Advantage Alcan! Is it time for Kitimat to fold their hand?

The District of Kitimat is reported to be "disappointed and weighing their options", which is a polite way of saying “whoops maybe we’re in a world of trouble here.”

It was only a few months ago that the District was heralding a ruling from the BC Utilities Commission as a sign that they were correct in their fight with the aluminum giant over the status of power sales in the province. Alcan subsequently has gone on to appeal that decision.

But having forced the issue to the Supreme Court of BC and receiving the ruling yesterday that Alcan is free to do what it wishes with its surplus power, the wind may have finally gone out of the Kitimat sails. One thing is certain this week's decision was a welcome bit of news in the corporate offices of the aluminum company.

The two sides have been fighting a bitter war of words for the last three years over the plans to build a new modernized smelter which may see job reductions, versus the money that Alcan makes from selling energy above what it uses to produce aluminum. The city has already seen the aluminum company shed some 1,000 jobs over the years. Kitimat argued that Alcan was in violation of the spirit of their 1950 agreement, which saw the Aluminum giant draw power from the Nechako River through its Kemano generating station.

The debate has split the community which continues to see population declines and caused friction between the municipal government and the business class in the city. At one point in the highly charged rhetoric, Alcan seemed to suggest that the plans to modernize the smelter were at stake should things continue down the path they were heading.

What remains to be seen now is if Kitimat wishes to launch an appeal of the decision requiring yet more work for the lawyers and another round of courtroom appearances, or if they decide that the fight is lost and it’s time to try and minimize their losses as much as possible.

It has been a hot button issue in the Northwest and beyond for a number of years, with the likes of Rafe Mair and Ben Meisner wading into the fray from time to time, arguing against the Alcan position. It’s expected that all of those concerns will continue to be aired as the debate continues on.

As is always the case, the population will await the word as to their fate. They are trapped between their elected officials and the corporate powers, both of which seem to be playing a game of chicken with the residents featured as the feed.

Dirk Meissner of the Province, provided a bit of background on the factors in the court case and what the court decision may eventually lead to in Kitimat.

Alcan free to sell power
District of Kitimat disappointed with ruling
Dirk Meissner
The Canadian Press
Friday, March 30, 2007

VICTORIA -- B.C.'s economic development minister says the northwest B.C. community of Kitimat needs to focus its energies on building a prosperous future after losing a bitter court battle with Alcan, the company town's largest employer.

Kitimat should consider the B.C. Supreme Court loss as an opportunity to unite behind a proposed $2-billion Alcan smelter upgrade project, even if it means a loss of 500 full-time jobs, Colin Hansen said yesterday.

The B.C. Supreme Court ruled that aluminum giant Alcan faces no restrictions on what it does with the electricity it generates at its power stations.

Back in the 1950s, Alcan gained rights to water in the Nechako River system, allowing it to build the massive Kemano hydroelectric facility to power an aluminum smelter that essentially founded the community of Kitimat.

Kitimat argued unsuccessfully that the B.C. Industrial Development Act and the original 1950 power-sales agreement between Alcan and the B.C. government allowed the company to only use its power to run the smelter or create jobs in the Kitimat area.

Kitimat argued Alcan stands to make huge profits selling power generated by a public water resource and ultimately will cut smelter jobs in favour of power sales.

"Alcan is very much committed to the generation of aluminum," said Hansen. "Alcan has shown a commitment to British Columbia over the last 50-some-odd years, and in the discussions that I've had with senior Alcan executives, they certainly indicated to me that they want to continue to be a good corporate citizen in British Columbia."

Alcan proposed a $2-billion plan last summer to upgrade its aluminum smelter in Kitimat. But the plan included a power-sales plan which meant selling power to B.C. Hydro, and a loss of about 500 jobs.

The Kitimat smelter currently employs more than 1,500 people. It used to employ more than 2,500.

Alcan's smelter upgrade proposal was put on hold after the power-sales option was rejected as too expensive by the regulatory B.C. Utilities Commission. The utilities commission decision is under appeal.

Alcan spokesman Michel Jacques said the court decision is a step in ensuring the sustainability of its operations in B.C.

The company still needs final approval for the upgrade project, he said.

Hansen said he believes the smelter project will proceed now that Alcan has the right to manage the power it produces.

"Now that the courts have decided what that interpretation should be it actually allows [Kitimat and Alcan] to sit down and move forward," Hansen said. "Everybody wants what's best for the residents of Kitimat."

The most recent census results revealed that Kitimat registered the largest population decline of any community in Canada from 2001 to 2006. Kitimat's population dropped more than 12 per cent to about 8,900 people. During the early 1980s, Kitimat had about 14,000 residents.

The District of Kitimat issued a statement saying it was disappointed with the court ruling and is weighing its options.

"We have been fighting to protect our community and one of the largest water resources in British Columbia for a number of years now, standing in where the provincial government should have been," said a statement attributed to Kitimat Mayor Richard Wozney and his council members.

"We are trying to make sure the benefits of our public resources go to British Columbians. If the provincial government had stood up for the use of this raw material in a value-added and profitable industry, the outcome surely would have been different. Why are they giving away our resources to multinationals?"

Kitimat district manager Trafford Hall said the community has yet to decide if it will appeal the ruling.

© The Vancouver Province 2007