Innovation and Industry Shifts: Modernization
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A potroom at the Rio Tinto Alcan smelter in Alma, Quebec, employing technology similar to what will be installed at Kitimat through the modernization project. |
Overview
Rio Tinto Alcan continually assesses investment opportunities by which it can sustain and advance its position within the vibrant and rapidly evolving global aluminum industry.
This involves, in part, investments in research and development to support refined production processes and product attributes. In 2007, Rio Tinto Alcan Primary Metal BC alone incurred $690,000 in such expenditures.
Rio Tinto Alcan also looks for compelling combinations of market opportunity, technology availability, access to capital, and hosting conditions that justify either greenfield or modernization projects with the potential to achieve step-changes in productivity and environmental performance.
A modernization plan for the Kitimat smelter – which began operation in 1954 – was announced in 2006 based on an alignment of such factors.
Strategies and Initiatives
The Kitimat Modernization Project: Modernization at Kitimat Works will involve construction of a new smelting system and associated infrastructure, using the latest evolution of “pre-bake” smelting technology, on the existing site.
Fewer but larger pots will operate in the modernized smelter, under more precise process control and at higher amperage than is possible with the current vertical stud Söderberg technology. A larger proportion of Kemano-generated power will be used at the new smelter, with more production per unit of energy consumed.
The modernized smelter will be able to produce up to 400,000 tonnes of aluminum per year (125,000 more than current capacity), while generating 40 per cent fewer overall emissions, including greenhouse gases. It will be one of the three largest smelters on the continent and will operate in the first quartile of global industry cost curves.
Modernization Progress: The modernization plan remained subject only to final Rio Tinto Board approval when this report was prepared. This was due to strong progress during 2007 – a year at the beginning of which all three conditions for submission to the Board remained outstanding.
The first condition was met in May, 2007, when a collective agreement was reached with the Canadian Auto Workers Union (CAW) Local 2301, covering the construction and start-up period. This was the first time the union agreed to open negotiations early, and the typical 10-12 month negotiating period was condensed into 30 days, based in part on prior agreement on terms of reference.
The second condition was met in December, when both federal and provincial environmental ministries confirmed that the project does not trigger an environmental assessment. And the third condition was met in January, 2008, when the BC Utilities Commission approved a long-term energy purchase agreement with BC Hydro. (See “New Agreement Puts Smelter First".)
With the pre-conditions achieved, preparatory work for modernization proceeded. This included awarding a contract for a detailed feasibility study and preliminary engineering work, ordering substations, and creating project modernization teams.
Community Impacts and Outreach: The modernization project is expected to secure the viability of the smelter for 35-50 years at an employment level of approximately 1,000. The timing is such that the 400-600 retirements coming up over the construction period will allow for a workforce transition that will not involve layoffs.
Rio Tinto Alcan Primary Metal BC is actively working to advance regional economic diversification, to assist with offsetting the impact of the new total employment level at its operations. (See “Regional Industrial Development”.)
During 2007, Rio Tinto Alcan Primary Metal BC personnel engaged with a new Social Impact Committee established at the initiative of the Kitimat Chamber of Commerce. The committee’s mandate is to look at the impacts, on social and economic services, of modernization and various other industrial projects and proposals that may proceed in the Kitimat-Terrace region in the coming years.
A modernization information office at the Kitimat City Centre Mall was opened in 2007, and various presentations to community audiences were given.