Relationship between aluminum producer Alcan and Kitimat, B.C., long and storied

VANCOUVER - A decision by a British Columbia regulator was just the latest round in the ongoing saga surrounding Alcan's smelter in Kitimat, B.C., and the complicated relationship between the town and the company that put it on the map in the post-war industrial boom.

It's sad to see the acrimonious relationship that has developed between the town and the company because that wasn't always the case, said Ken Coates, dean of arts at the University of Waterloo in Ontario.

"It was one of these planned company towns developed to be an attractive place to work and live and designed initially to be an even larger town than it is," said Coates, who is working on a book about Alcan and development in Northern Canada.

"It's been very much a preferred place to live. I think one of the reasons why you're seeing the kind of reaction from the community is that the folks that live there and work for Alcan, have liked working and living in Kitimat."

The community boomed in the 1950s when Alcan came to town bringing jobs and prosperity with it. Legions of construction workers came to Northern B.C. to help build the projects associated with the smelter, Kemano power plant and a 16-kilometre tunnel through a mountain.

But things haven't been the same since the cancellation of the Kemano completion project that would have doubled the generating capacity of the reservoir system and increased Alcan's ability to expand, Coates said.

Last week, the B.C. Utilities Commission rejected a proposed long-term power contract with Alcan, saying it was not in the public interest. The decision, which can be appealed, found that B.C. Hydro shouldn't have agreed to pricing provisions.

The decision followed a dispute in B.C. Supreme Court last fall in which the District of Kitimat asked the court to turn off the sale of Alcan power while the smelter cuts back its capacity.

The community argued the aluminium giant was breaking the law that allowed the smelter to generate its own power more than 50 years ago. The municipality said Alcan was given rights to use the river at exceptional water rates in an effort to support its aluminum operations, not to export bulk power.

Under that act, Alcan is only supposed to be able to sell surplus power, but Kitimat argued the company has cut production to sell lucrative power to B.C. Hydro.

In August, Alcan said that it would cut roughly one-third of its workforce as part of a US$1.8-billion revamp of its primary aluminum smelter in Kitimat.

The cuts are to be part of a plan to modernize and increase production at the aging smelter from 245,000 tonnes a year to about 400,000 tonnes that the company is now reconsidering.

Coates said the roughly 500 jobs that will be lost are key to the community.

"The issue of a place like Kitimat is really that of community size," he said.

"Communities of a certain size get other facilities, hospitals get certain support. The school has certain classes offered. And as soon as you watch communities going through that downward spiral is gets really frightening."