Newfoundland receives Alcoa hydro, smelter study

- TORONTO - Canada's Newfoundland government is assessing the results of a study by U.S. aluminum producer Alcoa Inc. to develop hydroelectric facilities and an aluminum processing plant in the Atlantic province, officials said on Tuesday.

The Alcoa feasibility study, presented to the province last Friday, looks at the viability of reviving a stalled Lower Churchill hydroelectric project and the possibility of building one or more aluminum production facilities in the remote Labrador region.

Provincial mining and energy minister Lloyd Matthews told Newfoundland's House of Assembly Monday his department was reviewing the study.

But he warned that any development would need to benefit people in Newfoundland, the poorest of Canada's 10 provinces.

``The challenge of arriving at a favorable development option for the Lower Churchill has been before this and preceding governments for almost 25 years,'' he told the House in comments sent to Reuters.

``Any project that leads to the development of the Lower Churchill must provide maximum benefits to the people of the province.''

Matthews said the provincial cabinet would evaluate the results, including other possible options for the project, reporting back to the legislature.

The government has previously said if the review warrants it, it will begin talks on commercial arrangements with Alcoa, the world's biggest aluminum producer.

A proposal unveiled in 1998 but abandoned due to difficulties with arranging financing called for a 3200 megawatt hydro project on the Churchill river.

The current project has the potential of 2000 megawatts and expected to cost about $2.6 billion.

Alcoa has said it is also looking at the economic viability of developing an aluminum smelter or smelters in the province, using energy from the lower Churchill.

The province is also in talks with nickel giant Inco Ltd to develop the Voisey's Bay nickel deposit, also in Labrador. The talks were extended until the end of the year.