VALCO’s current operating position is unsustainable – Lands Minister backs calls for strategic investor

The government is contemplating enlisting the help of a strategic investor to revive the Volta Aluminium Company (VALCO) and restore it to full-scale production. Minister for Lands and Natural Resources, Emmanuel Armah-Kofi Buah, emphasized that VALCO's current operating position is unsustainable, warning that the company is loss-making and operating far below its full capacity.

VALCO, which possesses significant industrial potential, requires fresh investment to rehabilitate its infrastructure and support Ghana's goal of cultivating an integrated aluminium industry. The Minister underscored the urgency of the situation, stating, "It is bleeding, it is bleeding." The government's limited public resources prevent it from indefinitely subsidizing an underperforming state-owned enterprise.

Instead, prioritizing VALCO's productivity and commercial viability over maintaining its current ownership structure is essential. The broader strategy involves leveraging Ghana's bauxite resources to create a more valuable minerals sector. VALCO is central to this plan, as integrating bauxite mining, processing, and downstream manufacturing helps retain more value from the aluminium industry within the country.

Restoring VALCO's production capacity could yield benefits beyond the company itself, including job creation, industrial development, and expansion of Ghana's aluminium value chain. However, a strategic investor arrangement may prompt questions about the extent of government involvement, investment amounts, rehabilitation of potlines, future capacity, employment, ownership structure, and power costs.

The government will need to ensure any partnership aligns with its long-term goal of developing an integrated aluminium industry, not merely addressing VALCO's immediate financial and operational challenges. Meanwhile, VALCO's Board Chair has proposed alternative solutions to keep the company afloat, disputing claims that the company has suffered significant losses.

The differing perspectives set the stage for further discussion on the future of the state-owned smelter and whether VALCO should pursue a strategic investment or alternative measures to revive its operations.