Volts from the Volta

The steamy banks of Ghana's crocodile-infested Volta River seemed an unlikely place to make a major test of Western investment faith and prospects in the new, fiercely nationalist countries of Africa, but so it was. Meeting in Accra, President Nkrumah's Ghana government and a consortium of aluminum companies headed by U.S. Aluminum Maker Edgar Kaiser signed a historic agreement. Under the deal, Kaiser will raise $178 million to build an aluminum smelter. Ghana will supply the power by building a $168 million dam on the Volta River. "It could mean to Ghana what TVA and the railroads meant to the U.S., coming all at once," said one Washington official last week over the news. Then he added reflectively: "The problem is making sure the Ghanaians mean all they're saying."

For 3 1/2-year-old Ghana, whose economy is almost wholly agricultural, the Volta dam and smelter combination could well provide the springboard to a miniature industrial revolution. Ghana's chief resources are the tremendous hydroelectric power potential of the Volta River and a large supply of bauxite ore from which aluminum can be extracted if large amounts of electricity are available. When Ghana was still a British colony and called the Gold Coast, British engineers drew up a plan for a dam and smelter works costing $900 million. It was more than newly independent Ghana could afford. Kaiser drew up his own plan, which boosted power capacity by 40% aluminum capacity by 10%; over the British estimates--and cost only $600 million (TIME. May 4, 1959). Ghana found that more reasonable, set about raising money to build the dam from the U.S., Britain, and the World Bank. It now has promises of $90 million, plus $70 million of its own money, will receive bids for the dam contract next month.

But the big question is how Kaiser's consortium, the Volta Aluminium Co. Ltd. (VALCO),* will fare in raising $178 million in private money to build the smelter. Although the Ghana government has given VALCO a written promise that it will not expropriate the Volta plant once it is built and running, President Nkrumah is a volatile nationalist and neutralist dealing with both East and West, and there are segments of his Cabinet that favor outright nationalization of all Ghanaian private enterprises. As a precaution for its U.S. and foreign private investors, VALCO will take out International Cooperation Administration insurance against nationalization hazards. But in the long run, it is on the maturity of the Ghanaians that Edgar Kaiser is gambling.

*VALCO's five participating companies, who will each buy a share of the Volta plant's output: Kaiser Aluminum, the Aluminum Co. of America, Reynolds Metals Co., Olin Mathieson Chemical Corp., and Canada's Aluminium Ltd.

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