Acute power shortages have cut Rio Tinto Alcan’s aluminium output in Cameroon by nearly 40 percent and reduced government revenues, the company said.
Alucam, a joint venture between Rio and the government, generates 3 percent of Cameroon’s gross domestic product (GDP).
The situation, which is cutting into profits at Alucam, could get worse if solutions to the power woes are not urgently found, Jacques Dubuc, a spokesman for the company’s operations in Europe, the Middle East and Africa, said late on Monday.
Alucam is one of Cameroon’s largest industrial projects with turnover of 149 billion CFA francs ($307.5 million) in 2008, representing 7 percent of industrial output and 5 percent of export revenues, the company and government said.
The global financial crisis has forced mining companies across the world to cut or delay expansion plans as commodities’ prices have slumped in the past six months. Rio had previously said its projects in Cameroon, which include expanding smelting capacity, remain on track.
“The problem of (the) power deficit has become too serious in Cameroon and Alucam was left with no choice but to scale down its activities,” Dubuc told Reuters.
“As a consequence, this year we foresee the company producing only some 55,000 tonnes of aluminium, down from its basic annual production of 88,000 tonnes,” he added.
Dubuc said Alucam needed 180 megawatts of electricity to operate at full capacity but supply levels have dropped to 120 MW this year, below the 140 MW expected during the dry season.
Options of drawing extra power from thermal power stations have been curbed by growing household demand, which has led to power rationing and frequent blackouts.
“This is not good news for the company and its shareholders … It is particularly not good news for the Cameroon government which will also lose money in terms of export taxes,” he said, without giving any details of the amount of money involved.
“As we are talking things could get worse for Alucam if this situation were to persist in the next one or two years,” Dubuc added, saying the company was urging the government to resolve the issue by starting work on the Kribi gas plant, where construction was initially due to begin in 2007.
The 122 million euro ($165.1 million) Kribi project is due to have initial capacity of 150 MW but could be extended to produce 350 MW, 50 MW of which would be supplied to Alucam.
Alucam hopes to boost its aluminium smelting capacity to 300,000 tonnes but plans have been blocked by restrictions to power supplies.
In the longer-term, Cameroon’s government hopes to ease Alucam’s power concerns by building the 300 MW Nachtigal hydro electric dam and the Lom Pangar reservoir to regulate the flow of water from the Sanaga River throughout the year.
Business leaders in Cameroon have long complained that energy shortages have prevented the country, the biggest economy in the six-nation Central African Economic and Monetary Community, from realising its full potential. (Editing by David Lewis and Peter Blackburn).