It's All About the Dollars

By 250 News

While the BC Utilities Commission  decidedMilton Wong, Director of Alcan says, “The whole point of being in business is to make money”.

There is no doubt that the company holds to that position.

In 2004 the company was told by its CEO Travis Engen, that the goal of the company is to double its value every five years.

Through over 200 subsidiaries incorporated in numerous tax havens around the world, the Aluminum giant has been able to avoid paying taxes.

In fact during the period, 1999 to 2003 Alcan paid no income taxes, and received $140 million in income tax returned. To add to that, Alcan sits on a $1.5 billion dollar of deferred income tax. That deferred tax can best be described as a permanent loan where Alcan pays no interest and will never have to pay the loan as well.

The Company had revenues of $24.88 billion dollars in 2004 with packaging making up 37% of those revenues. Alcan is listed by many observers as the largest Tobacco packing company in the world.

In 2004, the company in its annual report, said that because the major tobacco companies are investing heavily into South East Asia it is important that the company grow its presence there. In May of 2005 Alcan inked an exclusive agreement with US tobacco giant R.J. Reynolds to supply tobacco packaging in Malaysia and Russia where they hope to grow their business.

Reports from the company indicate that Alcan’s success can be found in the fact that 75% of its products are being produced at costs which are lower than the world average.

While Aluminum production in Canada is poised to fall, that is not the case in other world countries. In Guinea a facility jointly owned by Alcan and Alcoa, will produce 1.5 million tons of bauxite, the largest in the world. The company also has entered into a joint venture in China in a 50-50 deal to build a new smelter. In Cameroon the company doubled its smelter output in 2004 after building a new hydro electric facility. The dam, built in part by Alcan, has not lived up to its promise to provide hydro electric power to the residents. 78% to 95% of the population still does not have access to power, while 50% of the power being generated at the facility is being used by Alcan in the production of aluminum.

The same cannot be said in Canada. In Quebec 5000 people showed up at a protest rally in Arvida after the company announced it would cut 550 jobs there. Alcan said it was closing the plant because it was old and outdated. In Kitimat, the company cut a similar number of jobs and has entered into an agreement to provide power to BC Hydro’s grid with the surplus power. 

The British Columbia Utilities Commission refused to allow the most recent agreement between Alcan and BC Hydro to proceed, saying that Hydro was about to pay too much for the power they would receive under this contract. The full context of the BCUC decision is to be released around Feb 1st of this year.

Alcan, which is able to produce hydro electric power for about $10 per MWH had a deal to sell that power to BC Hydro at a price of $70 per MWH, about a 700 % return on investment.  Over the length of the contract, the company stood to pocket billions of dollars.

Under the old agreement with Hydro, Alcan was receiving about $30 dollars MWH for the same amount of power in a contract set to end in 2014. Testimony at the BCUC hearings by BC hydro officials said there is no power shortage in BC.

Regardless, Alcan's Board of Directors feels that the CEO and two of the Vice Presidents are doing a good job. For his efforts in 2004, CEO Travis Engen was rewarded with $3,879.854 , his Vice President Richard Evans received $2,403,021 and Cynthia Carroll .VP. received $1,481.942 .

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