The leading smelter in Rio Tinto Alcan's fleet

It is the number one project for Rio Tinto Alcan.

The board of the Regional District of Bulkley Nechako was provided with an update on the company's Kitimat modernization project during their meeting last week.

Paul Henning, Rio Tinto Alcan's vice president of B.C. operations and strategic projects for Western Canada spoke to the board for nearly an hour about the project.

Henning was also accompanied by Rio Tinto Alcan employees Justus Benckhuysen, Nechako operations coordinator, Lianne Olson, stakeholder and community relations liaison and Colleen Nyce, manager of communications.

He said the Kitimat modernization project is a $2.5 billion project that will, for a time be the largest of the Rio Tinto Alcan 100 per cent owned plants.

"A bigger one will come on stream a few years later in Quebec and there is one in Australia that is even bigger, but we only own 40 per cent of that one," he added.

The old smelter is still currently being used and Henning said they are building the new smelter right on top of the old one, which poses some challenges.

"We can't take our eye off production ... we are still invested in the old smelter and have to keep it operational [until the new smelter comes online]."

A total of $300 million has been committed to the project for 2011.

"We have to spend about $1 million a day, this money has to be spent to keep us on track," Henning said adding that the project does not yet have final board approval, but that they are confident the project will go through.

"We are scheduled to receive final approval this year."

A construction crew of over 400 people is expected to be working on the site this year.

Cleaning and demolition will take place and brown field relocation is scheduled. A new reduction services building will be constructed, along with  industrial soil removal and a village for construction crew.

"This is what $300 million looks like. There will be 400 beds on site and they will be populated in 2011. In 2012 we are looking to increase this to 1,500," Henning said.

The new smelter will come on board with optimized AP40 technology which Rio Tinto Alcan own and sell.

"The technology is a world class standard. It will be the leading smelter in the Rio Tinto Alcan Fleet and its environmental footprint will be 50 per cent less than what we have today."

Rio Tinto Alcan have secured the smelter's operation in Kitimat for between 35 - 50 years and to date have allocated $650 million to the modernization project.

The new smelter is also set to increase hot metal production by close to 50 per cent.

Henning said aluminium is not back to its peak price, but that it is at a good level.

"Growth rate is three to four per cent a year," he said.

Work is also being completed on the Kemano intake tunnel at Tahtsa Lake which includes running a submersible inside the tunnel to check for blockages and cracks.

The tunnel, built in 1954 stretches for 16 kilometres inside Mount Dubose.

It is a 25 feet around, horseshoe shaped, flat bottomed, concrete lined tunnel that brings water to the smelter from the Nechako reservoir.

Henning said there is also the possibility that work may continue on a second tunnel [which is currently eight kilometres long] to protect the old one.

"It would allow the old tunnel to breathe ..... if the second tunnel is completed we would then run two tunnels."