Power shortage may shut Kaiser Aluminum unit in Ghana

The Volta Aluminum Limited Co. in Ghana (Valco), a unit of Houston-based Kaiser Aluminum Corp., may shut down in April because of low water levels at the Volta Dam which supplies its electric power, an energy industry source told Reuters on Thursday.

"It's very likely that Valco will shut down within four weeks. I don't believe the level of the Volta Lake will come back up to a reasonable level anytime soon to enable the company to operate even one potline," the source told Reuters.

Pots are electrolytic cells arranged in lines which reduce alumina, an intermediate raw material derived from bauxite, to aluminum metal.

A company spokesman could not immediately be reached for comment on a possible closure, according to Reuters.

Valco is now operating at 20 percent of its 200,000 tons per year capacity, with all but one of its five potlines closed since January of this year due to reduced power supply.

"The Volta Dam is already at 239 feet which is a foot below the official minimum operating level, and it's dropping by several inches every week," the source said.

The Volta Dam is a 912-megawatt hydro-electric plant at Akosombo, 63 miles northeast of the capital.

Meteorologists say rains are not expected for another six months in northern Ghana where the Volta River has its source.

Valco and the Ghanaian government are locked in a dispute over proposed increases in power tariffs paid by Valco to the Volta River Authority (VRA), the state-run power producer.

VRA receives about 1.1 cents (U.S.) per kilowatt hour of power from Valco, a fraction of what other Ghanaian companies pay.

Valco, located at Tema the main port and industrial city in the former British colony, has been the VRA's single largest customer.

Reuters reported that Ghanaian authorities say that because of the poor rains, the VRA now generates much of its electricity from costlier thermal sources, and cannot afford to supply Valco at the original rates.

Valco's parent company Kaiser Aluminum filed for Chapter 11 bankruptcy in February last year but said its filing did not include the Valco smelter.