BHP Billiton has shelved plans to build an aluminum smelter that would have underpinned a hydropower plant known as Inga III in the Democratic Republic of Congo.

Mr Ruban Yogarajah London based BHP spokesman said that “Following a review of the project’s economics, BHP Billiton has decided not to continue with its smelter project in the DRC, which was still at a very early stage.”

The Inga plant was to provide about 5000 MW of energy at an estimated cost of USD 5.2 billion. Between 3500 MW and 4200 MW would have been used for Congo’s internal demand, prioritizing BHP’s proposed aluminum smelter, according to the Energy Ministry.

Aluminum producers such as BHP and Rio Tinto, the world’s third largest mining company have reined in projects as the price of the metal has slumped. Aluminum used in cars, packaging and houses has declined nearly 21% since May 3, cutting income for producers including United Company Rusal and Alcoa.

BHP and ArcelorMittal, the world’s biggest steelmaker, scrapped talks on a proposed iron ore mine joint venture concerning a deposit of the steelmaking raw material straddling the border of Liberia and Guinea in September 2010. BHP also plans to halt exploration for bauxite, an ore required for aluminum production at its Boffa Santou Houda site in Guinea.

Mr Marius Kloppers CEO of BHP said that “Aluminum has had a structural profitability downturn, as opposed to a cyclical profitability downturn. That probably makes us a little bit more comfortable in saying more definitely that we at this stage certainly, do not want to allocate more capital to this sector. The aluminum unit has a very strong mandate: no new CAPEX minimize spend, keep the assets in a net cash generating position.”

(Sourced from www.smh.com.au0