Alcan cuts Kitimat production in half

Alcan (AL-T) has announced that, due to low water levels, it will further cut aluminum production at its Kitimat smelter in British Columbia.

Beginning the week of June 18, production will be cut to 50% of the smelter’s nameplate capacity of 275,000 tonnes per year. The latest move follows a 16-month, 30,000-tonne (or 10%) production cutback in January.

Both reductions stem from historically low water levels in B.C. reservoirs, due to a province-wide drought. The Kitimat smelter is powered with electricity generated by Alcan’s hydroelectric power plant, which draws its water from the Nechako reservoir.

“The situation has not improved and it is now clear that the spring runoffs have not provided enough water to maintain the current reduced level of aluminum production and meet our energy supply obligations to B.C. Hydro,” says Emery LeBlanc, president of Alcan’s primary metal group. “By cutting back additional production we can meet our contractual commitments to B.C. Hydro, generate income from additional power sales and keep all employees on the payroll.”

Facing the same problem in Brazil, Alcan recently reduced aluminum production there by 12,000 tonnes. Curtailments are expected at other Brazilian smelters as the government has called for energy users to make voluntary cuts of up to 20% of consumption. Such a reduction could drop the country’s aluminum output by as much as 200,000 tonnes.

In afternoon trade on the Toronto Stock Exchange, Alcan shares were off $1.80 at $66.60. In New York, they were US$1.08 lower at US$43.81.