Alcoa pledges to back Alcan commitments linked to Quebec hydro

U.S. aluminum giant Alcoa Inc., which is pursuing a US$28 billion takeover of Canada’s Alcan Inc., promises to meet Alcan’s investment obligations that are linked to favorable hydropower concessions from the province of Quebec.

�Alcoa and Alcan together are uniquely qualified to assume stewardship of the hydro resources and other natural resources currently under Alcan’s ownership, control, direction, and influence in Quebec,� Alcoa told Alcan’s board of directors.

In a May 17 letter to Alcan’s board, Alcoa said it would continue Alcan’s Quebec and global expansion projects. Alcan’s hydropower facilities in Quebec total 2,687 MW and include Chute-a-Caron, Chute a la Savanne, Chute-des-Passes, Chute du Diable, Isle-Maligne, and Shipshaw.

Alcan has a preferential power rate under long-term contracts with Quebec government-owned utility Hydro-Quebec, and waterways rights key to its ability to economically produce aluminum in the province. In return, Alcan has made commitments to invest in the province and maintain its head office in Montreal.

Alcoa proposes dual corporate headquarters in Montreal and New York. Alcoa also said it is committed to maintaining effective and responsible stewardship of hydro resources and other natural resources, including those that Alcan controls.

Alcoa said it would honor both companies’ plans for expansion and job growth in Quebec, and added it is prepared to carry forward Alcan smelter projects in South Africa, Oman, and Saudi Arabia.

Alcan recently announced it is beginning engineering work to install a 225-MW high-efficiency turbine at its 896-MW Shipshaw hydro project in Quebec as part of a planned ten-year US$1.8 billion investment in the aluminum company’s facilities in Quebec’s Saguenay-Lac-Saint-Jean Region. (HNN 4/30/07)

Alcoa’s plan calls for adding to a Montreal-based Primary Metals Group headquarters the people and functions necessary to manage an additional 11 hydroelectric facilities and six thermal plants in Canada, the U.S., and Australia with a combined generation of more than 2,210 MW. Those people also would manage Alcoa’s 930-MW share of three hydroelectric plants under construction in Brazil.

In addition to hydro projects and aluminum operations in Quebec, Alcan owns and operates facilities in British Columbia, including the 896-MW Kemano hydroelectric project.

Alcoa announced the unsolicited takeover offer May 7, and said its offer is scheduled to expire July 10, subject to extension.

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