Inc. plans to cut its electricity purchases for its three
Québec smelters and could idle production if it
doesnt get a better power deal from Canadian public
energy utility Hydro-Québec.
The total capacity
theoretically in play could be as much as 953,000 tonnes,
according to Alcoas website and calculations by
The move to slash
Alcoas power purchases in Québec comes because of
a rate increase slated to take effect Jan. 1, 2015, that would
significantly boost energy costs and make the companys
Québec smelters uncompetitive, the Pittsburgh-based
aluminum producer said in an e-mail to AMM Oct.
"There is always a
possibility a smelter will curtail without a competitive power
rate," an Alcoa spokeswoman said in the e-mail.
The three smelters
impacted are in Bécancour, Deschambault and Baie-Comeau,
Québec, the spokeswoman said, noting that the facilities
employ about 3,000 people.
"A competitive power
rate is needed that allows Alcoa to continue to invest in its
operations and maintain its important economic impact in
Québec," the spokeswoman said. "The rate must be
competitive on a global scale and flexible enough to adapt with
changing aluminum market conditions."
Alcoa said it plans to
gradually reduce power consumption from Nov. 1, 2014, through
Dec. 31, 2014.
The increased power
rate would cost Alcoa some $220 million annually starting Jan.
1, 2015, the spokeswoman said.
smelter makes T-ingots, rolling ingots, billets and rod and has
capacity of 385,000 tonnes per year, according to Alcoas
website. But the company in the third quarter closed two
potlines at Baie-Comeau representing 105,000 tonnes of
amm.com, Oct. 8).
owned Aluminerie de Bécancour Inc. (ABI) makes T-ingots,
rolling ingots and billets and is capable of producing 413,000
tonnes per year, Alcoas website said.
smelter produces T-ingots and has an annual capacity of 260,000
tonnes, according to the website.
Rio Tinto Alcan Inc., which owns a minority stake in ABI, and
the Aluminum Association of Canada have already asked that
Québec work to provide cheaper power to the
provinces aluminum industry in order for it to expand and
remain competitive globally (
amm.com, Oct. 4).
Aluminum producers in
the United States and Canada have been pushing for lower
electricity rates in the wake of low prices for aluminum on the
London Metal Exchange.
The cash primary
aluminum contract ended the LMEs official session at
$1,833 per tonne on Oct. 31, down 13.7 percent from a 2013 high
of $2,123 per tonne on Feb. 15.