VALCO crucial to our industry - Aluworks MD

Shutting down VALCO will affect about 200 entities in the aluminium industry and all its downstream sectors, risking numerous jobs in the value chain, Kwasi Okoh, Managing Director of Aluworks Limited, has told the B&FT.

Reacting to the World Bank’s proposal to Government to shut down VALCO, which enjoys massive state subsidies on power, Mr. Okoh said the suggestion is “incorrect”.

“They have made their suggestion and it is incorrect. It will affect the country’s manufacturing base, which is already very low,” he said.

“Government is not going to sit down for the industrial base of this economy to reduce even further, because people need jobs. The only way to keep jobs is for industry to grow bigger to provide more of them,” he added.

In the World Bank’s estimation, VALCO’s continued operation has a high economic cost for the country and Government should stop the hidden power subsidy it gives the aluminium smelter, which the Bank said harms the viability of power sector utilities.

But Mr. Okoh’s remarks support other voices of opposition to the World Bank’s suggestion, including Mr. Emmanuel Armah Kofi Buah, the Energy Minister, who said Government sees VALCO as a catalyst to industrialise Ghana’s economy for stronger growth.

Aluworks, which sources aluminium ingots -- its key raw material - from VALCO, sold 7,843 tonnes of aluminium products in 2012; down from 8,754 tonnes in 2011. Despite this 12 percent shortfall in volume terms, in value terms the net shortfall was 0.07 percent as the company earned revenues of GH¢49.68million, compared to GH¢49.72million in 2011. This came about as a result of a significantly higher tonnage of gross value added aluminium discs sold in 2012 than in 2011.

“The year 2012 proved to be a difficult year for exports. However, it is pleasing that in 2013 we have seen a resurgence of orders from Nigeria on the back of the closure of rolling mills in that country; so Nigerian customers with an eye for quality are turning to Ghana for supplies, which we will nurture and hope to solidify into a strong trend,” Mr. Okoh said.

Last year, Aluworks exported 2,468 metric tonnes of aluminium products, earning US$7.88million, compared with 3,852 metric tonnes in 2011 for which US$13.5million was earned.