Hydro-Québec losses since Jan. 11 reach $41.7 million
MONTREAL, March 20, 2018 /CNW/ - Publicly owned Hydro-Québec is losing $604,464 a day due to the unilateral decision by multinationals Alcoa and Rio Tinto to lock out workers at the ABI aluminum smelter in Bécancour.
Since the lockout was imposed on Jan. 11, Hydro-Québec has lost $41.7 million in earnings, according to an independent analysis of the terms of the hydro contract between the public utility, the Quebec government and the ABI smelter. The contract analysis was commissioned by the United Steelworkers (Syndicat des Métallos), which represents the 1,030 locked-out workers at ABI.
The contract stipulates that ABI must pay for the entire energy block that Hydro-Québec has set aside for the smelter, whether the power is used or not.
After ABI workers were locked out in January, the smelter's co-owners – Alcoa and Rio Tinto – cut aluminum production by two-thirds, with a comparable reduction in the facility's electricity consumption.
However, the analysis of the terms of the contract reveals that the company's obligation to Hydro-Québec can be suspended when it locks out its workers. Even though the lockout is a unilateral decision by the company, the contract is structured to allow the company to declare "force majeure" and avoid paying for the hydro it is not using
The loss in revenues to Hydro-Québec during the lockout amounts to $604,464 per day during the winter and $600,352 daily in summer months, according to the independent analysis of the contract. Over the course of one year, revenue losses would reach $220 million.
By declaring force majeure, ABI also avoids an annual $41.9-million penalty it would normally have to pay due to decreased production, under terms of the contract. The contract calls for such penalties when production falls under a threshold of 380,000 tons of aluminum per year.
"A lockout is not an earthquake; it is an informed business decision," said Dominic Lemieux, Assistant to the United Steelworkers Quebec Director.
"It makes no sense for the lockout to be considered a case of force majeure and for the cost burden to fall in part on the shoulders of all Quebecers. You can't simply say this is a private dispute when the situation can ultimately have such a significant impact on all Quebecers," Lemieux said.
Alcoa and Rio Tinto rejected the union's offer to continue negotiations in January and decided instead to lock out the 1,030 ABI workers.
"The company benefits from favourable electricity rates from the Quebec state because it is supposed to create good jobs in the province in return," said Clément Masse, President of Steelworkers Local 9700 at the ABI smelter.
"Instead, the company is unilaterally breaking this pact, even though a negotiated resolution is within reach. This is placing a heavy burden on 1,030 families and the economy of an entire region. And now we understand that Quebecers as a whole will also be paying the price," Masse said.
The ABI lockout has rekindled memories of Rio Tinto Alcan's controversial lockout of aluminum workers in Alma, Que., in 2012, when Hydro-Québec was forced to buy surplus hydro from the company's smelter as it cut production during the lockout. Hydro-Québec paid Rio Tinto $148 million over six months to buy electricity that the public utility didn't even need.
"In this scenario in Bécancour, Hydro-Québec is losing revenues rather than paying out money. But the logic is the same: Quebecers as a whole have to foot the bill for the cavalier actions of these aluminum multinationals. It gives us a sense of déjà vu," said Lemieux.
In all, four terawatt hours are being added annually to Hydro-Quebec's surpluses, while the utility is already struggling to sell excess electricity.
A summary of the independent analysis of the hydro contract commissioned by the United Steelworkers is available at: https://www.metallos.org.
U.S.-based Alcoa owns 74.9% of the ABI smelter and the Australian-British multinational Rio Tinto owns 25.1%. The smelter's production reached 439,999 tonnes in 2017.
ABI workers were locked out as negotiations stalled on pension and seniority issues. Late last fall, the union's bargaining committee agreed to consider the creation of a new pension plan for all workers – in direct response to the employer's concerns.
Despite the significant compromise offered by the union, rather than pursue a negotiated settlement the company broke off talks and forced a vote on a final, comprehensive offer that was rejected by workers.
The United Steelworkers/Syndicat des Métallos, affiliated with the Quebec Federation of Labour (QFL-FTQ), is Quebec's largest private-sector union, with more than 60,000 members working in all sectors of the economy.
SOURCE United Steelworkers (USW)
For further information: Clairandrée Cauchy, United Steelworkers/Syndicat des Métallos Communications, 514-774-4001, email@example.com