INTRODUCTION
The establishment of VALCO was as a result of the vision of the first President of the Republic of Ghana, Dr Kwame Nkrumah, to launch an integrated aluminium industry in the country. The Company is therefore a product of the meeting of minds of Dr Nkrumah and the late Edgar Kaiser, Chairman and Founder of Kaiser Aluminium & Chemical Corporation (KACC), the immediate past majority shareholder of VALCO.
VALCO, is a major long-term investment in Ghana, one of the largest enterprises in the country and the second largest smelter in Sub-Saharan Africa. VALCO is a major producer of primary aluminium for the world market and the company currently, directly employs some 574 Ghanaians hold various technical, professional and managerial positions.
BIRTH OF VALCO
Construction of the VALCO plant began in 1964 and commercial production of aluminium began in the Plant in March 1967. Prior to that series of discussions had taken place that culminated in the signing of an agreement for the construction of the Akosombo Hydro-electric Dam. In the early 1950’s studies had been conducted on the establishment of a hydroelectric dam and a ready buyer of the energy generated. An aluminium smelter appeared to be the most obvious choice. Those involved in the studies included British Aluminium, ALCOA, Reynolds Metal, Olin, Aluminium Limited and Kaiser Aluminium. Most of these investors withdrew from the discussions leaving Kaiser Aluminum and Reynolds Metal.
Discussions between Government of Ghana and foreign lenders for the construction of the Akosombo Hydro-electric Project required a financial guarantee before the project could take off. VALCO therefore became the necessary guarantor agreeing under a “take or pay” contract to purchase not less than 300 MW of the 912 MW to be produced by Akosombo for a period of 30 years with the right for a further extension of 20 years. Under this agreement VALCO was to pay for the cost of that amount of power even when it did not take it. in other words, VALCO gave the economic justification for the building of the Akosombo dam.
In March 1967 when VALCO poured its first metal for commercial purposes the plant had a capacity of 3 cell lines made up of 100 cells per line. Subsequently the facility was expanded with the construction of the fourth and fifth cell lines in 1970 and 1974 respectively bringing the installed capacity to 200,000 metric tonnes per year.
OPERATIONS (RESTARTS AND SHUTDOWNS)
VALCO’s operations have been characterized by shutdowns and restarts largely due to unavailability of sufficient power to run at full capacity at all times. Thus, the company’s production operations have averaged about 70% of installed capacity from inception. Between 1982 and 2004 when the ownership structure changed, the plant shut down and restarted operations thirteen times at various levels for the above reason.
VALCO’s history can be structured into two; namely the illustrious history from the days of its establishment until the beginning of another chapter following the exit of Kaiser Aluminum from the scene in 2004.
It is instructive to note that between March 2002 and January 2003 VALCO progressively shut down three (3) of its four (4) operating lines due to power shortage. In May 2003, the last line was shut down, as it had become uneconomical to operate at that level. As a result majority of the employees were sent home, the few that was retained formed the nucleus for an anticipated restart of operations after improved power availability and successful power tariff negotiations was in place.
OWNERSHIP CHANGE TO GOVERNMENT OF GHANA
In October 2004, however, the plant was completely shut down when the Government of Ghana (GoG) purchased the 90% stake offered it by Kaiser Aluminum & Chemical Corporation (KACC). Earlier that year the Government sent a committee of aluminium production experts to carry out due diligence to recommend how the Government could take over VALCO. For the next six months, discussions went on between Government officials and senior management of VALCO and representatives of ALCOA, the minority shareholders on restart of operations. At the same time a transitional team was put in place to protect the plant from loss and deterioration and also to coordinate activities with stakeholders to facilitate the resumption of operations.
In September 2005 smelting operations resumed at the plant, this time under what was termed the New VALCO, which was wholly managed by Ghanaians.
