Alcan's $1.8-Billion Smelter Expansion Nears Green Light

Alcan Inc. has entered into a new power-supply agreement with Vancouver-based BC Hydro, by which surplus power from Alcan's hydroelectric plant at Kemano, BC, will be delivered to the utility through the end of 2034. The agreement will be filed with the British Columbia Utilities Commission (BCUC), and then will be disclosed to the public as part of the BCUC approval process."This is a significant step toward the modernization of Kitimat Works," stated Alcan Primary Metal Group president and CEO Michel Jacques.In August 2006, Alcan unveiled its $1.8-billion modernization plan for the smelter at Kitimat, north of Vancouver.

The additional capacity would add about 155,000 metric tons/year of capacity to the operation, and increase Alcan's annual global primary aluminum production by more than 4%. Kitimat would become one of the largest smelters in North America, and one of the largest wholly owned by Alcan. The new capacity would begin to become available in 2009, with full new capacity available by late 2011.Kitimat, and its companion hydroelectric plant in nearby Kemano, BC, was the object of a long debate in the 1980s and ‘90s concerning Alcan’s right to expand its wholly owned operations. The modernized Kitimat smelter would use virtually all of the power available from Kemano.In 2006, Alcan reported that it had an agreement-in-principle with BC Hydro that includes a "smelter first" provision, ensuring that power deliveries to the smelter would take priority over sales to BC Hydro.

Alcan stated it would sell "any surplus power directly to BC Hydro, signaling an end to power sales to BC Hydro's subsidiary, Powerex, as of December 31, 2006.""Alcan is as committed as ever to realizing this project in BC.," stated Jacques. "We are confident that this new agreement addresses the findings from the BCUC's decision rendered in December 2006 and builds on the key elements of the new energy policy made public by the B.C. Government in February," he added.Directors of Alcan have yet to approve the Kitimat modernization project.Two of three provisions stipulated by the company as essential to the project's approval — a long-term energy-supply agreement from the BCUC; and a long-term labor agreement with the Canadian Auto Workers union (concluded in May) — have been fulfilled.Now, the project hinges on resolution of environmental permits. Alcan indicates it is in "advanced discussions" with federal and provincial environmental authorities to resolve the permitting issues.

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