December 9, 2000

December 9, 2000

Water shortage leaves Alcan high and dry Aluminum maker forced to cut production in B.C.

Drew Hasselback Financial Post VANCOUVER - A water shortage is forcing Alcan Aluminium Ltd. to cut production at its smelter in Kitimat, B.C., by 40,000 tonnes.

Alcan, which produces 272,000 tonnes of aluminum per year, says the reduction will remove about $10-million per month from aluminum ingot revenues. The production curtailment will begin in mid-January and is expected to last for at least 10 months.

The company generates power using water from the Nechako Reservoir.

Alcan said three consecutive years of drier than usual whether have reduced water levels, so production must be cut to protect the power supply.

Alcan is trying to strike a deal to buy power from B.C. Hydro, but has so far not been able to agree to anything that would keep the Kitimat smelter operating at full capacity.

Low levels at the reservoir have already forced Alcan to suspend power deliveries to two customers, B.C. Hydro and Eurocan Pulp and Paper. Alcan said suspending power sales results in the loss of $4-million per month in revenue.

The company is still talking with unions regarding the impact on jobs. Those most likely to be affected are 70 temporary workers. The remainder of the Kitimat operation's 1,800 employees are full time.

Alcan expects to have global revenue of US$14-billion next year. It recently completed a US$3.4-billion merger with Alusuisse Group Ltd. of Switzerland.

dhasselback@van.nationalpost.com Aluminum maker forced to cut production in B.C.

Drew Hasselback Financial Post VANCOUVER - A water shortage is forcing Alcan Aluminium Ltd. to cut production at its smelter in Kitimat, B.C., by 40,000 tonnes.

Alcan, which produces 272,000 tonnes of aluminum per year, says the reduction will remove about $10-million per month from aluminum ingot revenues. The production curtailment will begin in mid-January and is expected to last for at least 10 months.

The company generates power using water from the Nechako Reservoir.

Alcan said three consecutive years of drier than usual whether have reduced water levels, so production must be cut to protect the power supply.

Alcan is trying to strike a deal to buy power from B.C. Hydro, but has so far not been able to agree to anything that would keep the Kitimat smelter operating at full capacity.

Low levels at the reservoir have already forced Alcan to suspend power deliveries to two customers, B.C. Hydro and Eurocan Pulp and Paper. Alcan said suspending power sales results in the loss of $4-million per month in revenue.

The company is still talking with unions regarding the impact on jobs. Those most likely to be affected are 70 temporary workers. The remainder of the Kitimat operation's 1,800 employees are full time.

Alcan expects to have global revenue of US$14-billion next year. It recently completed a US$3.4-billion merger with Alusuisse Group Ltd. of Switzerland.

dhasselback@van.nationalpost.com

http://www.nationalpost.com/financialpost/cadbusiness/story.html?f=/stories/20001209/399162.html

-- Martin Thompson (mthom1927@aol.com), December 09, 2000