The Volta Aluminium Company (VALCO) was established as a collaborative venture between the Government of Ghana and Kaiser and Reynolds of the United States of America.
VALCO started operations in 1967, with ownership then vested in Kaiser Aluminium and Chemical Corporation (Kaiser) and Reynolds Metals Corporation (Reynolds). Kaiser owned 90% of the shareholdings and the remaining 10% by Reynolds, but Reynolds sold its shares to Aluminium Company of America (Alcoa) before the Company began operations in 1967.
Ghana’s first President, Kwame Nkrumah, identified the Integrated Aluminium Industry (IAI) as the starting point for Ghana’s industrialization agenda. With Ghana already having an operational bauxite mine in Awaso, Nkrumah saw the proposal by Kaiser Aluminium to establish a refinery and the VALCO smelter as a timely and major step towards the realization of an Integrated Aluminium Industry. The establishment of the Volta Aluminium Company was one of the main requirements for the realization of the Volta River Project that established the Akosombo Hydroelectric Dam.
VALCO was built with an installed capacity of 200,000 tonnes of refined aluminium annually. The aluminium smelter was run by private partners and imported alumina from overseas for more than 60 years to feed the plant.
VALCO has gone through turbulent phases, including a series of shutdowns largely due to the lack of investment, repairs, and maintenance. In 2008, the Government of Ghana, under former President John Agyekum Kufuor, acquired Kaiser’s shares in VALCO, making it a wholly Ghanaian-owned Company. The plant has been operating with the same dated technology and obsolete equipment inherited from the previous owners (Kaiser Aluminium and Alcoa). It has one of the highest production costs per tonne of aluminium globally.
The lack of capital injection and modernization of the plant over the years has led to VALCO operating under capacity and recording losses.
President Akufo-Addo, with his vision to industrialize and transform Ghana’s economy, birthed the Ghana Integrated Aluminium Development Corporation (GIADEC) in 2018 with a mandate to develop and promote Ghana’s Integrated Aluminium Industry (IAI).
VALCO in the integrated aluminium industry project
GIADEC is mandated by its enabling Act of 2018 (Act 976) to develop Ghana’s Integrated Aluminium Industry spanning bauxite mining, alumina refining, aluminium smelting and downstream aluminium products manufacturing. In this pursuit, the Government’s 100 per cent ownership of VALCO has been transferred to GIADEC. Also, per the Master Plan of GIADEC, VALCO has been made the anchor of the IAI Project, linking the upstream and downstream sectors of the aluminium industry.
VALCO, being the only existing Smelter in Ghana, is required to expand its production from the current 40,000tpa to 300,000tpa of aluminium, implying that the Company’s production capacity must be increased by 650 per cent. To achieve this target, VALCO requires significant transformation to retrofit its old and obsolete potlines as well as other production facilities, plant and equipment to more modern and efficient technology. The fully retrofitted VALCO Smelter will increase its installed capacity to a fully operational 300,000 tpa.
VALCO’s retrofitting project
The VALCO retrofitting project involves the replacement of the five (5) obsolete P69 Potlines and associated plant and equipment of the Smelter with a modern and more efficient smelting technology. GIADEC and VALCO have assessed the financial needs for the retrofitting project and have estimated it at Six hundred million United States Dollars (USD600,000,000)
The retrofitting will be done in two phases to enable production to continue without supply interruptions to the burgeoning local downstream companies.
Cabinet approval
In June 2022, Cabinet approved Ghana Integrated Aluminium Development Corporation (GIADEC) and the Volta Aluminium Company Limited (VALCO) to identify and engage a 'Strategic Partner' with the financial and relevant capacity to provide the needed investment and technical wherewithal plus strategic international linkages.
The future state of VALCO
The implementation of Project 4 - the modernization and expansion of the VALCO smelter to improve efficiency and increase capacity; is to ensure that VALCO is positioned to sustainably grow and be profitable and contribute towards establishing and realizing the linkages of the upstream and downstream components of the Masterplan for Ghana’s IAI. The modernization and retrofitting of the VALCO smelter will increase the plant’s current production of 50,000 to a new installed capacity of 300,000 tonnes, which will be a major boost to the realization of the plan.
Benefits of a retrofitted and modernized VALCO
The retrofitting is designed to transform VALCO from a loss-making entity into a best-in-class profit-making and shareholder value-maximizing entity, promoting the Government’s industrialization agenda and contributing substantially to the socio-economic development and growth of the Ghanaian economy.
VALCOs smelting operations will allow significant value addition to Ghana’s bauxite resources. It is estimated that on an annual basis, 1.5mt of bauxite valued at approximately USD75million can generate USD180million after refinery and USD600million after smelting.
Smelting is the key linkage between the upstream and downstream sectors of the aluminium industry, where a tonne of aluminium can generate USD6,000 – three times the value after smelting (USD2,000 per tonne).
VALCO operating at 40% capacity, currently employs about 750 workers. After retrofitting and modernizing the plant to increase production from the current 50,000 to 300,000 tonnes of aluminium per annum, the smelter will create high-paying direct plus indirect jobs in the thousands for Ghanaians.
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