Alcoa bid for Alcan raises concern about South African Smelter

Alcoa Inc`s planned takeover of Alcan inc has raised concern over the Canadian aluminium producer`s proposed US$2.7 billion smelter in South Africa.

"It creates some risk around the project," Tony Twine, an economist at Johannesburg-based Econometrix Inc said on Wednesday in an interview from the city.  "If there are new owners, it might alter the balance of perceptions."

The 720,000 t/y project at the deepwater port of Coega on South Africa`s southeast coast was orginally proposed by Pechiney SA in 2001 and inherited by Alcan when it acquired the French company in 2004.

Alcan agreed a 25-year power supply agreement with state-owned Eskom Holdings Ltd on November 24, taking advantage of cheaper electricity prices in the country.

Alcan spokeswoman Anik Michaud and Alcoa spokesman Kevin Lowery weren`t immediately available for comment when called by Bloomberg news.

Alcoa said on May 6 it will offer US$26.9 billion in cash and stock for Montreal-based Alcan to create the world`s biggest aluminium producer.

State-owned Coega Development Corp, which manages the industrial zone that includes the smelter site, and it will monitor the takeover bid with "keen interest". "Talks with Alcan are most definitely continuing," Coega spokeswoman Vuyelwa Qinga said in a statement.

South Africa`s Trade and Industry Department, the state-owned Industrial Development Corp, which plans to take a 15% stake in the smelter, and Eskom weren`t available for comment.