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17.11.2008 Business & Finance

Vale says had interest in Ghana but not in VALCO

By Reuters
Vale says had interest in Ghana but not in VALCO

Brazilian mining giant Vale (VALE5.SA: Quote, Profile, Research, Stock Buzz)(RIO.N: Quote, Profile, Research, Stock Buzz) said on Tuesday it had commissioned Ghanaian aluminum maker VALCO to conduct a feasibility study into a bauxite mine and alumina refinery in the West African state.

But the firm said it had "no interest in taking part" in the restarting of VALCO aluminum smelter which has been shut down since March 2007 because of power shortages. Ghana's trade ministry said last week Vale wanted to buy a stake in VALCO.

In a brief statement, Vale said VALCO had approached it about participation in restarting the smelter after it had signed a memorandum of understanding for VALCO to conduct the feasibility study for the bauxite and alumina project.

"Vale has no interest in taking part in the reopening process of the aluminum smelter ... Concerning talks for the bauxite mine and alumina refinery project, the studies are yet to be concluded," the statement said.

Ghana's trade ministry said in a memo to parliament that both Vale and Norsk Hydro (NHY.OL: Quote, Profile, Research, Stock Buzz) had agreed on Aug. 8 to buy a 70 percent stake in VALCO and invest $4.7 billion in Ghana's aluminum industry.

Last Friday its parliament approved the sale of the stake in the state-owned aluminum smelter for $175.5 million, prompting both firms to issue swift denials they were planning to buy into it. [ID:nL7656685]

VALCO has capacity to produce 200,000 tonnes of aluminum a year, but has been shut since March 2007 due to power shortages caused by low water levels in the vast Volta hydroelectric dam.

VALCO was created in the 1960s after Ghana's independence from Britain in 1957. Ghana's government bought out Kaiser Aluminum's (KALU.OQ: Quote, Profile, Research, Stock Buzz) 90 percent stake in 2004 for $18 million. (Reporting by Peter Murphy; Editing by Christian Wiessner).

Source: Reuters