Sep 26 2006
Alcan announced that it expects a total cost increase of approximately 20-25 percent against the original US$1.5 billion for the expansion and upgrade of its Gove alumina refinery in the Northern Territory of Australia. Start-up is expected in the first quarter of 2007 consistent with the original 27-month schedule.
“The overall financial return on the Gove expansion and upgrade remain highly attractive,” said Jacynthe Côté, President and Chief Executive Officer, Alcan Bauxite and Alumina. “The project has been impacted by extremely tight construction market conditions in Australia, as well as additional integration work necessary as the expansion neared completion,” Côté continued. “These impacts have been more than offset by a favourable shift in aluminum markets since the project began.”
The expansion and existing plant upgrade project was approved in September 2004 and is approximately 90 percent complete. It will increase the refinery's capacity from approximately 2.0 million to 3.8 million tonnes per year; bring Alcan’s internal alumina production capacity into balance; and reduce cash costs by approximately US$30 per tonne.
Early in the project, and due to tight Australian construction market conditions*, Alcan implemented an innovative pre-assembled module (PAM) strategy, which entailed the majority of plant components being fabricated in low-cost countries and shipped to Gove ready for installation.
“The factors affecting the Gove project are similar to those on other major construction projects in Australia,” continued Côté. “Alcan’s PAM strategy partially mitigated the high Australian costs, but was unable to fully offset all increases.”