AlcanÂ’s mega savings on megawatts
By Globe and Mail
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This is the kind of big question the likes of Plato and Aristotle might have debated for years without resolution.
The people handling Rio Tinto Alcan's advertising are, however, unencumbered by philosophical dialectics. According to an unprecedented ad campaign developed by Cossette Communication Group, and now saturating Quebec's airwaves and newspapers, Alcan apparently produces not just aluminum, but such universal human aspirations as happiness, hope, courage, harmony, pride and beauty.
The 60-second TV spots and double-page colour newspaper spreads are impossible to miss if you've been at all breathing in Quebec in the past month. They are meant to cement the impression that, without the now foreign-owned Alcan, the province would be a much poorer place - in both the metaphysical and economic senses.
By sponsoring champion wheelchair athlete Chantal Petitclerc, Alcan produces pride. With marathon swimmers, courage. With the children's hospital, hope. With the museum, beauty. The "happiness" Alcan produces comes via its sponsorship of the Montreal International Jazz Festival. (The English version of the ad makes a more modest claim: With the jazz fest, Alcan produces only "excitement." But the French - and more widely seen - version uses the term "bonheur" - which unmistakably translates as "happiness.")
The advertising claims may be a bit over the top, but they do convey a fundamental truth.
As corporate citizens go, Alcan is one of the better ones, conscious its licence to operate depends on continually proving its worth to Quebeckers.
The ads, however, may have an unintended consequence in leading Quebeckers to ask themselves whether Alcan gives back as much as it gets.
And it gets a lot. From outright ownership of the riverbed of the Saguenay to lucrative water rights to produce its own electricity at the six hydro plants spared expropriation when Quebec nationalized the industry in 1963, to the additional electricity that Alcan purchases at below market rates from Hydro-Québec, to the tax holiday, interest-free loan and more cheap power the provincial government is promising to encourage Alcan to expand its operations.
The hydroelectric stations, built between 1926 and 1959, are an inestimably valuable asset in any year. They enable Alcan to produce its own power - greenhouse gas emissions-free power to boot - for pennies when most of its competitors in other countries pay dollars.
In most years, the stations provide about 2,000 megawatts to Alcan. It buys the remaining 180 MW it needs to operate its smelters from provincially owned Hydro-Québec for about half the going market rate. This year, however, Alcan's own hydro turbines are spinning at record rates, enabling it to produce more electricity than it needs. Surpluses are sold to Hydro-Québec. But for how much, taxpayers aren't told. Nor are Rio Tinto's shareholders, though they profit most directly from it.
"The recent precipitation has allowed us to reduce our purchase of energy for the time being. However, as energy production can fluctuate throughout the year depending on rainfall we do not provide forecasts or tabulate our total energy purchases until the end of the year," Alcan spokesman Stefano Bertolli said in an e-mail reply to a request for details on the company's recent power sales.
It's true a dry fall could turn Alcan's current power surpluses into a shortfall. But it's also true the company is currently reaping untold financial benefits from a wet summer. Record or near-record snowfalls last winter produced a huge spring runoff. Above-average rains since then have filled Alcan's reservoirs to near capacity, forcing water through the turbines faster.
The unrivalled hydro benefits are just one example of what Alcan gets from Quebec. But the firm's current ads are silent on that score. Nor do they tell Quebeckers, as a recent study by Université du Québec à Montréal economist Léo-Paul Lauzon revealed, that Alcan paid no income taxes in Quebec (or federally) between 2001 and 2006, despite reporting more than $4-billion in cumulative profits during that period. Does sponsoring the jazz fest, Sick Kids and Chantal Petitclerc make up for that?
Alcan recently announced the creation of a $200-million endowment to "support communities in Canada." The Rio Tinto Alcan Canada Fund was one of the sweeteners the British-Australian mining mammoth promised to thwart opposition in Quebec to the foreign takeover of a homegrown multinational.
For some, it may be enough to justify the lofty claims of Alcan's ads. But more than a few philosophers - and accountants - might beg to differ.
