For Immediate Release
ALCOA TO STUDY FEASIBILITY OF NEW B.C. ALUMINUM SMELTER
VANCOUVER-Alcoa and the British Columbia government signed a memorandum of understanding today to proceed with a planning and feasibility study for construction of a primary aluminum smelter.
The announcement was made jointly by Premier Glen Clark and Alan Renken, president of Alcoa's Primary Metals business unit. The plant would represent an investment of $1.2 billion (approximately US$843 million) as well as 500 direct and 1,500 indirect jobs. This represents the third potential new aluminum smelter investment in B.C. announced in the past six months.
Alcoa will determine the feasibility of potential sites for a new aluminum smelting plant in British Columbia, with the province providing site infrastructure information. The planning and feasibility study will be completed no later than Dec. 31, 1998. Depending on the outcome of the study and all necessary government and company approvals, construction could start in 1999.
"Attracting the world's leading aluminum producer demonstrates that our Power for Jobs strategy provides the right incentives to get international private sector investors interested in British Columbia," said Clark. "Should the two MOUs signed this year, and a third MOU signed with Alcan, lead to construction of three new primary aluminum plants, our ability to use excess hydroelectric power as an investment tool could lead to over 6,000 direct and indirect jobs." In January, British Columbia signed a memorandum of understanding with Alumax to conduct a planning and feasibility study for a new smelter.
"British Columbia has sufficient hydroelectric power, the transportation infrastructure, the skilled labor, and access to Pacific Rim markets we need to make a primary aluminum smelter viable," said Renken. "Last December, the premier presented us with a compelling case for investing in B.C. Based on ensuing discussions, we will now investigate the feasibility of establishing operations here."
Under the MOU, Alcoa commits to:
The province agrees to:
Alcoa and the provincial government also agree to identify opportunities for additional secondary manufacturing investments and maximizing purchases from B.C. suppliers in the construction and operation of the new plant in order to maximize B.C. employment and business opportunities.
The facility would include state-of-the-art environmental protection equipment and would meet all of the requirements of the environmental assessment review process for an aluminum production facility in British Columbia. - 30 -
The world's largest producer of aluminum and alumina, Alcoa participates in all major segments of the industry: mining, refining, smelting, fabricating and recycling. Alcoa serves customers worldwide in the packaging, automotive, aerospace, construction and other markets with a variety of fabricated and finished products. Non-aluminum businesses including packaging machinery, vinyl siding, plastic bottles and closures, and electrical distribution systems for cars and trucks.
The company is organized into 20 business units, with 187 operating locations and 81,600 employees in 28 countries. In 1997, approximately 54 per cent of revenues were derived from the United States, 17 per cent from Europe, 16 per cent from Other Americas (particularly Brazil), and 13 per cent from the Pacific (mostly Australia). From a market perspective, Alcoa generated 24 per cent of revenue from packaging, 24 per cent from transportation, 16 per cent from distributors and other, 15 per cent from alumina and chemicals, 11 per cent from aluminum ingot and 10 per cent from building and construction.
In 1997, Alcoa's revenues were US$13.3 billion, up 71 per cent from US$7.8 billion in 1987. Capital expenditures in the 1987-1997 period averaged over US$841 million per year. Worldwide employment grew to 81,600 in 1997 compared with 60,000 in 1994 and 55,000 in 1987. Alcoa ranks 97 on the Fortune 500 list.
The company's operations consist of three segments: Alumina and Chemicals, Aluminum Processing and Non-Aluminum Products. The Alumina and Chemicals segment includes the production and sale of bauxite, alumina chemicals, aluminum and related transportation services for this segment. The Aluminum Processing segment includes the production and sale of molten metal, ingot and aluminum products that are flat-rolled, engineered or finished. Also included are power, transportation and other services for this segment. The Non-Aluminum Products segment includes the production and sale of electrical, ceramic, plastic and composite materials products, manufacturing equipment, gold, magnesium and steel and titanium forgings.
Alcoa's mission is to be the best aluminum company in the world, setting world standards in quality and creating value for customers, employees and shareholders through innovative technology and operating expertise.
Alcoa believes that future growth and success have their roots in the fundamental values of an organization. For Alcoa, these values begin with integrity, with respect for their people, their safety and health, and for the environment.
Primary Plant Locations (18)
POWER FOR JOBS
Government recognizes that for British Columbians, new jobs and economic opportunities are a central priority. Power for Jobs is part of government's overall Jobs for BC strategy, and is aimed at using the province's valuable electricity and power resources from the Columbia River Treaty downstream benefits (DSBs), to maximize the value and benefits for British Columbians. These benefits will be in the form of job creation, new investment, regional economic development and increasing revenue to the province.
The Power for Jobs Development Act enables government to use hydroelectric power, including DSBs, to stimulate investment and job-creating industrial activity in B.C.
History of the Columbia River Treaty and Downstream Benefits
The Columbia River Treaty was set up to provide for and share flood control and power production benefits between Canada and the United States arising from regulating flows of the Columbia River. The treaty, signed in 1961 and ratified in 1964, runs for a minimum of 60 years.
Canada built three large storage dams in B.C. that capture spring run-off to control flooding and generate additional power in both countries. For this, Canada received payment for flood control, and is entitled to half the additional power that can be generated at dams downstream in the U.S.
This power, known as the Canadian entitlement to downstream power benefits (DSBs), is approximately 1,400 MW of peak capacity, and more than 4,500 gigawatt-hours of electrical energy per year-enough power to meet the needs of close to 500,000 B.C. households. In a separate 1963 agreement with Canada, B.C. assumed rights to the DSBs and was obliged to ensure that the storage dams were constructed and operated as required by the treaty.
In 1964, B.C. sold its share of the DSBs to a group of American utilities for US$254 million. The money received from the sale of DSBs helped to fund construction of the three treaty dams in B.C.: Duncan, Keenleyside and Mica. The DSB sale agreements expire 30 years from the scheduled completion date of each of the three dams.
Return of DSBs to British Columbia
For the past few years, B.C. has pursued strategies to maximize the value of the DSBs-a key provincial asset. The approach adopted in negotiations has been to resolve issues, such as the size and return of the DSBs, and access to U.S. markets individually.
Agreements have been reached that give B.C. free return of 1,400 MW of
DSBs over existing lines, with 1,100 MW delivered directly to the Lower Mainland where
demand is highest. Through its membership in regional transmission associations, B.C. also
has open, non-discriminatory access to Bonneville Power Administration's and other U.S.
KPMG ALUMINUM REPORT SUMMARY
The long-run global outlook for aluminum is strong. Industry forecasts suggest that demand for aluminum will increase by 35 per cent over the next decade to 29 million tonnes per annum. Meeting this demand will require substantial new investment in aluminum plants.
According to an independent report conducted by KPMG, B.C. is in a position to become one of the world's leading exporters of aluminum. The province's current and upcoming electric power capacity could provide enough energy for two to three new aluminum plants. A significant part of this capacity will come from the return to B.C. of 1,400 MW of downstream benefits generated by U.S. dams on the Columbia River-power that B.C. previously sold on a long-term basis.
B.C.'s position on the Pacific Rim gives it excellent access to both raw materials and the world's three largest aluminum markets-the U.S., Japan and China. The province's many coastal communities offer natural deep-water harbors. Also, B.C. has extensive infrastructure in place including natural gas pipelines and world-class air, rail and port connections.
Three new aluminum plants would:
Last updated February 25, 1998.