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Sunday 05.02.2012

Greenland scales back Alcoa involvement

Greenland Development says more time is needed to estimate construction costs at the smelter and hydroelectric project in Maniitsoq.

Greenland has delayed a decision on joining Alcoa in a planned aluminium venture and scaled back its possible stake to 10 to 30 per cent, Reuters reports.



The chief executive of state body Greenland Development says more time was needed to estimate construction costs at the smelter and hydroelectric project in Maniitsoq.

"It has been postponed because we haven't finished the field investigations yet," Flemming Drechsel told Reuters on Wednesday.

Greenland's parliament will decide on the venture in spring 2010 and not this autumn as earlier planned.

Alcoa spokesman Kevin Lowery said: "We are awaiting their decision. It's not something we were going to start building tomorrow, obviously we will continue to talk with them to move the project forward."

Alcoa and Greenland announced in 2007 they would explore building a plant and said construction could begin in 2010, with production starting in 2014.

The company and Greenland's government had been discussing the posibility of Greenland taking an up to 50 per cent stake in the project but Drechsel said the government was now considering 10 to 30 per cent.

The proposal consists of a smelter with annual capacity of at least 350,000 tonnes and two hydropower plants. Annual revenue is estimated at 3-4 billion Danish crowns ($566-754.7 million).

"In the first pre-feasibility study two years ago, the estimate was that it could be financed with 75 to 80 percent lending capital," Drechsel said. "Now the estimate is 60 to 65 percent because banks and other financial institutions have become more risk-averse."

Since Alcoa is only looking for a 50 per cent share, the door could be open to other partners. Greenland media earlier reported that the Japanese company Mitsui had shown interest.