VALCO to double activity

ACCRA, March 15 (Reuters) - Ghana's Valco aluminium smelter, which restarted in January after a prolonged shutdown, is running one potline but will add a second in 3-4 months, a government official said on Tuesday.

The 200,000-tonne per year smelter with six potlines had been shut since March 2007, largely due to weak metal prices and power shortages caused by low water levels in the vast Volta hydropower dam.

Energy Ministry spokesman Edward Bawa said the smelter had resumed production mainly to feed local aluminium requirements.

"It's going on well and there are plans to add a second potline in 3-4 months," Bawa told Reuters, without giving a figure for current output.

Bawa said Ghana's energy supply was improving and that a post start-up evaluation was ongoing to determine how best to optimise the smelter to drive government's plans for an integrated aluminium industry.

"The power situation is improving and we believe when positioned well, Valco can be a key economic driver," he said.

Ghana fully owns Valco after buying Kaiser Aluminium's 90 percent stake in 2004 for $18 million and then acquiring the outstanding 10 percent stake from U.S. aluminium maker Alcoa (AA.N: Quote) four years later.

The West African nation plans to establish an integrated industry including a 2 million tonne/year alumina refinery.

The government estimates that as world metal prices recover, Valco could add about $300 million in revenues into the economy yearly at full capacity.

In addition to being the world No. 2 cocoa grower and Africa's second largest gold miner, Ghana also joined the league of oil producing countries in December when it began pumping from its Jubilee field with estimates of up to 1.5 billion barrels.