Grahamstown - A US$1.6 billion investment by French aluminium giant Pechiney involving the construction of a sophisticated smelter at Coega, near Port Elizabeth, could be finalised within a month.

Coega Development Corporation (CDC) CEO Pepi Silinga said in Grahamstown this week that Pechiney had eight international legal teams working on the agreement and could sign on the dotted line within a month.

If the deal goes through, Pechiney will be the first major investor in the project.

Pechiney executive chairman Jean-Pierre Rodier said earlier this month that Coega was "by far" his company's preferred option.

The company indicated that it would look to South African parastatals such as the Industrial Development Corporation (IDC) and Eskom, as well as the private sector to take up 50% of the investment.

Silinga said there had also been renewed interest from other possible investors, including metals group Billiton, which three years ago pulled out of a proposed zinc refinery project at Coega.

Silinga dismissed concerns that government was investing heavily in infrastructure for a project that was not sustainable in the long run.

"We have to provide the infrastructure. Business would not invest otherwise."

Despite the heavy public investment, the project was looking to break even in seven to eight years.

He said that while World Bank research showed that the internal rate of return on public infrastructure seldom exceeded 4%, the CDC was looking at an internal rate of return of 11% or 12%.

According to a study done, Pechinay's investment would result in linked investment of R8.7 billion, a R6 billion contribution to GDP and the creation of roughly 20 000 jobs, Silanga said.

With acknowledgements to Sapa and www.news24.co.za