An ongoing review of Pechiney assets has prompted Montreal-based aluminum giant Alcan (AL-T) to book an impairment charge totalling 45 million euros for costs incurred up to the end of September 2003 at the Coega smelter project in South Africa.
Alcan says that costs incurred subsequent to that date will be charged to income, but the charges will not affect its earnings, as they will be recorded as a charge in Pechiney’s 2003 financial statements.
Pechiney had committed to take a 49% stake in the smelter, 20 km from Port Elizabeth, before Alcan launched its bid for the French rival last year.
Pechiney had expected the proposed 460 000-tonne-per-year smelter to cast its first metal in 2006, with full capacity being reached a year later.
The balance of the project is shared by the state-owned power utility Eskom and financier Industrial Development Corp., both with 12.5%; the remainder is divided between a black economic empowerment partner and the Steinmeitz Group.
Alcan says its ongoing review will also target its interest in Aluminium de Grce, where it has concerns regarding the supply of electrical power to the AdG smelter.AdG recently said it was considering its options for electricity supply to its St. Nicholas aluminium smelter for 2006 and beyond. The company’s current pact with DEH, Greece’s public power company expires on March 31, 2006.
“No decision has been made on any of Pechiney’s current investments,” Alcan said. “The company will announce in due course any decision taken in relation to this review.”
Following a sharp drop immediately following the news shares in Alcan rebounded to $59.10 (up 36 from their previous close) in afternoon trading in Toronto on Jan. 19.