Alcoa and Alcan postpone Quebec smelter upgrades – by Sophie Cousineau (Globe and Mail – May 17, 2013)

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

MONTREAL — With an aluminum market weighed down by surpluses, Alcoa Inc. and Rio Tinto Alcan are postponing billions in upgrade and expansion plans to their smelters in Quebec.

While some 750 Rio Tinto Alcan employees will get to keep their jobs longer, 500 Alcoa workers will be pushed into early retirement.

Alcoa is deferring by three years the $1.2-billion modernization of its Baie-Comeau smelter. But the aluminum producer is still going ahead with plans to shut down two of the plant’s old potlines. The dismantling of those Soderberg potlines, which will take place over the next two years, will eliminate 500 positions, or about a third of the smelter’s 1,400-employee work force.

This is the second time the American producer has reviewed its plans for the upgrade of the Baie-Comeau smelter, which was built in 1957. The Pittsburgh-based company first unveiled plans to modernize the smelter in 2008, but gave the final go-ahead on Nov. 7, 2011, after securing a 25-year electricity procurement deal with the Quebec government.

For its part, Rio Tinto Alcan is also pushing back, by three years to 2019, completion of the $2.1-billion investment plan it unveiled in 2006.

The producer has invested $1.5-billion so far, most notably in the first phase of the new Jonquière production centre. But it still has to complete the second and the third phase of the new Saguenay-region smelter and possibly expand its facility in Alma, in the Lac-Saint-Jean region, said spokesperson Claudine Gagnon.

In the meantime, Rio Tinto Alcan will keep open its dated and polluting Arvida smelter for an additional two years. This plant, which employs close to 750 employees, was scheduled to close by the end of 2014 at the latest.

To secure electricity deals with the Quebec government, both multinationals had promised to complete their expansion plans on schedule. But market conditions have changed, with faltering consumption by the automotive and aerospace industries, among other industrial users.

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