Premier Pauline Marois reassures Alcoa employees, says negotiations underway

Premier Pauline Marois said Wednesday she would enter negotiations with Alcoa Inc., which has said its three Quebec smelters would no longer be competitive if Hydro Québec raises its electricity costs by a reported 60 per cent.

"We should reassure Alcoa employees, not scare them," Marois said in repsonse to opposition questions at the National Assembly.

it was in response to media reports that Alcoa — which employs 3,300 at three Quebec aluminum smelters in Bécancour, Deschambeault and Baie-Comeau - could shut down in 2015.

She said talks with the company are underway but she would not negotiate in public. Marois told the assembly there are "discussions at the highest level" between Alcoa and the Quebec government, led by high-ranking civil servant Jean St-Gelais, and Finance Minister Nicolas Marceau.

According to TVA, the annual electricity bill for the three smelters would jump to $570 million from $350 million. François Legault, leader of the Coalition Avenir Québec, said the government is proposing a 60-per-cent increase in the hydro rates.

But Finance Minister Marceau recalled that the previous Liberal government announced the end of the risk-sharing agreements in its 2010-11 budget, saying then, that the aluminum companies would pay 25 per cent, or $160 million more a year for electricity, on average.

Alcoa would not confirm the amount of the increase.

"This is a major industry for Quebec," Marois said. Aluminum smelting has been established in Quebec "for decades," providing "very good jobs.

"And we will continue to do so," the premier told the assembly.

In an email response, Alcoa spokeswoman Lysane Martel confirmed that a shutdown of the three smelters was a possibility.

"Given the current conditions of the aluminum market and in the absence of a satisfactory resolution with the government of Quebec, our smelters will become uncompetitive in 2015," Martel wrote in an email. "Therefore, curtailing the smelters is a possible outcome."

Alcoa, which acquired the three smelters, benefited from Hydro-Québec's so-called risk-sharing, or loss-sharing agreements, dating back to the 1980s and designed to attract new smelters to the province with low-cost electricity from Hydro-Québec's surplus output.

Martel said Alcoa is seeking — in its talks with the government — an extension of "this type of formula which had proven to be beneficial for all parties."