African Selection Group (ASG) has expressed strong interest in Ghana’s aluminum value chain, particularly in retrofitting and modernizing the Volta Aluminum Company (VALCO) smelter as well as construct alumina refinery.
The company aims to enhance the efficiency and production capacity of the smelter from 60,000 to over 300,000 metric tonnes annually.
John Kamara, Managing Director of ASG, stated that ASG’s vertically integrated business model aligns well with the Ghana Integrated Aluminium Development Corporation’s (GIADEC) approach.
He disclosed this during an investor engagement session with GIADEC.
The ASG delegation present at the meeting included David Woodall, Group Operating Director; Wayne Apted, Chief Financial Officer; and Quinton Charaud, a member of the Finance Team. Their engagement with GIADEC signifies a crucial step towards forming strategic partnerships that will drive the development of Ghana’s aluminum industry.
2-Phase strategic plan for VALCO
Mr. Kamara outlined ASG’s two-phase strategic plan to revamp VALCO.
Phase 1 will focus on upgrading production facilities, expanding capacity, implementing energy efficiency measures, and introducing technological upgrades.
This phase will also modernize the potlines and supporting infrastructure to enhance energy efficiency and operational stability.
Plans for a new alumina refinery in Ghana
Phase 2 will involve the construction of an in-country alumina refinery to ensure a stable and cost-effective supply of alumina to VALCO, reducing reliance on imports.
Mr. Kamara emphasized that ASG intends to adopt advanced, sustainable refining processes that offer significant environmental and operational benefits over the traditional Bayer process.
Regarding power supply, Mr. Kamara noted that ASG would explore innovative technologies and alternative energy sources within Ghana’s energy mix to ensure a reliable and cost-effective power supply to sustain operations.
GIADEC open to global investors
On his part, the Chief Executive Officer (CEO) of GIADEC, Mr. Reindorf Twumasi Ankrah, reiterated that the Corporation is open to forming partnerships with global investors who share its vision of establishing an Integrated Aluminium Industry (IAI) in Ghana.
He emphasized the need for investors with both financial capability and industry expertise to support this ambitious initiative.
Mr. Ankrah highlighted that GIADEC requires over $6 billion to fully develop the aluminium value chain.
He noted that given Ghana’s current economic situation, the Corporation cannot rely solely on central government funding.
As a result, GIADEC is actively seeking strategic partnerships with investors committed to the IAI.
GIADEC was established under the Ghana Integrated Aluminum Development Corporation Act, 2018 (Act 976), to develop and promote a globally competitive Integrated Aluminum Industry (IAI) in Ghana.
Ghana currently has an operational bauxite mine in Awaso and an aluminum smelter, the VALCO smelter in Tema.
What is missing to ensure a full integration of Ghana’s aluminum industry is an alumina refinery.
A comprehensive strategy and master plan was been developed to utilize Ghana’s 900 million metric tonnes of bauxite, existing aluminum smelter, and related assets, with a key focus on value addition and job creation.
The four-project master plan, which serves as the blueprint for the industry’s full development, was successfully defined and moved into various stages of execution.
While challenges remain, including funding constraints, infrastructure deficits, and the need for renewable energy at competitive rates, the groundwork for a globally competitive aluminum industry has been firmly established.
VALCO posts positive performance in 2022
In 2022, VALCO posted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $5.7 million in 2022.
The positive position reported for 2022 was achieved by the $8.86 million net gains realized from the innovative aluminum forward sale deal the Board and management struck with the company’s bankers.
The net profit after tax was however negative $4.88 million due solely to the $12 million depreciation.
This is the second best ever performance in a decade, only to the results of 2021 where it posted $8.7 million.
In 2020, VALCO posted negative $15.1 million EBITDA.
In 2022, VALCO recorded $121.7 million in revenue representing growth of 13% compared to the $107.5 million revenue posted in 2021.
Price variance contributed $19.2 million representing 18% while the shortfall in sales volume impacted negatively by some $8.5 million which represents 5.4% of total revenue growth in 2021.
In 2022, input prices escalated to record levels, growing the cost of sales by a much higher margin of 24% to $129.82 million.
Freight rates also increased during the period.
Products value maximization activities
The Board and Management strategically identified several products value maximization activities as well as a host of cost reduction initiatives for implementation.
One of them was VALCO partnering Daiichi and Alumexin for the manufacture of LED lamps and aluminum profiles respectively.
Downstream market opportunities
The Board and Management also identified downstream market opportunities in Europe, America and West Africa and is studying the possibility of establishing a 30ktpa rod processing mill as well as the production of aluminum circles, sheets, and foils.
VALCO was created in the 1960s after Ghana’s independence from Britain in 1957.
Ghana fully owns VALCO after buying Kaiser Aluminum’s 90% stake in 2004 for $18 million and acquiring the outstanding 10% stake from U.S. aluminum maker Alcoa four years later for $2 million, with plans to establish an integrated industry including a 2-million tonne/year alumina refinery.
By ELVIS DARKO, Accra
