Bechtel Gains $200-Million (U.S.) Contract For Kitimat Project

Nickle's Energy Analects
11 July 2008

Bechtel Corporation says it has signed a $200-million (U.S.) contract to provide engineering, procurement and construction management for the Rio Tinto Alcan Inc. modernization project at the smelter complex in Kitimat, British Columbia.

The proposed $2.5 billion Kitimat Modernization Project would increase production capacity at the smelter by 40%, taking it up to 400,000 tons per year and increase Rio Tinto annual global primary aluminum production capability by more than three per cent.

This will make Kitimat one of the largest Rio Tinto smelters in the world.

Plans call for the Kitimat aluminum production capacity to increase by 125,000 tons by using hydroelectric power from the generating station at the complex. The modernization and green power usage is expected to reduce greenhouse gas emissions by more than 40% per year.

First metal from the modernized smelter is expected in 2011.

In January, the British Columbia Utilities Commission (BCUC) accepted the approach and objectives proposed by BC Hydro and Power Authority in a long-term electricity purchase agreement (EPA) reached with Alcan Inc for supply from the Kemano hydroelectric facility.

The term of the EPA was retroactive from Oct. 1, 2007 and extends to Dec. 31, 2034.

Subsequent to submitting the proposed EPA, Alcan was acquired in November 2007 and renamed Rio Tinto Canada Holding Inc. (RTCH).

The commission concluded the net benefits to ratepayers, calculated by comparing the cost of the 2007 EPA to other resource alternatives, would still be positive under most reasonable scenarios and likely range between $65 million and $120 million under a natural gas price forecast by by the Energy Information Administration in the United States.