SA expects Alcan smelter decision soon

South Africa said on Wednesday Canada's Alcan intends to invest in a long-delayed $2,5-billion aluminium smelter and was expected to sign an energy deal with state-owned power utility Eskom "in the near future".

South Africa said last month Alcan, which has repeatedly put off a final decision to build the 600 000 tonne smelter, was locked in "very intense negotiations" about the electricity supply for the project. It said at the time it expected a decision by the end of September.

Russian officials said in September the country's biggest aluminium firm RUSAL may agree to build the smelter, raising doubt over whether Alcan would press ahead with the plan.

But the National Treasury said on Wednesday it expected Alcan to sign an agreement with electricity supplier Eskom soon. South African power shortages triggered a wave of blackouts last year, sparking concern about supply.

"Alcan intends to invest in the $2,5-billion aluminium smelter at Coega, and is expected to sign an energy deal with Eskom in the near future," the National Treasury said in its Medium Term Budget Policy Statement.

Alcan, the world's second biggest aluminium company, inherited the plan for the smelter, near the southeastern port city of Port Elizabeth, when it took over smaller French rival Pechiney in 2003.