REPORTING · 16th April 2010
CP - Montreal
Rio Tinto Alcan will not be rushed into giving the green light to various projects until a clearer picture of economic stability emerges, the CEO of the aluminum giant said Monday.
Jacynthe Cote told the Canadian Club there are encouraging signs that demand for the lightweight industrial metal is bouncing back.
But Cote said it is too early to accelerate the investments that were put on hold because of the worldwide economic slowdown, including a pilot plant using its AP50 technology in Saguenay, Que.
Rio Tinto Alcan is also involved with a $2-billion smelter expansion in Kitimat, B.C. It also plans to expand the Alma smelter and build a high-efficiency turbine at its Shipshaw power station. Both of those are in Quebec.
Cote, the head of the aluminum division of the global mining giant Rio Tinto PLC (NYSE:RTP), said it's important to wait a few more quarters to make sure the economic recovery actually takes hold.
But even that won't be a cure-all for the industry because of the vast quantities of aluminum that are on the market and need to be used up before prices firm up, she said.
The long-term prognosis is very encouraging, however, she noted.
"I believe the aluminum industry has a bright future and....we anticipate an increase in demand of four to six per cent per year,'' Cote said in her speech.
"That means that worldwide aluminum demand should roughly double within 10 years.''
Aluminum is widely used in packaging, auto production and in the aircraft industry.
Cote also used her speech to praise the Quebec government for not hiking the preferential rate - the so-called Rate L - it offers huge industrial users of electricity.
"With the Canadian dollar verging on parity, Rate L is already a slightly higher price than the average rates our industry pays for electricity around the world, and it is clear that industry would not be able to absorb major hikes in Rate L.
"If the aluminium industry is to be able to continue growing here in 20, 30 or 40 years, it must be able to buy electricity at competitive and predictable prices.''
Rio Tinto Alcan, the former Montreal-based Alcan Inc., has about 23,000 employees in 27 countries.