To buy or not to buy: a lively debate has erupted following the announcement by Kaiser international to sell its 90% shares in the Tema-based Volta Aluminium Company (VALCO) to the Ghana government. To buy or not to buy is now the question facing the government. George Frank Asmah reports.

Author:Asmah, George Frank
Position:Ghana
 
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Suddenly everybody is talking about VALCO. The government and Kaiser signed a memorandum of understanding on 19 December last year for the transfer of the majority shares. The American multinational, Alcoa, which owns the remaining 10%, has the right of first refusal, subject to VALCO's corporate governance requirements.

Seemingly over-excited, the Ghanaian government has already engaged a team of advisors to enable it to take the best decision in the interest of the country. But President John Agyekum Kufuor has already said that the execution of "Kaiser's offer would mark Ghana's industrial re-birth and give the country the opportunity to exploit its large bauxite deposits.

According to Kaiser, the 90% shares is estimated at about $100m. "Kaiser is pleased that the transaction provides the opportunity for VALCO's majority ownership and economic potential to be transferred to the people of Ghana," said Jack A. Hockema, Kaiser's president and CEO.

But Yaw Osafo-Maafo, Ghana's finance minister, told New African (see NA, March) that the government was unlikely to run VALCO as a state-owned enterprise if it did acquire it, "It will certainly offload it to the private sector or bring on board a private operator. The government will not like to be seen operating VALCO. That is not how our government thinks. We are private sector oriented."

Kaiser and Ghana have been unequal friends and business partners for about 40 years. Ghana's industrialisation largely began with Kaiser's commitment to the building of the Akosombo Dam and power facility.

Industry and finance watchers are, however, optimistic that the transfer of VALCO's majority ownership could provide Ghana with a great opportunity to establish a comprehensive aluminium-based industry which could propel the government's agenda of making the country a middle-income industrial nation by the year 2020. Currently, Ghana exports bauxite from Awaso in its raw form whilst large deposits of the ore remain untapped at Nyinahin in the Ashanti Region and Kyebi in the Eastern Region.

Many questions have been asked about why Kaiser wants to sell its shares, but the most pertinent has been: "Why does Kaiser want to offload its majority ownership of a 'profitable' company?" Production at VALCO has been suspended for about a year now. The immediate reason was that the level of the water in the Akosombo Dam had gone so low that to allow VALCO to continue to operate would mean depriving other electricity...

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