Alcoa warns Quebec against power rate hike

Reuters

Oct 30 (Reuters) - U.S. aluminum producer Alcoa Inc warned on Wednesday that a planned electricity rate hike inQuebec would make its three smelters in the Canadian provinceuncompetitive.

Alcoa has notified provincial power company Hydro-Québecthat it plans to reduce its contractual obligations to buy powerstarting Nov. 1, 2014, the company said in an emailed statement.Rates are set to rise on Jan. 1, 2015.

"A competitive power rate is needed that allows Alcoa tocontinue to invest in its operations and maintain its importanteconomic impact in Quebec," Alcoa said.

Producing aluminum is a power-consuming process, anddisputes over electricity rates are not uncommon.

The smelters that could be affected are in Deschambault andBécancour, both on the north shore of the St. Lawrence Riverbetween Montreal and Quebec City, and Baie-Comeau, some 350kilometers northeast of Quebec City.

Alcoa's latest annual report said Deschambault facility hasthe capacity to produce up to 260,000 tonnes of aluminum eachyear. It owns 75 percent of Bécancour, which has 413,000 tonnesof annual capacity. Rio Tinto holds a minority stake inthat smelter.

Baie-Comeau's capacity was reported as 385,000 tonnes in theannual report, but Alcoa said in May it would permanently closetwo potlines at that smelter, with total capacity of 105,000tonnes.

Hydro-Québec could not immediately be reached for comment.

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