VALCO temporary curtails last pot-line

Kaiser Aluminium, the largest shareholder of 90 percent in the Volta Aluminium Company Limited (VALCO), has decided to curtail the last remaining operating pot line with effective May 5, 2003.

VALCO decided to initiate the curtailment to provide Volta River Authority (VRA) with additional flexibility in meeting the needs of other power users in Ghana in light of the low level of the Akosombo Dam.

A statement from the company on Friday said by this, VALCO would preserve its right to power later in the year when the level of the Dam rises.

It expects this curtailment to extend through the end of the rainy season, at which time it will resume operations by using the remainder of its 2003 power allocation including the power that it would have consumed in the absence of the present curtailment.

It said VALCO was still evaluating the financial impacts of the curtailment including potential charges and cash requirement for affected employees.

''The net cash impact of such curtailment is expected to be offset, in part, by a reduction in working capital, excluding special items, and the impact of the additional curtailment on ongoing operating income is expected to be modest''.

It said VALCO would continue to pursue a dual-track approach to the power situation.

The primary track is through arbitration under the auspices of the International Chamber of Commerce in Paris with both the VRA and the Government of Ghana, concerning past curtailments and the volume and price of power available to VALCO under existing long-term contracts.

The second tract is direct negotiation with the VRA and the Government of Ghana to find a mutually beneficial solution short of arbitration.

VALCO has five pot lines, each with a capacity to produce 40,000 metric tonnes of primary aluminium annually. Although VALCO has a long-term power contract with VRA the number of operating pot lines varies from year to year depending on the power allocation.

In 2000, 2001 and into early 2002, VALCO had operated four pot lines.

In March 2002 VALCO responded to VRA allocation cuts by reducing its operating level to three pot lines. It further reduced its operating pot lines to two and then one between December 2002 and January 2003.