BHP Billiton is the world’s largest diversified mining and resources company, with some 38 000 employees across 100 operations in approximately 25 countries. Its operations encompass a broad range of commodities including aluminium, energy coal, metallurgical coal, copper, manganese, iron ore, uranium, nickel, diamonds, silver and titanium minerals, oil, gas, and liquefied natural gas.
In southern Africa, the company has operations in manganese, energy coal and aluminium. In addition to investigating aluminium smelting opportunities in the DRC, it is involved in minerals exploration, and opened an office in Kinshasa during 2006.
The proposed aluminium smelter would produce about 800 000 tonnes per annum in its first phase, and use up to 2 000MW of electricity. This would mean an increase of more than 60% on the current production level of 1.3Mtpa, and would take production to 2.1Mtpa.
Commenting on the effect this added production would have on the supply-demand situation, BHP Billiton Aluminium, president Xolani Mkhwanazi gives the assurance that this is one of the issues which will be addressed in the project feasibility report. “We anticipate, however, that the international aluminium market will absorb the new production,” he adds.
There has been mention of the possibility of a second phase for the project, but Mkhwanazi says a decision on this aspect will also emerge from the outcome of the feasibility study. “It would be dependent to a large extent on the continued availability of the power necessary for such expansion,” he explains.
BHP BILLITON WILL FUND STUDIES
The smelter would use electricity from the proposed Inga 3 hydro-power station at Inga, on the Congo River, and BHP Billiton has agreed to fund the costs of Inga 3’s feasibility study. It is understood that the company will pay US$20 million (close to R140 million) towards the study in exchange for power to its smelter.
Initial concept studies have been completed for both the hydropower station and the aluminium smelter, and preparations are now underway to start the feasibility studies for both projects. BHP will undertake the smelter feasibility study itself, but could give no indications of costs at this early stage.
“The process is a long one,” Mkhwanazi explains, “and the timing will be driven by developments which arise during the course of the exercise. Feasibility studies of this nature require intensive investigation, and such complex project studies are seldom completed in less than 18 months,” he estimates. “This would take us well into 2009.”
“Cost of the smelter will be calculated accurately as part of the feasibility study. We expect it to be in the region of US$3 billion (R20 billion), but that is in today’s dollar terms, and it is sure to escalate in future,” Mkhwanazi points out. He would not comment on financing arrangements, saying that these decisions would be made once the viability of the project had been confirmed.
FIRST ALUMINIUM BY 2014
As far as the time factor is concerned, this is obviously dependent on the findings of the feasibility studies, but – he predicts: “A start can be expected in around four to five years’ time, and first metal production cannot be expected before 2014 or 2015.”
The agreement was signed in Kinshasa by DRC minister of energy Salomon Banamuhere, Mkhwanazi and the chairman of BHP Billiton in Southern Africa, Vincent Maphai.
“Of course, the development of the Inga 3 hydropower project and the aluminium smelter project will be demanding,” Maphai admits, “however we are fully prepared to work with the government of the DRC to ensure the success of these projects.”
As has been demonstrated with other similar developments – such as BHP Billiton’s Mozal aluminium smelter in Mozambique – the smelter development in the DRC would bring enormous benefits to the local economy, and it can be expected to contribute significantly towards that country’s gross domestic product. BHP Billiton says it remains committed to its core value of zero harm and to sustainable development, as demonstrated in Mozambique and the other countries in which it operates.
“We want to build the world’s most modern aluminium smelter in the DRC, and to operate it according to international best practice,” Dr. Maphai emphasises. “We commit to being good corporate citizens of your country, and to working with all of you to grow the DRC and benefit her people. We aim to be a business that creates a positive legacy for your country,” heconcludes, “and we are proud to be part of the DRC’s future.”