Alcoa aluminum company reaches power deal with Quebec

Alcoa and the government of Quebec have reached an agreement over electricity rates, saving an estimated 3,000 jobs in the province.

In October, the aluminum company hadthreatened to close down three of its Quebec facilities afterHydro-Qubec said it would hike how much it charges the company for electricity.

• Alcoa threatens to close Quebec smelters over hydro hikes

At the time, Premier PaulineMaroiscalled the response "alarmist" and unnecessary.

Today at a news conference in Baie-Comeau, Premier Pauline Maroisannounced the province had agreed to continue offering preferential rates fortheBcancourandDeschambaultfacilities until 2030 and for theBaie-Comeauplant through 2036.

In exchange for the preferential rates, Alcoa will invest $250 million over five years to modernize its three Quebec plants.

Radio-Canadasays Alcoa's power rate is going up to 3.3 cents per kilowatt-hour under the deal, from 2.8 cents previously. That compares tothe normal rate of 4.3 cents it faced on Jan. 1 without today's deal with the Marois government.

The agreement will help Alcoa achieve its goal of moving down the global aluminum cost curve,"said Bob Wilt, president of Alcoa Global Primary Products.

The companyis no longer pursuing a plan to modernize itsBaie-Comeau facility at a cost of $1.2 billion, although it has committed $150 million to the site.

Alcoa closed two of itspotlines a series of containers used to reduceor smelt alumina before forming aluminumat theBaie-Comeauplant last year. The potlines had acombined annual capacity of 105,000 tonnes, and Alcoahad planned to build a new potline at the site.

The companyhas agreed to support the governments electric transportation strategy by considering the Baie-Comeau facility as a potential source of aluminum for emerging technology applications, including aluminum-air batteries for electric cars which Alcoa is developing with technology company Phinergy.

In a statement, Alcoa said it hoped to take advantage of the increased amount of aluminum used in automakingin order to expand its business.

Automakers have indicated that aluminum body sheet content in North American vehicles is expected to quadruple by 2015 and increase tenfold by 2025, from 2012 levels, Alcoa said.