It seems that Cameroon might at last be able to break the vicious cycle of shortage of power preventing industrial growth and lack of industrial growth discouraging investment in new power plants. Rio Tinto aims to expand its aluminium smelter and this can have far-reaching effects on the economic growth of the country, as Neil Ford explains.
Cameroon has long been recognised as having one of the most diverse economies in Central or West Africa. Agriculture, services and even the relatively modest oil sector all make a large contribution to GDP, while Douala boasts a significant industrial and manufacturing base.
Yet industrial production has long been held back by a lack of electricity supplies, while investment in new power plants has been deterred by the lack of a guaranteed market for its output. Now, however, mining giant Rio Tinto has put together a proposal that could solve both problems at the same time.
The biggest industrial concern in Cameroon at present is the Alucam aluminium smelter at Edea, close to Douala. It was developed by French firm Pechiney, which held a 46.7% stake in the venture until it was taken over by its Canadian competitor Alcan in 2003.
The Canadian firm was bought by Anglo-Australian mining giant Rio Tinto in November last year and the new Rio Tinto Alcan now operates the plant, with the government of Cameroon retaining its own 46.7% share in Alucam.
Alucam is currently supplied by bauxite imported from Guinea but the company's successive operators have all hoped to boost production capacity of 87,000 tonnes a year by developing proven bauxite reserves within Cameroon itself.
The bauxite is processed into alumina, which in turn is used to make aluminium and Cameroon would be able to retain more of the economic benefits of the industry if it was able to host all stages of the production process.
Some reserves have been identified in the west of Cameroon but interest centres on the 900m tonne Minim Martap and 200m tonne Ta Ngaoudal reserves, both in Adamaoua Province.
The Edea smelter consumes about 45% of total power output in Cameroon, so boosting production capacity to 300,000 tonnes a year, as planned by Alcan, would certainly require new generating capacity. The government has tried to attract foreign investment to exploit its scattered gas reserves for use in a gas-to-power project but interest has been limited. The most likely source of new electricity...