Alcoa eyes Ghana's Valco, others circle -source

ACCRA, March 25 (Reuters) - Alcoa is considering whether to exploit bauxite deposits in Ghana and increase its 10 percent stake in the Volta Aluminium Company (Valco) smelter, a senior industry source said on Thursday.

Initially, during their recent visit, Alcoa's intention was to negotiate the sale of their 10 percent stake in Valco," the source, who declined to be named, told Reuters.

"But after they had the opportunity to look at the country's bauxite resources, they decided to go back and consider whether to go ahead and sell, or increase their stake and explore the deposits," the source said.

The Minerals Commission, which regulates mining in Ghana, had estimated about 120 million tonnes of bauxite at Kibi in the Eastern Region of the country.

A spokesman at Alcoa said: "Occasionally we stop in and look at our assets, but it's nothing more or less than that."

Kaiser Aluminum Corp, which owns 90 per cent of Valco, said in December it had decided to sell its stake in the smelter to the Ghanaian state. Valco has the capacity to produce 200,000 tonnes-a-year of aluminium and is located in Tema, the West African nation's main port and industrial city.

Alcoa Primary Metals president Randall Overbey held private talks with Ghanaian President John Kufuor in Accra last Thursday, government officials said.

Ghana's Energy Minister Paa Kwesi Nduom declined to give full details, but said that Alcoa was one of many that had visited Valco.

"BHP Billiton, Chalco (Chinese Aluminium Company), Mitsubishi, Glencore -- they've all been here," Nduom said.

Until its virtual shutdown in 2003, Valco -- which was established in the mid-1960s -- imported semi-processed bauxite from Jamaica for processing in Tema.

Nduom said the government's stance in all talks was, "...that we'd like to exploit our own bauxite resources and add value to it. It may not be done immediately, but if possible, we'd like it to be part of the package."

BHP Billiton expressed interest last year in developing a multi-billion-dollar integrated aluminium industry using bauxite from Kibi.

"Their application is still active," Joseph Aboagye, director of planning and policy analysis at the Minerals Commission said.

Nduom said a draft due diligence report on Valco was expected to be ready in about a week.