United Company Rusal, the world's largest aluminium and alumina producer, says that it has exported the first aluminium ingots produced at its recently reopened smelter in Nigeria. The Russian company will now seek new sites for additional smelters and places to mine bauxite, the principal ore used to make aluminium, in Africa.
The first shipment of 72 tons of aluminium ingots has been transported from the Aluminium Smelting Company of Nigeria Ltd. (Alscon) plant, recently a subject of an ownership wrangle and located in the southern port town of Ikot Abasi, to the port of Rotterdam, the Netherlands, the company said Wednesday.
The beginning of export shipment marks a significant milestone for Alscon and represents new opportunities for all stakeholders, said Andrey Partyanskiy, managing director at Alscon, in a statement.
Sales of metal to the local market will also commence and have a positive impact on local industries, he said. We believe that Nigeria has a huge potential for becoming one of the major producers of aluminium in Africa.
Partyanskiy added that, at full capacity, the smelter would provide 1,900 jobs. Associated small- and medium-size businesses to support the smelter are expected to also create approximately 20,000 related jobs for the state of Akwa Ibom.
Alscon had a capacity of 193,000 tons a year when it opened in 1997 at a cost of US$2.5-billion. It is virtually new. Partially completed in 1997, it operated for just about three years on a trial basis, and had stood idle since 2000, when a combination of inadequate and costly gas supplies for electricity generation, and difficult transportation access by river, made production impossibly costly to sustain.
Due to inefficient management, the smelter only produced a lacklustre 40,000 tons before it was shut down in 1999. It produced its first aluminium in eight years in February this year.
UC Rusal hopes to get the plant to its original capacity by 2010 through an investment of US$300-million. It is now operating 40 of the smelter's cells, with a target of 140 cells by yearend and 432 cells by 2010.
The Oleg Deripaska-controlled company took over a majority stake in Alscon in February 2007, but found itself in hot soup down the line in Nigeria and the United States, where US companies tried to persuade the Bush Administration to back them in a bid to oust the Russian billionaire from the Nigerian smelter.
In November last year, Mineweb reported that UC Rusal had been taken to court in Nigeria and the US by the Los Angeles-based Bancorp Financial Investment Group, which had sued it for abusing the privatisation process in 2004 resulting in it being awarded Alscon on a low bid.
The Nigerian government was also reportedly ready to investigate how Deripaska was able to take control of Alscon for only US$250-million. With new smelters generally costing about US$4,000 per ton to build, UC Rusal's price for Alscon was almost one-third the going rate at US$1,667 per capacity ton for the 77.5% stake.
But last month the Nigerian government had changed in its stance towards the company, commending it when it announced that it had spent over US$20-million in refurbishing and modernising the smelter since taking over Alscon.
The Nigerian mines and steel development minister, Alhaji Mohammed Gusau, is on record as having told journalists after touring the plant in April that he was pleased with the world-class quality of aluminium produced by Alscon and the scale of production which the plant has reached only two months after the launch.
He was also satisfied with the cordial relationship, which exists between the company and the local communities and urged the population to create a favourable working environment for the company to operate, adding that the achievements in both production and social aspects are commendable and we look forward to seeing more of those in the future.
Nevertheless, following the revival of Nigeria's smelter, UC Rusal says it is reaffirming its commitment to Africa and will not allow such incidents as the kidnapping of six of its expatriate employees in Nigeria and the killing of one of its drivers last year affect its commitment to invest in the continent.
UC Rusal, which produces 4.2-million tons of aluminium and 11.3-million ton of alumina a year, has targeted investing US$5-billion in West Africa, according to the May issue of the African Business magazine. Bloomberg reports that Libya has been identified as a potential site for its next African smelter and also that Rusal would expand its mining and refining operations in Guinea, the world's number one bauxite exporter.
Guinea was its first port of call when it ventured into Africa in 2001 and has since been operating mines owned by the country's Compagnie des Bauxites de Kindia.