Alcan Inc said the expected start-up date for the expansion of its Gove alumina refinery in Australia has been delayed to the second quarter of 2007, and revised its cost estimates to 2.3 bln usd.
The Canadian aluminium producer blamed the cost overruns on additional tie-in integration work, the appreciation of the Australian dollar, and severe weather conditions that resulted in late delivery of several large pre-assembled modules (PAMs), as well as challenging Australian market conditions.
The company announced in October last year that it expected the cost of the expansion project to rise to between 1.8 and 1.88 bln usd from the original 1.5 bln usd estimated. Although at the time the company said it was still on target for a first-quarter start-up.
'Alcan 's PAM strategy partially mitigated the tight Australian market conditions but was unable to offset all cost and scheduling challenges,' Jacynthe Cote, Alcan's president and chief executive said.
Expanded production ramp-up will start progressively during the second quarter of 2007 and continue through the first quarter of 2008, at which time the refinery is expected to reach its nameplate capacity.
Alcan added that saleable production in 2007 is forecast to be between 2.3 and 2.4 mln tonnes, representing an increase of about 500,000-600,000 tonnes compared to 2006's level of 1.8 mln tonnes.
The project was approved in September 2004 and is approximately 95 percent physically complete, with estimated capital spending of US$400 million for 2007. It will increase the refinery's capacity to 3.8 million tonnes per year and is expected to bring Alcan's internal alumina production capacity into balance with current requirements, and reduce cash costs at Gove by US$30 per tonne.
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