February 2, 2004

High compliance, production costs cited in closure of Alcan's Jonquiére plant

As a result of high costs associated with environmental compliance as well as production, Alcan will close its 60-year-old JonquiËre Soderberg primary aluminum facility in Saguenay, Quebec, by the second quarter of 2004.

Compared to Alcan's other smelters in Quebec, the JonquiËre Soderberg operation has the highest production costs and faces the greatest environmental challenges. It is also one of the least energy-efficient.

"Closing a plant is never an easy decision, but as a corporation dedicated to economic and environmental sustainability, we must make the decisions that are required to be both environmentally responsible and protect Alcan's competitive position globally," said Alcan president and CEO Travis Engen. "Despite our successful efforts over the years to bring the JonquiËre Soderberg lines up to today's environmental and technological standards, the reality is that this technology has a limited life span," he added.

Alcan's decision was also influenced by the strengthening of the Canadian dollar relative to the U.S. dollar over the last year, as this currency increase has outpaced the recent rise in the aluminum market price.

The four Soderberg potlines will be shut down between February and April, affecting 90 kt per year of production capacity. This represents 3% of Alcan's global production capacity. The remaining 163 kt of pre-bake smelting technology capacity in JonquiËre will not be affected.

Although the closure will eliminate approximately 550 jobs, the company plans to take advantage of the projected normal employee turnover during the next two years to minimize impacts on workers. "Our local leadership team will work closely with the appropriate employee representatives to ensure that there will not be any layoffs and minimize impacts on our employees," said Cynthia Carroll, president and CEO of Alcan's primary metal group.

"The closure of the JonquiËre Soderberg lines reinforces the importance of continuing to work on sustainable and value creating economic development projects in the region," she added. In 2003 alone, Alcan and its partners were involved in initiatives which will create over 600 jobs in the Saguenay-Lac- Saint-Jean region.

In Vancouver, meanwhile, the District of Kitimat has filed a petition with the British Columbia Supreme Court seeking to stop Alcan from exporting power generated at its Kemano power plant at the expense of producing aluminum, which is what the power plant was originally built for. The court action launched by the District claims that Alcan is in breach of both the provisions of BC's Industrial Development Act and of the terms of its water licence because it has been cutting back aluminum production in order to sell electricity.

The company acquired access in 1997 to one of the province's most valuable water resources in exchange for a commitment to build and expand a permanent aluminum industry in BC. The water resource could support an aluminum smelter of more 500,000 tonnes per year which is what the agreement called for, says the District.

$1M sustainability prize

In other activities, Alcan has established a $1 million (U.S.) annual prize to recognize outstanding contributions to the goal of sustainability by not-for-profit organizations. Company president and CEO Engen announced the Alcan Prize for Sustainability at the World Economic Forum 2004 annual meeting in Davos, Switzerland late last month.

The prize is open to all not-for-profit, non-governmental, civil society organizations that have made and continue to make significant contributions integrating economic, environmental, and social sustainability. The U.K.-based International Business Leaders Forum (IBLF) will manage the day-to-day administration of the Alcan Prize program.

"The Alcan Prize for Sustainability helps strengthen and support the vital partnership work of not-for-profit and non-governmental organizations, in particular those who are working to further sustainable development," said IBLF CEO Robert Davies.

Winners will be selected by a panel of international judges, themselves chosen for their accomplishments and expertise in promoting sustainability principles and practices. JosÈ-Maria Figueres, co-CEO of the World Economic Forum and former president of Costa Rica, will head the 2004 adjudication panel.

"This prize links two key actors who are instrumental in creating successful sustainable development: business and not-for-profit organizations. As the co-CEO of the World Economic Forum, an organization that promotes multi-stakeholder dialogue and action on global issues, I strongly support and encourage the Alcan award," Figueres said.

In addition to the $1 million to be awarded to a single organization, the panel will have the discretion to award merit-based Alcan bursaries to organizations selected as finalists by the judges. The bursaries are intended to promote capacity-building by allowing a senior member of the recipient organization to attend the University of Cambridge program for industry in England and earn a post-graduate certificate in Cross Sector Partnership.

A call for entries for the Alcan Prize for Sustainability will go out immediately. A short list of finalists will be announced in June and the winner of the first annual prize is expected to be named in January 2005.

Also at the World Economic Forum, Alcan presented a position paper titled "Committed to the Sustainable Management of Water, One of Our Most Precious Resources" as a submission to the Forum's Water Initiative, which is co-chaired by Engen.

Prepared in recognition of the International Year of Freshwater (2003), the paper calls for a rethinking of how the world's fresh water is managed and used, and outlines Alcan's corporate water strategy. By contributing to the evolving body of knowledge on sustainable water management, the company hopes to stimulate discussion and provide insight into the types of best practices that will help protect and preserve the world's fresh water.

"While water is not our core business, without it, we would have no business at all," said Engen. "We want to contribute to preventing and resolving water crises by sharing our successes and the lessons we have learned in freshwater management throughout our 101-year history. Ensuring the sustainable management of water is essential to safeguarding our long-term licence to operate and to grow," he added.

The position paper may be viewed on Alcan's Web site, www.alcan.com.

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