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Votorantim: Cost Of Power In Brazil Hurting Aluminum Projects
Aug 9, 2010 09:46CST
Source:SMM

RIO DE JANEIRO, Aug. 9 -- Brazil's sprawling industrial and mining conglomerate Votorantim Group is diverting new investments in Brazil away from primary aluminum projects due to the country's prohibitively high electric power costs, a top executive said Friday.

"Energy costs in Brazil are inhibiting investments, particularly in energy-intensive sectors like primary aluminum," Raul Calfat, managing director of the privately held group's industrial unit, Votorantim Industrial, said at an investment seminar in Rio de Janeiro.

"We're directing investments to other sectors like cement and to those that generate their own energy like pulp and paper," Calfat said.

In addition, metalworking and long steel products are more attractive areas than primary aluminum for new group investments, Calfat added.

Votorantim owns Brazil's biggest primary aluminum smelter, the Companhia Brasileira do Aluminio works in Sao Paulo state with an annual capacity of 500,000 metric tons. The group recently announced plans to set up a new aluminum plant in Trinidad and Tobago, where electricity costs $35 per megawatt hour, compared with $57 in Brazil, Calfat said.

"We're discussing new expansions of our primary aluminum capacity, carrying out feasibility studies and seeking alternatives," Calfat said.

Votorantim continues to invest in expanding its extrusion facilities to process aluminum in Brazil, he said.

The heavy taxes and charges on electric power in Brazil, which can inflate electrical energy costs to as much as $155 per megawatt hour from the base price of $57 per Mwh, "serve as an alert" to companies whose cost structures may be harmed by the uncompetitive high prices, he said.

Brazil's electrical energy costs are significantly higher than in all other primary aluminum and metals-producing countries, according to a study presented by Calfat.

 

 
 

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