Majority stake sale is not the only path to modernise VALCO, industry analysts argue

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Industry analysts have argued against allowing a strategic investor to acquire up to a 70 per cent stake in the Volta Aluminium Company (VALCO), stating that Ghana's estimated USD 48 billion bauxite reserves could provide an alternative route to financing the state-owned aluminium producer's modernisation.

They have argued that Ghana should explore financing options backed by its mineral resources rather than relinquishing majority ownership of VALCO in exchange for a proposed USD 600 million investment.

"We are sitting on bauxite worth USD 48 billion, yet we claim we cannot raise USD 600 million. Isn't that strange?" they said.

According to the analysts, the country's aluminium industry has the potential to become a cornerstone of Ghana's industrialisation strategy, making it important to consider funding models that preserve greater state ownership.

"This industry can become the backbone of our industrialisation project. Why surrender 70 per cent of it for USD 600 million? It makes no sense," they added. 

Experts have also mentioned that requiring funds does not necessarily require the sale of a controlling stake, suggesting that commercial financing could provide an alternative means of supporting VALCO's expansion.

"On the strength of the enterprise, you can approach banks, secure USD 600 million, retrofit and expand operations, and repay as a loan. Financial institutions don't need to own shares to provide funding," they stated.

He also added that the discussion surrounding VALCO should be viewed from an economic perspective rather than an ideological one.

"There is no ideological debate; it is about common sense. Simple common sense," they said.

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Why is the government pursuing investment to modernise VALCO?

These comments from the industry experts follow the Ghanaian government's move to seek private investment to modernise and expand VALCO through a strategic equity capitalisation programme.

Speaking on TV3's New Day, Ghana Integrated Aluminium Development Corporation (GIADEC) Chief Executive Officer Reindorf Twumasi Ankrah said several interested investors had submitted proposals that included acquiring up to a 70 per cent stake in the company. However, he stressed that negotiations have not yet begun and that no ownership structure has been finalized. 

"All the proposals were drawn in accordance with that, and they were all asking for 70 per cent. But the actual terms have not yet been decided. We are yet to negotiate and finalise on anything," Ankrah said. 

He explained that the proposals were prepared in line with the GIADEC Act, which requires GIADEC, together with a Ghanaian individual or entity, to retain at least a 30 per cent interest in projects within the country's integrated aluminium industry.

According to Ankrah, a strategic committee has already completed its evaluation of proposals submitted for VALCO's retooling and modernisation, with the next phase expected to focus on negotiations with a preferred investor.

The proposed investment is intended to rehabilitate the existing smelter while increasing annual production capacity from 200,000 tonnes to 300,000 tonnes through the addition of a new 100,000-tonne production line, as part of broader efforts to strengthen Ghana's aluminium value chain.

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