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Spin on Deal Will Leave You Dizzy: One Man's Opinion

By Ben Meisner

Tuesday, August 15, 2006 03:57 AM

     

Just what is the deal with the new smelter being built by Alcan in Kitimat?

The facility will operate with 850 fewer jobs than when the old facility was working at full capacity.

The company (according to its releases) now accounts for $217 million dollars in the provincial manufacturing economy. Take away $60 million of that which will be the reduction of a total of 850 jobs and you have lost 30% of the total manufacturing economy.

Is there any wonder why the city of Kitimat is shrinking?

The agreement signed in 1950 (which is the template for any new agreement ever signed by Alcan) says that the extra power can be used for the development of industry "within the vicinity of the works." That is what the District of Kitimat will use as the basis of its challenge in the courts come this fall.  That is of course unless the province has inked a new agreement preventing that community from arguing that excess power was to be used for development of the "Pacific Northwest" an argument long held in this province.

According to Premier Campbell , when the new smelter is built, Alcan will be able to sell to the BC Hydro grid enough power to look after 225,000 homes. That translates into about $154 million in power sales annually by Alcan to the BC Hydro grid.  Because of the amount of water rates they pay the province, Alcan will be able to make 1700 % on every mega watt they sell.

That means that the new smelter will be paid off in about 13 years ($1.8 billion US) without so much as one dime coming from the smelters operation. In the meantime, BC Hydro, owned by the people, will earn $217 million in 2006, serving the entire province with electricity while a single company, Alcan will earn $154 million for its sales to that grid.

Is there any wonder that Alcan has announced a new plant?  A new plant along with the cold water release facility being planned by the province (with the province kicking in $50 million for the construction)  will free up yet more water which means more money for the company.


Why in the world the contract signed in 1997 is being revised also leaves one wondering.

That contract between BC Hydro and Alcan was for a rate of about $28.93 back in 1994, adding on the inflation clause it would be no where near the $75 dollars that Alcan will now receive . Why would the province negotiate a new deal that costs the people of the province more, leaves ore scratching.

BC Hydro will also hand over $45 million to Alcan in 2007 and a further $66 million in 2011. Now under the deal that was cobbled together by then Premier Glen Clark, the province would supply the company any power lost for their expansion in Aluminum production, but this new plant will use less electricity and so why in the world are we in the province on the hook for a further $111 million?  

I had a call in to the President of BC Hydro to explain this deal, but no call back. 

In the end it is the people of the province who will pay for lost jobs, lost income in this province and increased profits for Alcan at the expense of the water rentals they receive. 

All these concessions for what?

I’m Meisner and that is one man’s opinion.  
 


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Comments

It's all about big buisness and profits, fills Campbell's and cronie's pockets and dumps on the average working person and taxpayers of B.C.
Socialist governments often venture into make-work projects... short-term gain, primarily optics, for what's simply bad business. Business decisions should rarely be made on how many people are employed, but on how viable the business can be made.

I believe Ben's posting is intended to inflame the notion that because efficiencies are achieved or that revenues are now being derived from new sources, resale of hydro electricity, this should automatically be transferred into new jobs Kitimat. Sorry, that just bad math and bad business. On the other hand, I guess those who have problems with companies making money would simply like to see the government cancel Alcan's license and shut them down then, build another hydro project to replace Alcan's capabilities... now that would create jobs, eh?
This just shows, yet again, where the Campell government's priorities lie. To heck with the people and the taxpayers. To heck with previously signed agreements. Do everything possible for your business, neoliberal cronies and when you leave public office you get financial rewards like no other. Pick up your finders fee for selling B.C.Rail and allowing Alcan to fleece the taxpayer and off to Hawaii where you can't hear the cries of those who suddenly realise that they have been sold into corporate slavery. It may be good business but who says good business is good for society? The only one's saying this are big business and their governmental puppets. Listen to the real experts who tell the truth without spin and you can learn just how damaging the BC Lieberals have been to the people of British Columbia. Please folks wake up and defend ourselves!!!!
Yes-one can disclaim governments vehemently, and do so with good intentions.
But to no avail.
As I recall, the best government this province ever experienced was the Social Credit-as the entire province was on a gigantic roll.
BUT-we had the criers then also-just like REALIST, who I feel must be a staunch N D P'er?
The N D P damaged this province like no other, but I must admit a perk being a porch does not say much for a premier. Other matters pertaining to business were questionable, and yes-REALIST-they pertained to businesses that would produce great returns.
Businesses have to make money-and you realize a business person must have money to create a business. It takes a great deal of work and dedication to make a business a success, as not everyone simply resorts to bankruptcy if the going gets a bit rough.
You seem to be very disillusioned, and proceed on a path of contempt for governments,and business, and concentrate on how hard done by you appear to be, but you wish to lay blame everywhere but on yourself.
Such negativity must surely cloud your thinking.
At times, initiating progress must appear an act of cruelty to some, but watch and see-life will go on, and perhaps the benefits will be worth the pain.
Maybe B C is just not the right province for you?
Perhaps another one would offer you more benefits and less stress.
In the meantime-maybe you just better "get a life."
Yes, REALIST, we really should go back to the NDP decade's priorities. The province was run into the ground while all the while the NDP doubled the debt of the province from 17 billion to 34 billion dollars! Prince George lost approximately 18,000 people in population and BC was the only province in all of Canada which experienced a negative growth history, while all the other provinces achieved a steady positive growth. All the other provinces passed BC which was number one until it ended up in tenth place and became a have-not province. Not one other province was affected by the so-called Asian Economic Flu, except BC, of course. Mining contracts were broken and ripped up, together with a certain saw mill's timber license being given away illegally, etc, etc.

None of the bad things that happened year after year in BC were the fault of the NDP government, of course. It was fate, kismet, karma, the winds of unpredictability and international uncontrollable forces, of course.

It may have been better not to have any government at all than one that was out of touch with reality and never really accountable for anything it did.

It is easy to promote socialism and demonstrate a hatred and disgust of capitalism and free enterprise while enjoying the progress and financial rewards (standard of living) that is the result of them.

Nice try but, I do not support the N.D.P. either as they were the ones who first led us down the neoliberal mistake. I admit that I am disillusioned with how things are going but, this disillusionment is supported by virtually, every thinking academic in the world. Try living in the educated worlds of universities and colleges and see what the real thinking people know and say. I suggest that you start using other non-corporate news agancies (such as the Tyee and the American Alternet) to see what really is going on. You would likely be surprise to discover that I am a devote capitalist, but capitalism without the control of governmental oversight, to collect proper an meaningfull taxes and maintain standards for the environment and social problems, is capitalism at its worst. We need governments (Global) who recognise the significant importance of capitalistic goals but also realise that the number one goal of any corporation is to make money, Given this truth, governments must act as a moral conscience to ensure that corporations pay their fair share of taxes and that these taxes are used to benifit society. I'll repeat this again: our governments have it backwards, society is NOT here to support the economy, rather the economy is here to support society. How much cleare could this be?
I'm tired of voting against parties and long for the day when we have a party to vote for.
If you people would take the time to read the post on Aug. 14th.((That was then, This is now)) by the Manager of the City of Kitimat you would be able to see without a doubt what is happening with Alcan at Kitimat, and why the City is taking Alcan to Court.

There is no point in all of you waxing philisophically about Business, Free Enterprise, Capitalism, Socialism, etc; as this is just Hyperbole, and Balderdash.

The fact of the matter is, is that Alcan is pulling a scam, and it just might work. If it doesnt they lose nothing as they will continue to make Aluminum at Kitimat and continue to make millions of dollars in profits, as they are doing now.

Now is the time to support the City of Kitimat and to do something concrete rather than to write pretty prose.

This is a clear cut case of **Whats good for General Bullmoose is good for Kitimat**. Kitimat is Dogpatch and the people of Kitimat are considered Schmoos by Alcan. Lets get this straight and do something about it.

1st. ****READ THE POST****

Get the facts.











REALIST, you seem to be in an uncomfortable position: Sitting BETWEEN two chairs.

The number one goal of any corporation is to make money for the shareholders. Some governments know how to keep the golden goose healthy and at the same time plug a substantial amount of feathers without either killing the goose or causing too much squawking.

Other governments go over the limits and we suffer the consequences, meaning that the geese pick up and leave and we have to go to the banking corporations to borrow enough feathers to keep us going.

Bad scene. Soon we work 25% of our time to just keep the banks supplied with feathers of our own, namely "interest due."

If you start a new party, let me know what its platform is and I will have an open-minded look at it.
I'll wax philosophically (not philisophically) about anything I wish to wax about.

Back off.

Wax all you want diplomat it seems that is your lot in life, however in the final analysis action always speaks louder than words. If you are not going to do something about any of the issues you **yap** about then what is the purpose.

Your opinion without action makes about as much noise as one hand clapping.
Free enterprise is too expensive.
BC Democratic Futures Party coming to a riding near you prior to 2009....
>Your opinion without action makes about as much noise as one hand clapping.<

Good example of philosophical waxing/yapping.

Chad B.s.er, are you going to have a website
for your party soon?
Touche'
Dip-Low-Matt I have one, its not on-line. It was for a while in the past. The conditions are not right at this time. The framework exists and IMO is the only one I would vote for. Not something I'm ready to get into right now.
What we need is 65 Independents running for MLA, this would split the vote and make the NDP and Liberals more responsive to the wants and needs of Citizens. Independents could make any statements they wished, and support or oppose any issue, and would not have to kow tow to the Leader, or to the Party. At the very worst they would be able to get things talked about such as extremly high taxes, high gas costs, gambling, the Alcan Kitimat fiasco, the high cost of running the Government. Government waste, the olympics, etc.

In addition it would screw up all the plans for the Liberals and the NDP as at this time they both feel that they are the only game in town.

Anyone want to run as an Independent. You would get my vote.
I like your idea of running Independents in all ridings - who knows, enough may get elected to hold the balance of power.

I don't think of Alcan and Kitimat as a "fiasco" all the moaning and hand wringing notwithstanding.

Alcan was offered an investment opportunity and it developed the power potential and the smelter under the terms of a 99 year agreement.

Alcan raised billions of dollars (in today's equivalent) and went ahead in good faith. Some 50 odd years later conditions have changed a lot as far as cost of electricity goes, the amount needed to produce a ton of aluminum from alumina,
Alcan has partnered with a large European producer and Kitimat represents only 7% or 8% of the total smelting capacity.

It also built a brand new 2 billion dollar modern smelter in Quebec which uses the latest more efficient technology.

We may not like the aspect of Alcan making piles of money with the electricity coming from its long paid for Kemano power generating facility but a contract is a contract.

More than half a century of the best paid jobs in BC have been provided by Alcan's smelter in Kitimat and successive governments have collected large amounts of taxes from the operation.

Instead of building a new dam and generating facility somewhere BC Hydro has the option of purchasing more power from Alcan and it has decided to do so.

I am not a lawyer but perhaps no previous government should have purchased any power from Alcan. If they had not then Alcan would have gotten the message that ANY and ALL power produced in Kemano was to be used exclusively for aluminum production. By purchasing left-over power (in my opinion) a precedent was set that it was alright for Alcan to sell power rather than use it for the purpose outlined in the original agreement, i.e. smelting of alumina.

Now the dogfight seems to be mainly about "how much is too much!"

If the courts decide that the original terms of the initial agreement have been violated then Alcan will have to rethink its plans for Kitimat and add more smelting capacity if it can work the added product into its total.

Alcan of course would appeal any unfavourable court decision and it would take years before a final ruling would come down that nobody can appeal anymore.

In the meantime Kitimat will not only have its smelter modernized but it will have assured high paid employment for a thousand workers for another half a century.

Other industry will come in with the pipeline projects and container rail traffic.

If any BC government wants to tackle the issue of wresting away from Alcan some basic rights it was given in writing some years ago I say go ahead and give it a try, but I don't think it will come cheap and undoubtedly Alcan would still be taking hundreds of millions of dollars in compensation to the bank, dollars that would still be coming out of our pockets.

The positive aspects of the Alcan announcement for Kitimat have been somewhat overshadowed by a certain hysteria that is associated with the long standing legal challenges that the Mayor of Kitimat has pursued over a number of years.

He certainly needs to be admired for his tenacity and who knows, he may still be vindicated in his conviction that Alcan did indeed not live up to the exact terms of the contract.



Diplomat. It all comes down to whos horse you want to ride.

My understanding of the situation is that Alcan is not, repeat not, living up to the agreement signed in 1950. Having watched Corporations over the years I have very little if any respect for them. Dollar driven and brain dead describes them quite well.

The Mayor of Kitimat has an uphill battle and needs the support of the People of Kitimat and of the rest of the Province, however I doubt that he will get it. The Provincial Government certainley will not support him. At first glance it would appear that this has no bearing on Prince George and area, however in some ways it does, and I will give you an example.

Back in the mid sixtys large areas of timber were given to the Pulp Mills when they located in the Prince George area. The agreement between the Corporations involved and the Government of the day was that they would get easy access to vast amounts of timber and in return would supply jobs to the area. In the 1st 20 years or so this worked quite well., however Canfor then began to buy up other mills, including Northwood Pulp and all its sawmills, and at the end of the day they owned most of the timber and mills in the area.

So far so good. Now Canfor has separated the Pulp Mills from their Lumber Division, and set up what they call the Pulp Income Trust. They have an 80% partnership in the new Trust Co., however what most people do not realize is that the Pulp Mills no longer have the Timber rights, as the rights remained with Canfors woods division. Now if we should get into a situation where they want to shut down a pulp mill the Government no longer has the leverage to take back the Timber as the Pulp Mills dont have any. Get it. As a result they will no longer be able to live up to the orignal agreement or understanding ie; Trees for Jobs. Thats how its done, and thats whats happening in Kitimat.

Multi National Companys like Alcan do not need local individuals such as yourself trying to explain, or defend their positions, they spend millions of dollars on PR for that reason. Public Relations for Corporations is just a code word for propaganda. If you repeat it often enough people will beleive it.