Alcan says Kitimat smelter expansion delayed by power challenge

Alcan Inc said the US$1.8 billion expansion of its Kitimat aluminium smelter in British Columbia will be delayed about a year by challenges to the company`s right to sell power in the province. The addition of capacity from the project, originally scheduled for 2009, has been "pushed back about a year," after the British Columbia Utilities Commission in December rejected Alcan`s agreement to sell power to utility BC Hydro, Alcan spokesman Bryan Tucker said. Alcan, the world`s third-largest aluminium maker, said it signed a revised agreement to sell excess power from its Kemano hydro-electric plant to BC Hydro, which is owned by the province. Alcan lowered its prices for the new contract, which runs until 2034 and is valued at about C$900 million (US$837 million), he said. “We are confident that this new agreement addresses the findings from the BCUC`s decision rendered in December,`` said Michel Jacques, head of Alcan`s primary metals business. Kitimat city officials challenged the power sales in court, arguing that Alcan breached a 1950 agreement with the provincial government and has reaped windfall profits from electricity sales while cutting back on aluminium production. Approval by the BCUC was one of three conditions Alcan set before it goes ahead with the plan to boost the smelter`s output to 400,000 tons a year from about 245,000 tons. The company also had said it needed environmental permits and a long-term labour agreement, which it reached with the Canadian Autoworkers union in May.