Cheap power protects Canadian aluminium jobs

MONTREAL – Cheap hydro power is shielding Canada from job cuts as aluminum giants Alcoa and Rio Tinto Alcan look to chop supply in the wake of dwindling global demand and falling prices. They say thousands of aluminum jobs are being shed around the world but Canadians are protected because the country's smelters in Quebec and British Columbia are among the lowest-cost in the world. Also helping is the reduced value of the Canadian dollar, which has fallen well below the U.S. greenback after spending the last quarter of 2007 at historic highs and the early part of 2008 near parity. Metal companies around the world are struggling to reduce costs in the wake of dwindling demand and near record low prices as major economies operate at recessionary levels. Alcoa (NYSE: AA) announced Tuesday that its will cut 13,500 positions, or 13 per cent of its work force. Alcoa has more than 4,200 workers in 15 locations and plants, mostly in Quebec and Ontario, but a spokesman at the company's headquarters in Pittsburgh said Tuesday that they weren't the target of the job cuts. Last month, Rio Tinto Group (NYSE: RIO) – a more diversified mining company – said it will cut 14,000 jobs worldwide, or 12.5 per cent of its overall employee base. A spokesman for its aluminum division said last month that Rio Tinto Alcan's Canadian jobs would be protected because its low cost assets ensure they won't face production curtailments Both companies are focusing their efforts on closing high cost mills in Europe and the United States. However, unexpected dramatic further decreases in selling prices would force the temporary closure of some Canadian smelters, said Charles Bradford of Bradford/Soleil Securities. Alcoa Canada Primary Metals includes the Baie-Comeau, Becancour and Deschambault smelters, as well as the Becancour rod plant. Rio's Quebec aluminum facilities are in Becancour and Shawinigan and it operates the Kitimat smelter and nearby hydro-electric operation in British Columbia. ---thestar.com