U.S. aluminum producer Alcoa Inc warned on Wednesday that a planned electricity rate hike in Quebec would make its three smelters in the province uncompetitive.
Alcoa has notified provincial power company Hydro-Québec that it plans to reduce its contractual obligations to buy power starting 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 to continue to invest in its operations and maintain its important economic impact in Quebec,” Alcoa said.
Producing aluminum is a power-consuming process, and disputes over electricity rates are not uncommon.
The smelters that could be affected are in Deschambault and Bécancour, both on the north shore of the St. Lawrence River between Montreal and Quebec City, and Baie-Comeau, some 350 kilometers northeast of Quebec City.
Alcoa’s latest annual report said Deschambault facility has the capacity to produce up to 260,000 tonnes of aluminum each year. It owns 75 per cent of Bécancour, which has 413,000 tonnes of annual capacity. Rio Tinto holds a minority stake in that smelter.
Baie-Comeau’s capacity was reported as 385,000 tonnes in the annual report, but Alcoa said in May it would permanently close two potlines at that smelter, with total capacity of 105,000 tonnes.
Hydro-Québec could not immediately be reached for comment.