Asha Javeed

Sur­al, the Venezue­lan alu­mini­um group, has been lob­by­ing the Gov­ern­ment to fol­low through on Alutech, a com­pa­ny that seeks to pro­duce down­stream alu­mini­um prod­ucts. Alutech is a joint ven­ture project, 60 per cent owned by Sur­al and 40 per cent owned by the Na­tion­al En­er­gy Cor­po­ra­tion (NGC). The project's fate was tied to the Alutrint smelter plant, hav­ing been con­ceived as a down­stream ven­ture. It was en­vi­sioned that Alutrint would pro­vide hot met­al from the smelter for Alutech to make var­ied prod­ucts. Alutech has been in lim­bo since March 2010 when the con­trac­tor, Car­il­lion, sus­pend­ed work be­cause of non-pay­ment by project man­ag­er, e-Teck. E-Teck was charged with con­struct­ing the plant build­ing and of­fice-a $125 mil­lion con­tract was award­ed -with the agree­ment to lease back to Alutech. For now, e-Teck needs to clear a $30 mil­lion bill from Car­il­lion. The build­ing, which is 40 per cent com­plete, re­mains aban­doned at Tamana. The change of gov­ern­ment-from the PNM to the Peo­ple's Part­ner­ship-with its firm "no smelter" po­si­tion, did not help Alutech's case.

Where­as the PNM Gov­ern­ment was sup­port­ive of Alutech, the Peo­ple's Part­ner­ship Gov­ern­ment has been in­de­ci­sive on the project. Af­ter al­most a year in of­fice, it has not de­cid­ed whether to pur­sue Alutech. Cash-strapped a month ago, Alutech ap­proached Fi­nance Min­is­ter Win­ston Dook­er­an to meet it month­ly $100,000 stor­age fee for equip­ment. The Busi­ness Guardian was told that Dook­er­an has agreed to make pay­ments. Alutech's cus­tom de­signed equip­ment, val­ued at more than US$19 mil­lion, is stored in ware­hous­es in Ari­ma and Char­lieville. It's al­most 90 per cent paid off for. De­spite the Gov­ern­ment's de­ci­sion to scrap the smelter, Alutech's fea­si­bil­i­ty study proves it can op­er­ate with­out a smelter in place. "The raw ma­te­r­i­al, alu­mini­um, will be im­port­ed in­to T&T from Brazil, Cana­da Venezuela or many oth­er sources. There­fore, Alutech can pro­ceed in­de­pen­dent­ly of the Alutrint smelter project," project di­rec­tor Dave Bai­joo told the Busi­ness Guardian.

Bai­joo's hop­ing to breathe new life in­to the project which has lan­guished at the Tamana In­tech Park.

Af­ter four years on the project, Bai­joo rea­sons that Alutech is the mod­el com­pa­ny in the Gov­ern­ment's di­ver­si­fi­ca­tion thrust. Alutech, he ex­plained, would pro­vide prod­ucts for the lo­cal mar­ket and ex­port, if nec­es­sary. Fur­ther, with a pro­duc­tion start-up of 10,000 rims a month, Alutech can ex­pand to pro­duce ca­bles and rods. Bai­joo point­ed out that Sur­al has made sev­er­al over­tures to the Gov­ern­ment: meet­ing with var­i­ous arms of the Gov­ern­ment, of­fer­ing to buy out the Gov­ern­ment's mi­nor­i­ty in­ter­est and even of­fer­ing to in­crease the Gov­ern­ment share­hold­ing on the project to 49 per cent. Sur­al is will­ing to ful­ly fund the bal­ance of equip­ment pur­chas­es, es­ti­mat­ed at US$9 mil­lion, pro­vid­ed the Gov­ern­ment com­mits to fin­ish con­struc­tion of the tech cen­tre and in­stalls util­i­ty ser­vices, such as gas, elec­tric­i­ty and wa­ter at Tamana Park. "Every­thing's on the ta­ble right now," said Bai­joo, "It's tak­ing a while to get things done."

Big bills

Alutech start­ed off as a $250 mil­lion in­vest­ment.

Thus far, the T&T Gov­ern­ment has spent:

1. US$17.2 mil­lion: rep­re­sent­ing eq­ui­ty in­jec­tions in Alutech.

2. $30 mil­lion: rep­re­sent­ing ex­pen­di­ture to date by e-Teck on the build­ing at Tamana.

Sur­al has spent

1. US$15 mil­lion: rep­re­sent­ing re­search and de­vel­op­ment ex­pen­di­ture by Sur­al pri­or to ex­e­cu­tion of the joint ven­ture agree­ment.

2. US$1.8 mil­lion: rep­re­sent­ing eq­ui­ty in­jec­tions af­ter ex­e­cu­tion of the joint ven­ture agree­ment.

And, while there was an un­struc­tured plan for Alutech, the com­pa­ny now has a se­ri­ous pro­pos­al on its hands.

Alutech's busi­ness plan

1. Alutech will de­vel­op, pro­duce and mar­ket high tech, high val­ue-added alu­mini­um down­stream prod­ucts pri­mar­i­ly for the au­to­mo­tive in­dus­try.

2. The com­mer­cial­i­sa­tion of Sur­al's pro­pri­etary SANGS tech­nol­o­gy. The ma­jor ad­van­tages of the SANGS tech­nol­o­gy is the short­er man­u­fac­tur­ing pe­ri­od and less waste met­al as com­pared to con­ven­tion­al hot met­al cast­ing.

A Cab­i­net note on Ju­ly 16, 2010, con­sid­ered the eco­nom­ics of the Alutrint smelter plant in La Brea and the down­stream Alutech project. While that note re­vealed that Alutrint would have been prof­itable if the Gov­ern­ment had pur­sued it, the note al­so point­ed out that Alutech was vi­able ven­ture with­out the smelter.

"Alutech's eco­nom­ic mod­el sug­gests the project could still be vi­able us­ing im­port­ed in­gots, al­beit at low­er lev­els of prof­itabil­i­ty, in the ab­sence of hot met­al," the note stat­ed. "Ad­di­tion­al­ly, once the com­mer­cial­i­sa­tion process was suc­cess­ful, Alutech had a li­cence for pro­duc­tion in the Amer­i­c­as and Asia," it said. The Gov­ern­ment's ex­it cost for Alutrint is about $291 mil­lion.

ABOUT SUR­AL

Sur­al was found­ed in 1975. It is head­quar­tered in Cara­cas, Venezuela. Its chair­man and ma­jor­i­ty stock­hold­er is Dr Al­fre­do Riv­iere. Sur­al is a world leader for alu­minum down­stream tech­nol­o­gy and prod­ucts with pro­duc­tion fa­cil­i­ties in Venezuela, Italy and Cana­da. Sur­al de­vel­oped the SNAGS Process, which is a rev­o­lu­tion­ary process for the pro­duc­tion of alu­minum au­to­mo­tive parts. Sur­al has more than 34 years ex­pe­ri­ence in pro­duc­ing, sell­ing and dis­tri­b­u­tion of alu­minum rods and elec­tri­cal ca­bles and more than 30 years ex­pe­ri­ence in pro­duc­ing, sell­ing and dis­tri­b­u­tion of alu­minum car wheels. Sales by the Sur­al Group ex­ceed US$500 mil­lion a year.