Alcoa Negotiate Renewable Energy Contracts for Three Candian Aluminum Smelters

Alcoa today announced it has reached an agreement with the government of Quebec on a new, renewable energy contract to supply all three of the Company’s aluminum smelters in the province – Baie Comeau, Becancour (ABI), and Deschambault through the year 2040 and enabling Alcoa to invest $1.2 billion to upgrade and expand Baie Comeau production to 548,000 metric tons per year (mtpy).

Initial engineering studies for the upgrade and expansion activity at Baie Comeau will begin in early 2008, with the vast majority of the investment planned for the final stages of the project. It is expected that conversion and upgrade of the smelting technologies at the plant to a more environmentally friendly one, as well as the expansion of output at Baie Comeau by 110,000 mtpy, will be completed by 2015. The upgrade will eliminate PAHs emissions from the Soderberg pots and reduce greenhouse gas (GHG) emissions at the plant by 40 percent.

“This is a great day for Quebec, the communities of Baie Comeau, Becancour and Deschambault, our employees, and for Alcoa,” said Alain Belda, Alcoa Chairman and Chief Executive Officer. “With the agreement to supply competitive long-term power for our three facilities in Quebec, we in turn can now invest in upgrading and expanding in order to make our already good operations in the province, even better.”

During the upgrade and expansion phase of the project, an estimated $540 million of added economic value will be created in Quebec over a period of 4 years, supporting the equivalent of 6,800 job-years of employment. Following construction, the continued operations will then generate – onsite as well as for suppliers and subcontractors – an added economic value of $470 million per year, supporting 3,900 jobs.

Prior to this agreement, Alcoa’s three smelters in Quebec produced more than 1.1 million metric tons of aluminum per year and employ more than 3,600 people directly. In addition to the direct benefits, the facilities will generate more than $1.8 billion in economic spin-offs annually in the province as a result of this agreement.

Under terms of the agreement, which is conditional on Alcoa upgrading and expanding production in Baie Comeau, power contracts to supply all three Quebec smelters -- as well as the energy needed to support the expansion -- will be extended through the year 2040 at the regulated industrial “L” rate. Alcoa will also receive financial support from the government in the form of a loan guarantee.

In addition to the power agreement for all three smelters and the additional power for Baie Comeau, both the government of Quebec and Alcoa will accelerate their negotiations regarding securing additional power to support expansion of the Deschambault smelter. Alcoa has said it would invest and expand the facility if additional, competitively-priced, long-term power could be secured.

“Thanks to the efforts of Premier Charest, the Premier’s entire team, HydroQuebec, our communities, and many others who helped, we have taken great steps to secure the future for the communities of Baie Comeau, ABI and Deschambault,” said Bernt Reitan, Alcoa Executive Vice President and Group President – Global Primary Products. “In addition to beginning work on the upgrade and expansion of Baie Comeau immediately, we will also now accelerate our discussions to see if we can secure enough competitively-priced, long-term power to enable us to invest and expand Deschambault as well. In fact, we would like to more than double the output there to 570,000 metric tons per year.”

Tell Us What You Think

Do you have a review, update or anything you would like to add to this news story?

Leave your feedback