Kitimat takes Alcan to court

- The district of Kitimat appeared in B.C. Supreme Court recently in an attempt to stop Alcan from selling electricity generated at its Kemano power plant.

Kitimat Mayor Richard Wozney said Alcan has been cutting aluminum production in Kitimat so it can sell more power, while at the same time increasing production in Quebec. Smelting aluminum in Kitimat is extremely profitable but Alcan can make more money selling electricity. As a result, said Wozney, it's breaking its contract with the people of B.C.

"We've been trying to resolve this issue with the Government and Alcan for the past two and half years," said Wozney. "Now it's time to act."

The District filed its legal petition in Vancouver alleging Alcan is in breach of the provisions of the Industrial Development Act and the terms of its water license.

Wozney said Alcan acquired access to one of the province's most valuable water resources in exchange for a commitment to build and expand a permanent aluminum industry in B.C. Now the company wants to keep the resource and sell the power, reneging on its contractual commitment to jobs and economic benefit for which the resource was exchanged.

This gives Alcan windfall profits at the direct expense of the owners of the resource -- the people of B.C., said Wozney. According to economic analyst Roslyn Kunin, the B.C. economy is already losing $113 million in economic benefit and up to $9.6 million in provincial tax revenue because Alcan has cut aluminum production at its Kitimat smelter in order to sell electricity. She said Kitimat has already lost more than 200 jobs and further damage will result over the long term if Alcan moves to increase energy sales at the expense of aluminum production.

The water resources in Kitimat could support an aluminum smelter of more than 500,000 metric tonnes per year, which is the smelter promised by Alcan in 1997. The District, however, anticipates that Alcan may announce the rebuilding of its Kitimat smelter. While this may appear to be good news, in reality a refitted smelter will be designed to use less electricity than the existing plant in order to establish a permanent power surplus. This move could result on the additional loss of 800 jobs. This could mean a $470 million annual loss to the provincial economy.

Meanwhile, Alcan has publicly expressed disappointment with the filings and said it will defend itself vigorously.

In a press release, the company said it has confirmed it is operating within its rights with the Government of B.C. several times.

"Alcan believes the best way to create a healthy business environment is to work co-operatively to create conditions that are conducive to investment," said the company in a press release. "Alcan has been attempting to work with the District to create this environment, and we had agreed to meet collectively with the Government of B.C. on the issues facing the region."