Toronto, Aug. 14 - Alcan Inc. said Monday it will boost its annual global primary aluminum production by more than 4 percent through a $1.8 billion modernization of its smelter in northern British Columbia.
The modernization will take place over three to five years, and raise production at the Kitimat Works primary aluminum smelter by more than 60 percent, to about 400,000 tonnes a year from its current 245,000 tonnes.
The company said the expansion project will employ about 2,000 during the construction phase. The revamped plant will employ about 1,000 long-term workers, down from current job levels.
Roughly 1,250 unionized workers are employed at Kitimat, along with more than 300 non-union staff, a Canadian Auto Workers union representative said.
Alcan, which said Kitimat will be one of the three largest smelters in North America, expects the first new capacity to come onstream in 2009, with final metal online by 2011.
The plan is subject to approval from the company's board of directors, environmental permits and agreements with provincial utility BC Hydro and the CAW.
Alcan and the town of Kitimat have been at odds in recent years over the use of electricity from the company's wholly owned Kemano hydro-electric plant.
Kitimat has gone as far as trying to sue first the company, and then the British Columbia government, arguing that Alcan should be using all the available electricity to produce more aluminum at the Kitimat site, rather than selling excess power for profit.
In its news release, the company said the modernized Kitimat smelter would use "virtually all" the power from the Kemano plant. It also plans to use "the latest evolution of smelting technology within the AP35 series," and said production costs would be in lowest quartile for the industry.
Kitimat's municipal manager, Trafford Hall, said that, while any investment is positive, locals are concerned the new technology will reduce the number of high-paying, primary jobs in the city of 10,400.
Kitimat expects industrial growth in return for the public water rights that Alcan obtained from the province decades ago, Hall said in an interview. The higher capacity of 400,000 tonnes announced on Monday is "significantly less" than the 550,000 tonnes that some Alcan managers had talked about in the past, Hall said.
"If the company is allowed to sell power, they will maximize power sales and minimize aluminum production" in B.C., Hall said.
An agreement in principle between Alcan and BC Hydro includes a "smelter first provision," which the company said would ensure that power deliveries to the smelter would take priority over sales to the provincial utility.
While not immediately available for comment, the Canadian Auto Workers Local 2301 has previously described the expected expansion as a good news/bad news story for Kitimat.
"The good news is that bringing in new technology is a positive move to insure longevity in jobs for the future," the union said in a July bulletin on its Web site. "On the other hand new technology brings with it a less labor intensive process," which will hurt jobs, the union bulletin noted.
Kitimat, on the northwest B.C. coast some 1,400 km (880 miles) from Vancouver, has received mixed industrial news in the past year. Methanex Corp. closed a methanol plant in the community last November, but Enbridge Inc. chose Kitimat over the nearby Pacific port city of Prince Rupert as the west-coast terminal for its proposed Gateway oil pipeline from Alberta.