Aluminium producer Rio Tinto Alcan on Thursday indicated that it expected its Coega aluminium smelter to only come on line in 2012.

Rio Tinto Alcan Aluminium CEO Dick Evans said that South Africa's power constraints meant that the energy-intensive project on the country's south-east coast had been temporarily suspended.

He reported that the project's engineers had been redeployed to Canada, where the power situation has improved, and Rio Tinto Alcan was looking into leveraging an "alumunium hub".

The company, which inherited the $2,7-billion project when it bought Canadian aluminium producer Alcan, originally planned to bring the new smelter online in two phases, between 2010 and 2014.

However, electricity capacity constraints in South Africa have forced it to review the timing of the project. The smelter was placed in an 'interim' phase, until the discussions, between the company, the government, the Coega Development Corporation, and State-owned utility Eskom, on the timing of the project had been concluded.

Earlier this month, the ruling African National Congress also called for a review of all energy-intensive projects "in line with the country's strategic needs".

After years of underinvestment, South Africa ran out of excess electricity capacity in January, forcing industry and mining companies to reduce their power consumption.

In a presentation to analysts and investors in London, Evans said: "Optionality counts, and we have a lot of it. When we do have unexpected delays, we can quickly reshuffle our portfolio."

Rio Tinto Alcan also owns smelters in British Columbia and Quebec, which are in various stages of expansion.

OTHER PROJECTS

At the company's Kitimat smelter in British Columbia, in Canada, advanced feasibility and project preconditions for a $2,5-billion capital expansion (capex) project from 2007 to 2011, had been completed and were expected to receive approval within months.

The project involved replacement of existing 277-kt/y capacity, with 400-kt/y capacity pre-bake, using the latest version of RTA's AP series technology. This project's power would be supplied from the Rio Tinto-owned Kemano hydropower station.

The company reported that the phase-out of existing production and ramp-up of new capacity were expected between the fourth quarter of 2010 and the final quarter of 2011.

Rio Tinto's Alma-2 project in Quebec, was a stage-two expansion to add between 150-kt/y and 190-kt/y capacity to the existing 415-kt/y smelter. The project capex between 2008 and 2011 was set at $1-billion.

The project was in the prefeasibility/feasibility stage, and was expected to receive approval by early 2009, with start up expected in the second half of 2011. Hydropower energy would power the project, and once completed, the smelter was expected to operate in the first quartile of the industry cash cost curve. It would use the latest version of RTA's AP 3X series pot cell technology.

Rio Tinto Alcan's Arvida AP-50 project, in Quebec, was a 60-kt/y pilot plant, and was evaluating the option of adding a 140-kt/y second-phase demonstration plant. The project was designed to be expandable to up to 450-kt/y.

Capex for the project was in the region of $2-billion for a 200-kt/y pilot-plus demonstration plant. It included infrastructure for capacity between 400-kt/y and 450-kt/y, and Rio Tinto said it expected approval by early 2009, with first metal expected in 2012. Energy would come from a primarily self-owned hydropower plant.