Govt Seeks Strategic Investor to Galvanize Integrated Aluminium Industry

VALCO has gone through turbulent phases including a series of shutdowns largely due to the lack of investment, repairs, and maintenance. In 2008, the Government of Ghana, under former President John Agyekum Kufuor, acquired Kaiser’s shares in VALCO making it a wholly Ghanaian-owned company. The plant has been operating with the same dated technology and obsolete equipment inherited from the previous owners (Kaiser Aluminium and Alcoa) and has one of the highest production costs per tonne of aluminium globally.

The lack of capital injection and modernization of the plant over the years has led to VALCO operating under capacity and recording losses.

President Akufo-Addo, with his vision to industrialize and transform Ghana’s economy, established the Ghana Integrated Aluminium Development Corporation (GIADEC) in 2018 with a mandate to develop and promote Ghana’s Integrated Aluminium Industry (IAI).

VALCO in the Integrated Aluminum Industry Project

GIADEC is mandated by its enabling Act of 2018 (Act 976) to develop Ghana’s Integrated Aluminium Industry spanning bauxite mining, alumina refining, aluminium smelting, and downstream aluminium products manufacturing. In this pursuit, the Government’s 100% ownership of VALCO has been transferred to GIADEC. Per GIADEC’s Master Plan, VALCO has been made the anchor of the IAI Project, linking the upstream and downstream sectors of the aluminium industry.

VALCO, being the only existing smelter in Ghana, is required to expand its production from the current 40,000tpa to 300,000tpa of aluminium. This means that the company’s production capacity must be increased by 650%. To achieve this target, VALCO requires significant transformation to retrofit its old and obsolete potlines as well as other production facilities and equipment to modern and efficient technology. The fully retrofitted VALCO Smelter will increase its installed capacity to a fully operational 300,000tpa.

VALCO’s Retrofitting Project

The VALCO retrofitting project involves the replacement of five (5) obsolete P69 Potlines and associated plant and equipment with modern, more efficient smelting technology. GIADEC and VALCO have assessed the financial needs for the retrofitting project and have estimated it at Six hundred million United States Dollars (USD600,000,000). The retrofitting will be done in two phases to enable production to continue without supply interruptions to the burgeoning local downstream companies.

Cabinet Approval

In June 2022, Cabinet granted approval for GIADEC and VALCO to identify and engage a Strategic Partner with the financial and technical capacity, as well as strategic international linkages, to provide the needed investment and technical know-how for the retrofitting and modernization project.

Future State of VALCO

The implementation of Project 4—the modernization and expansion of the VALCO smelter to improve efficiency and increase capacity—is essential for VALCO to sustainably grow and be profitable. It is intended to link the upstream and downstream components of Ghana’s IAI Master Plan. The modernization and retrofitting of VALCO will increase the plant’s current production from 50,000 to 300,000 tonnes, contributing significantly to the realization of the integrated aluminium plan.

Benefits of a Retrofitted and Modernized VALCO

The retrofitting is designed to transform VALCO from a loss-making entity into a best-in-class, profit-making organization, promoting the Government’s industrialization agenda and contributing to Ghana’s socio-economic development. VALCO’s smelting operations will add significant value to Ghana’s bauxite resources. It is estimated that 1.5mt of bauxite valued at approximately USD75 million can generate USD180 million after refining and USD600 million after smelting.

VALCO, currently operating at 40% capacity, employs about 750 workers. After retrofitting and modernizing the plant to increase production to 300,000 tonnes per annum, the smelter will create thousands of high-paying direct and indirect jobs for Ghanaians.