UPDATE:Greenland, Alcoa To Seek Partner In Smelter Project
Executive
(Adds details.)
LONDON -(Dow Jones)- A third party is expected to be sought to partner the
government of Greenland and U.S. aluminum producer Alcoa Inc. (AA) in a new
smelter project, an executive at Greenland Development Inc. said Friday.
The government has the right to take up to 50% in the project but is likely to
take less and ask for a third party to be brought in, said Flemming Drechsel,
managing director of the state-owned company.
"We must make a final decision on the ownership of the project after phase two
of the Memorandum of Understanding with Alcoa," Drechsel told a conference in
London organized by Metal Events.
"Alcoa favors a partnership, an integrated project in which it will take 50%
and has strongly encouraged the government to take 10%," he said. "The
government has the opportunity to take up to 50% but doesn't have the appetite
or financial ability to do so--a third party is required."
Drechsel said it isn't yet clear whether the third party will be another
industrial company or an equity partner.
The smelter is slated to produce 400,000 metric tons of aluminum annually,
based on power availability. Two new hydropower plants with a combined capacity
of 650 megawatts is currently envisaged, Drechsel said.
The decision on the partner is due to be made by the government in the spring
of 2010, he said, after which time the concession and other investment terms
will be negotiated and a decision taken by the project's owners on whether to
initiate the final stages of development.
The alternative is for Alcoa and its partner to be granted concessions and
land permits to construct a hydropower plant and smelter project in a 100%
private equity deal, Drechsel said.
The final decision on the project go-ahead will be made in 2011 or 2012, he
added.
Greenland Development was set up in 2006 as a private limited company owned by
the government to coordinate state negotiations and cooperate with Alcoa to
build the smelter.
-By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413; andrea.hotter@
dowjones.com
(END) Dow Jones Newswires
11-27-090900ET
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