Alcan's Kitimat Plans Rile Locals

Thursday, August 10, 2006 04:01 AM

The three political figures from the Kitimat area, Kitimat Mayor R Wozney, MLA Robin Austin and MP Nathan Cullen are calling on the provincial government to enforce the terms of the original agreement with Alcan Aluminum.

The three say the matter of Alcan cutting back jobs at the smelter and the selling of power to the Canadian and US grid has resulted in the reduction of 300 to 400 jobs already.

The group says when a new plant is announced, (the announcement is expected this weekend) the number of jobs lost will climb to 1000.

Here is the copy of the news release issued by the three:

Alcan’s Scaled Back Smelter Plan Alarms Community Leaders

Scaled back smelter will cut 700 direct jobs and damage regional economy

Community leaders from all levels of government expressed concern over Alcan’s announcement that it is scaling back its smelter investment plans.

At a June 29 meeting of the Terrace and District Chamber of Commerce, Alcan Senior official Paul Henning announced it will build a much smaller smelter than Alcan planned in 2001 — a smelter that Alcan agreed to build in return for gaining its permanent water license for the Nechako River. The scaled back smelter would employ about 700 fewer workers and use considerably less electricity than Alcan has available from its use of the Nechako River and other power arrangements. Henning admits, “We’re reducing the workforce. But we’re doing it in a way that is gentle, I guess — we’re not laying people off.”

Alcan’s planned 2001 smelter would have produced 550,000 metric tonnes of aluminum annually and employed 1700 workers. Alcan’s current plan will only produce 400,000 tonnes and will cut the workforce to 1000. Kitimat Mayor Richard Wozney is wondering why: “This is a very profitable industry. At a time when world-wide demand and prices for aluminum are at an all-time high, why is Alcan downsizing its plans?” Wozney goes on to say, “The only answer is they want to sell-off the electricity. Each megawatt of electricity diverted from the aluminum industry costs BC about 10 jobs. There is nothing “gentle” about removing 700 direct jobs from a small town’s economy.”

Electricity is the single largest cost in the production of aluminum, at over one third the total. Kemano produces the cheapest electricity in the world giving Kitimat Works a decisive competitive advantage. In recent years, Alcan has closed aluminum production to increase its power sales. It now sells about one third of Kemano’s electricity for windfall profits. Over 350 direct jobs have already been lost. The new smelter would entrench a significant block of electricity for power sales.

Provincial MLA Robin Austin says it is time for the government to start enforcing the terms of the agreement with Alcan. “The current government has let Alcan get away with the sell-off of this public resource,” says Austin. “This river belongs to the people of BC. The benefits of damming it should go to British Columbians.” Austin says if the government enforced the agreement, Alcan would use all the electricity for smelting and Alcan’s previously planned smelter would return prosperity to the area.

The Federal MP for the area, Nathan Cullen says, “I believe that it is in the best interests of Alcan and the community of Kitimat to finally resolve the issue of power sales. The best way forward is for Alcan to use the power available for the production of aluminium."

Mayor Wozney says the issue is simple: “Alcan should use the river for smelting or to power industrial development in the area. Otherwise there is little benefit to BC to give away this incredible public resource.”

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The City of Kitimat is taking Alcan to Court and is hoping to have the matter heard this October. Kitimat has suffered through bad times since the company scaled back aluminum production and ramped up its power sales.

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Posted on Thursday, August 10, 2006 04:01 AM in News by 250 News

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Comments

Posted by: YamaDooPolCat on August 10 2006 6:12 AM

Kitamat had better hope Alcan isn't taken over by BC Hydro. BC Hydro doesn't produce aluminum, just cheap power for Vancouver.

Posted by: diplomat on August 10 2006 7:45 AM

News item in www.northernsentinel.com states:

"The modernized smelter would produce 400,000 tonnes of aluminum a year, using state-of-the-art Pechiney technology.

Currently the plant capacity is 272,000 tonnes - it is producing about 250,000 tonnes.

The total cost of the modernization is expected to be around US$2 billion."

Can Alcan be FORCED to produce 550,000 tonnes per year?

That remains to be seen.

Posted by: Chadermando on August 11 2006 5:04 AM

If BC Hydro owned the dam than the people of BC would have direct control ofver the river and its eco-system as well as recieve all windfall profits from export sales to the Americans.

Currently Alcan is motivated to violate the terms of their agreement and sell excess power to the Americans for windfall profits that leave Canada and go to their shareholders in Switzerland.

Fundimentally this will come down to NAFTA rules unless the government themselves interpret the Alcan agreement to mean that all excess power over aluminum production is to be used solely in the Northwest for subsidized economic development via cheep power with all power required to be sold in the Northwest.

The key here is that this needs to be established that this agreement was a legally binding agreement that is grandfathered to NAFTA. Otherwise NAFTA rules say we can not sell energy to the American market for more than we sell it to the Canadian market and therefore undermining any profit sharing by the people of BC through subsidized rates.

I find it interesting thtat the Boeing 787 program is now in jeopordy because of the Bush tariffs on Russian arms exporter Rosoboronexport over exports of aircraft to Iran. Rosoboronexport supplies Boeing with

Posted by: Chadermando on August 11 2006 5:10 AM

Notice the talk of a lack of secure aluminum supplies for the Beoing 787 program and its load bearing structural material supply. Maybe a solution to the problem win-win...

---------------------------------------

"By introducing these uncalled-for sanctions, the State Department is creating other problems for American firms. One of them is related to titanium supplies to Boeing from the Verkhnyaya Salda aluminum plant. After all, 30-40% of the load-carrying structure in every Boeing airplane is made of metal supplied by Russia's VSMPO Aviasma. The multibillion-dollar contract between Boeing and the Urals-based company is to last for several years. There were even plans for a joint venture. However, the controlling stake in VSMPO Aviasma will be sold to Rosoboronexport in the near future. The State Department must be aware of that. The forthcoming deal has been widely covered by both Russian and American mass media. Now Boeing will have to look for other titanium suppliers, but there are not many of them on the global market. Moreover, the quality of Verkhnyaya Salda titanium is significantly higher than that of metal offered by other countries.

I will not discuss who will lose more from Washington's short-sighted trade policy, as this is obvious. It is equally obvious that Boeing can no longer hope to sell its long-distance airliners to Russia. Aeroflot has been drafting a contract to buy 22 Boeing 787 planes for $3 billion, but now, apparently, it will have to turn to its European partner, Airbus, whose A350 wide-bodied planes are in no way inferior to their American rival and are even superior in capacity and comfort. "

Posted by: diplomat on August 13 2006 5:50 PM

A visit to the website listed below will yield
a large number of PDF files which show a history of Alcan's relationship with the BC Government of the day and BC Hydro.

Alcan has basically never used 100% of the power produced in Kemano only for smelting aluminum. For many decades Kitimat townsite, Terrace and Prince Rupert as well as Stewart have been supplied with electricity from Kemano, i.e. before the grid of the whole province was tied into Alcan's generating capacity or vice versa.

http://www.city.kitimat.bc.ca/index.php/CityNews/PowerSales

I don't know how NAFTA would enter into the story and affect the original agreement which stems from almost 60 years ago.

Certain committments were made by Alcan in a 1997 agreement with the Province but they appear to apply only in case Alcan builds a new smelter. Alcan's present 2006 proposal is only for a rebuilding of the old smelter.