Alcan tries again with new power contract for Kitimat expansion

Canadian producer Alcan announced that it and local power supplier BC Hydro have signed a contract for a new power supply agreement to cover the proposed expansion of the company's Kitimat smelter in British Columbia from the current 277,000tpy to 400,000tpy. The new contract is intended to meet the concerns of local regulator—the British Columbia Utilities Commission—which in December last year rejected a long-term power deal between the two companies, arguing it was not in the public interest. The new deal must also be filed with the Commission for approval but Michel Jacques, President and Chief Executive Officer, Alcan Primary Metal Group, said that “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.” The new agreement provides specifically for the delivery of any surplus power back to BC Hydro through the end of 2034. The Kitimat project is a key part of Alcan's long-term strategy. Not only will it boost group production by more than 4% and make the smelter one of the three largest in North America, but the modernization programme will slash gas emissions and place the plant in the first quartile of the cost industry curve, Alcan said. When originally announced last year, Alcan was aiming for a completion/ramp-up target of 2009 to 2011. More recently, the company has conceded that a protracted battle with the local authorities in Kitimat and the power set-back had probably pushed it back around one year from that time-table.