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Business News Wed, 12 Nov 2008

VALCO: Deal or no Deal?

... Minister Insists 'Deal'
... Buyers Reiterate 'No Deal'

The Minister of Trade, Industry & Private Sector Development, Papa Owusu-Ankomah says he is astonished with report filed by Reuters News Agency which claimed that the deal involving the 70 per cent sale of Volta Aluminium Company (VALCO) was a fiasco.

According to Reuters, both foreign companies, mentioned in the deal that was unanimously approved by parliament, had denied they had any plans to buy 70percent stake in VALCO.

Hon Owusu-Ankomah told The Chronicle that he was amazed with the publication, adding that such stories could mar the deal. He noted that the deal was between the Government of Ghana (GOG) and International Aluminium Partners which consists the Norwegian Company -Norsk Hydro and the Brazilian company -Companhia Vale do Rio Doce (CVRD).

The Trade Minister cautioned that the deal was very sensitive and that newspaper reports could force the consortium to back out from the deal.

“My friend, we don’t want to lose this deal, it is a very sensitive matter,” Hon Owusu-Ankomah elaborated. He indicated that officials were briefing a joint committee of parliament, which consisted of both members of the majority and minority on the level of the development of the agreement, which was recently signed.

He said, elsewhere such deals are shrouded in secrecy until it was sealed, but because the government wanted to be transparent, it sent the agreement to parliament and thereby making it public. He called on Ghanaians not to panic and that everything was under control.

On Friday, Reuters quoted Norsk Hydro spokesman, Stefan Solberg as saying, “ Norsk Hydro has no plans to make any investments in Ghana,”

“We have not signed any agreement. This is something we have looked at just like (we have looked at) other places in the world,” Solberg said.

A spokeswoman for Brazil’s Vale told Reuters in Sao Paolo that “there are no such plans for this.” CVRD (VALE) is the second largest mining company in the world and the largest producer of iron ore, with an asset base of US$165 billion, whilst Norsk Hydro Aluminium Company of Norway is the second largest integrated aluminium company in Europe.

The consortium would take over 70 percent shares of VALCO for US$175.5million and they are expected to make an initial payment of US$25m within 15 working days of the execution of the agreement and upon approval by Parliament.

This initial amount would signify irrevocable commitment on the part of the consortium to pay the remaining amount

The agreement noted that the outstanding amount of US$150.5m must be paid within forty-five (45) days after the VALCO smelter has commenced production with two pot lines in normal operations, the execution of the transfer of shares by the Government and the delivery of the share certificate signed by VALCO in favour of the consortium.

Government of Ghana is expected to represent and warrant to the consortium that the company shall not be nationalized at any time in the future.

In the event of such an action, the consortium would be paid an aggregated amount, being the total sum paid for the shares, plus the value of any additional shares purchased by the consortium at an interest rate of LIBOR plus 4% spread from the date of payment of the initial deposit, and acquisition of each additional share (s) to the date of nationalization.
The Agreement would generate socio-economic benefits to the nation, some of which include the development of an integrated aluminium industry in the country, an investment with an estimated cost of US$4.7b.
Mining of Bauxite at Kibi and Nyinahin -$500m, development of a two-million tonne aluminium refinery plant at Tema -$2,500m, refurbishment of the rail line from Kumasi to Tema -$500m, 1200 megawatts power plant in Tema to be known as the Chemu Power -$1,200m, the extension of the production capacity of VALCO to be the largest aluminium smelter in Africa, with export earnings of over US$1.6billion annually, and finally the generation of about 9700 direct jobs and 42,000 indirect jobs.
Meanwhile officials of the consortium still insist that they have not signed any agreement with either Valco or government.

... Minister Insists 'Deal'
... Buyers Reiterate 'No Deal'

The Minister of Trade, Industry & Private Sector Development, Papa Owusu-Ankomah says he is astonished with report filed by Reuters News Agency which claimed that the deal involving the 70 per cent sale of Volta Aluminium Company (VALCO) was a fiasco.

According to Reuters, both foreign companies, mentioned in the deal that was unanimously approved by parliament, had denied they had any plans to buy 70percent stake in VALCO.

Hon Owusu-Ankomah told The Chronicle that he was amazed with the publication, adding that such stories could mar the deal. He noted that the deal was between the Government of Ghana (GOG) and International Aluminium Partners which consists the Norwegian Company -Norsk Hydro and the Brazilian company -Companhia Vale do Rio Doce (CVRD).

The Trade Minister cautioned that the deal was very sensitive and that newspaper reports could force the consortium to back out from the deal.

“My friend, we don’t want to lose this deal, it is a very sensitive matter,” Hon Owusu-Ankomah elaborated. He indicated that officials were briefing a joint committee of parliament, which consisted of both members of the majority and minority on the level of the development of the agreement, which was recently signed.

He said, elsewhere such deals are shrouded in secrecy until it was sealed, but because the government wanted to be transparent, it sent the agreement to parliament and thereby making it public. He called on Ghanaians not to panic and that everything was under control.

On Friday, Reuters quoted Norsk Hydro spokesman, Stefan Solberg as saying, “ Norsk Hydro has no plans to make any investments in Ghana,”

“We have not signed any agreement. This is something we have looked at just like (we have looked at) other places in the world,” Solberg said.

A spokeswoman for Brazil’s Vale told Reuters in Sao Paolo that “there are no such plans for this.” CVRD (VALE) is the second largest mining company in the world and the largest producer of iron ore, with an asset base of US$165 billion, whilst Norsk Hydro Aluminium Company of Norway is the second largest integrated aluminium company in Europe.

The consortium would take over 70 percent shares of VALCO for US$175.5million and they are expected to make an initial payment of US$25m within 15 working days of the execution of the agreement and upon approval by Parliament.

This initial amount would signify irrevocable commitment on the part of the consortium to pay the remaining amount

The agreement noted that the outstanding amount of US$150.5m must be paid within forty-five (45) days after the VALCO smelter has commenced production with two pot lines in normal operations, the execution of the transfer of shares by the Government and the delivery of the share certificate signed by VALCO in favour of the consortium.

Government of Ghana is expected to represent and warrant to the consortium that the company shall not be nationalized at any time in the future.

In the event of such an action, the consortium would be paid an aggregated amount, being the total sum paid for the shares, plus the value of any additional shares purchased by the consortium at an interest rate of LIBOR plus 4% spread from the date of payment of the initial deposit, and acquisition of each additional share (s) to the date of nationalization.
The Agreement would generate socio-economic benefits to the nation, some of which include the development of an integrated aluminium industry in the country, an investment with an estimated cost of US$4.7b.
Mining of Bauxite at Kibi and Nyinahin -$500m, development of a two-million tonne aluminium refinery plant at Tema -$2,500m, refurbishment of the rail line from Kumasi to Tema -$500m, 1200 megawatts power plant in Tema to be known as the Chemu Power -$1,200m, the extension of the production capacity of VALCO to be the largest aluminium smelter in Africa, with export earnings of over US$1.6billion annually, and finally the generation of about 9700 direct jobs and 42,000 indirect jobs.
Meanwhile officials of the consortium still insist that they have not signed any agreement with either Valco or government.

Source: Chronicle
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