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