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Alcoa, Quebec Agree to C$1 Billion Smelter Modernization by Staff Mining Engineering - January 2003

Alcoa and the governmnet of Quebec have reached an agreement. It will allow the world's largest aluminum producer to expand and modernize its Baie-Comeau smelter in the province.

Alcoa will invest C$1 billion over eight years to modernize the smelter. This will include replacing the existing Soderberg technology with a pre-bak process.

The program will increase the Baie-Comeau smelter's capacity by 110 kt/a (121,250 stpy) to 547 kt/A (603,000 stpy). Alcoa said work on the modernization program will begin next year and will be operational by 2010. The agreement calls for the smelter to employ 1,476 workers.

For its part, the government of Quebec has pledged financial support and guaranteed additional energy to run the smelter. The Baie-Comeau smelter project is elgible for a 10-year tax break and for financial help under the Faire program. Under that program, the company will receive a C$170-million interest-free loan.

A key issue in the agreement is the governmnet's guarantee of additional power supplies. Hydro-Quebec will provde at the industrial power rate the necessary 175 MW of power that will be required to operate the smelter. In addtion, the government has agreed to renew for 25 years the water rights for the McCormick hydroelectric plant. This plant also supplies power to the smelter. That agreement will begin in 2011.