UPDATE 1-Alcoa reaches Quebec power deal; drops potline for Baie-Comeau

Tue Feb 25, 2014 12:26pm EST

Feb 25 (Reuters) - Aluminum producer Alcoa Inc said
on Tuesday it has reached a deal to renew its existing power
supply agreements in Quebec, but no longer plans to build a new
potline to replace the two it closed at its Baie-Comeau facility
last year.
    The company said under the deal the Canadian province's
power company, Hydro-Québec, will renew supply contracts for
Alcoa's Becancour and Deschambault facilities until 2030, and
for its Baie-Comeau plant to 2036.
    Alcoa closed two potlines at Baie-Comeau last year, with
combined annual capacity of 105,000 tonnes, and had planned to
build a new potline at the site. A potline is a series of
containers used to reduce, or smelt alumina, forming aluminum.
    It now plans to invest $250 million at the three Quebec
facilities over the next five years, and shift some of
Baie-Comeau's production to make more of the kinds of aluminum
used by automakers. Auto manufacturers' demand is growing
rapidly as the industry seeks to improve fuel efficiency.
 
    Alcoa had warned in October that if Hydro-Québec went ahead
with a planned rate hike, the three smelters would no longer be
competitive. 
    Smelting aluminum requires large amounts of electricity, so
power costs play a big role in where aluminum producers choose
to build their smelters.
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