Rio Tinto Alcan reports that it is in discussions with the South African government regarding the timing of the Coega aluminium smelter project near Port Elizabeth. A team, consisting of members from government, Rio Tinto and Eskom, are reviewing the terms of the project in order to align its timing with the availability of secure power generation capacity from Eskom.

“We are committed to working closely with the South African government to assist in mitigating the current energy crisis, while maintaining the option for future long term development of the Port Elizabeth region,” said Dick Evans, Chief Executive, Rio Tinto Alcan and member of the Rio Tinto Board. “Rio Tinto has operated successfully in South Africa for several decades, and we look forward to continuing our mutually beneficial presence in the future,” he added.

Rio Tinto Alcan will work with the government to minimise the impact of a potential rescheduling on regional economic development. “We will continue working on our local community and social investment plans and remain committed to finding solutions that will lead to the development of this project,” said Sandeep Biswas, Senior VP, Business Development, Rio Tinto Alcan. “The objective is to preserve the feasibility of the project and its underlying benefits for both Rio Tinto and South Africa, having the long term picture in mind,” he added.

The project is moving into an interim phase pending the outcome of ongoing discussions regarding the timing of the project. As the detailed feasibility study is concluded, the project team will be adjusted for this interim phase as appropriate. A long-term energy agreement for the proposed smelter was signed with Eskom in November 2006, and an agreement for infrastructure and job training support was concluded with Coega Development Corp in July 2007. The Industrial Development Corporation of South Africa (IDC) is a 15% partner in the project. An additional ownership allocation, of no less than 5%, has been reserved for broad based Black Economic Empowerment partners.

Rio Tinto has operated in South Africa for several decades, currently employing over 4,130 people, in Palabora Mining Co; Richards Bay Minerals (50/50 joint venture with BHP Billiton), as well as staff in Limpopo and Johannesburg offices.