Valco cuts aluminium output further

ACCRA, Jan 10, (Reuters) - Aluminum production at the Volta Aluminium Company (Valco) in Ghana is down to a fifth of its 200,000 tonnes per year capacity following a reduction in power supply to the plant, the company said on Friday.

"We closed down one potline on December 31 and shut down another yesterday (Thursday)," Dave Thomas, Valco managing director, told Reuters on Friday.

"Prior to that we were operating three of our five potlines."

The cut comes as talks in the United States over tariffs between the Ghanaian government and Valco, a unit of U.S. firm Kaiser Aluminum Corp, collapsed this week, according to a statement from the Ghanaian authorities on Friday.

Thomas said the state-run power producer Volta River Authority (VRA), gave them notice late last year of an impending power reduction necessitated by the low operating level of the Akosombo Dam, which supplies power to Valco.

"We have no idea how long this will go on for," he said.

Valco was established 35 years ago and is located at Tema, the main port and industrial city in the former British colony. It has been the VRA's single largest customer.

Valco's guarantee of power purchases at cheap rates facilitated the construction of the Volta Dam, a 912 megawatt hydro-electric plant at Akosombo, 100 km (63 miles) north-east of the capital.

Ghana said on Friday it wants Valco to pay more than the 1.1 cents per kilowatt hour (kWh) it currently pays, saying it cost 6.5 cents to produce one kWh of electricity.

"The ordinary Ghanaian pays 7.8 cents per kWh. This situation is no longer tenable. Valco has resisted efforts to make it pay a more realistic price reflecting current costs of producing power in Ghana," said the government statement, which was signed by Energy Minister Albert Kan-Dapaah.

It said more than 65 per cent of Ghana's power came from thermal sources which used light crude oil as hydro-energy was no longer sufficient to meet the needs of both Ghana and Valco.

"Valco has failed to see the new realities, and insists that power be sold today at rates that pretend that Ghana's power is produced exclusively from cheap hydro sources as it was when it first started operations in Ghana 35 years ago," it said.

Thomas declined to comment on the collapse of negotiations in Washington earlier this week between the Ghanaian government and Kaiser Aluminum. Valco employs nearly one thousand people.

He would not say categorically if Valco would lay off staff: "We're in the process of evaluating our labour situation."

ACCRA, Jan 10, (Reuters) - Aluminum production at the Volta Aluminium Company (Valco) in Ghana is down to a fifth of its 200,000 tonnes per year capacity following a reduction in power supply to the plant, the company said on Friday.

"We closed down one potline on December 31 and shut down another yesterday (Thursday)," Dave Thomas, Valco managing director, told Reuters on Friday.

"Prior to that we were operating three of our five potlines."

The cut comes as talks in the United States over tariffs between the Ghanaian government and Valco, a unit of U.S. firm Kaiser Aluminum Corp, collapsed this week, according to a statement from the Ghanaian authorities on Friday.

Thomas said the state-run power producer Volta River Authority (VRA), gave them notice late last year of an impending power reduction necessitated by the low operating level of the Akosombo Dam, which supplies power to Valco.

"We have no idea how long this will go on for," he said.

Valco was established 35 years ago and is located at Tema, the main port and industrial city in the former British colony. It has been the VRA's single largest customer.

Valco's guarantee of power purchases at cheap rates facilitated the construction of the Volta Dam, a 912 megawatt hydro-electric plant at Akosombo, 100 km (63 miles) north-east of the capital.

Ghana said on Friday it wants Valco to pay more than the 1.1 cents per kilowatt hour (kWh) it currently pays, saying it cost 6.5 cents to produce one kWh of electricity.

"The ordinary Ghanaian pays 7.8 cents per kWh. This situation is no longer tenable. Valco has resisted efforts to make it pay a more realistic price reflecting current costs of producing power in Ghana," said the government statement, which was signed by Energy Minister Albert Kan-Dapaah.

It said more than 65 per cent of Ghana's power came from thermal sources which used light crude oil as hydro-energy was no longer sufficient to meet the needs of both Ghana and Valco.

"Valco has failed to see the new realities, and insists that power be sold today at rates that pretend that Ghana's power is produced exclusively from cheap hydro sources as it was when it first started operations in Ghana 35 years ago," it said.

Thomas declined to comment on the collapse of negotiations in Washington earlier this week between the Ghanaian government and Kaiser Aluminum. Valco employs nearly one thousand people.

He would not say categorically if Valco would lay off staff: "We're in the process of evaluating our labour situation."