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Sunday 05.02.2012

Alcoa looking for a partner

A third party may partner with the government of Greenland and U.S. aluminum producer Alcoa Inc. in its smelter project.

A third party may partner with the government of Greenland and U.S. aluminum producer Alcoa Inc. in its smelter project, an executive at Greenland Development Inc. said Friday.



Greenland has the right to take up to 50 per cent 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 per cent and has strongly encouraged the government to take 10 per cent," he said. "The government has the opportunity to take up to 50 per cent 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 tonnes of aluminum annually, based on power availability from two new hydropower plants with a combined capacity of 650 megawatts, Drechsel said.

The decision on the partner is due to be made by Greenland 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 per cent private equity deal, Drechsel said.

The final decision on the project go-ahead will be made in 2011 or 2012, he said.

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.