The Quebec leaders of Rio Tinto, Alcoa and Alouette touted the potential of green aluminum in Quebec on Wednesday during a panel discussion at the Montreal Council on International Relations. However, they made a sine qua non condition for their investments in Quebec: obtaining competitive electricity rates.
Aluminum smelters are among the biggest emitters of greenhouse gases in Quebec, but they are aiming for carbon neutrality by 2050.
“We were very affected by the forest fires in our region. It just increases the need to mobilize as a society [par rapport à la carboneutralité], and we have a role to play,” said Claude Gosselin, President and Chief Executive Officer of Aluminerie Alouette. “The community, the government, the financial market and our customers all have expectations of us. »
Rio Tinto and Alcoa rely first and foremost on Elysis technology, which makes it possible to produce aluminum without emitting CO2.
“It’s like going from a combustion engine to an electric motor,” said Jean Simard, president and CEO of the Aluminum Association of Canada.
However, it remains to be demonstrated that this technology works on a commercial level, underlined the president of Alcoa Canada, Louis Langlois. If all goes well, the first large-scale production could take place in 2026. At Rio Tinto, it is planned to build new factories using these technologies, alongside existing factories, since it would be complex to adapt the latter, estimates the executive director of Atlantic operations at Rio Tinto, Sébastien Ross.
In the meantime, Rio Tinto wants to reduce its emissions by 50% by 2030. Decarbonization of the alumina refinery, carbon capture and recycling projects are on the menu. It is also hoped to be able to replace 96 prebaked anode tanks at the Arvida plant with tanks emitting less greenhouse gases.
Foreign competition
All these changes will require a lot of investment, say the leaders. Additional energy will also be needed to ensure decarbonization, they say, when this energy-intensive industry is already Hydro-Quebec’s largest customer. However, it is not guaranteed that these investments will be made in Quebec.
“The price of electricity is the factor that determines whether an aluminum smelter is profitable or not,” said Louis Langlois. When we look at the cost curve, the price must be at least in the median of all aluminum smelters in the world. »
Mr. Simard pointed out that aluminum from the Middle East, which is fueled by natural gas, and that from India, which uses coal, compete with Quebec aluminum for American customers.
“If it’s not in Quebec, investments in aluminum smelters could be made in the Middle East or elsewhere in the world,” he said.
Getting through crises
Dozens of aluminum smelters have closed in recent years as various geopolitical crises have driven aluminum prices down and energy costs soared. The risk-sharing contracts of Quebec aluminum smelters with Hydro-Quebec have allowed them to maintain their activities, said the leaders.
These agreements ensure that electricity rates are modulated according to the price of aluminum. When the price of aluminum is low, companies pay less for their electricity. This allows them to pay less than tariff L, linked to most industrial activities.
However, these contracts will expire in the coming years. The four industry representatives argued for maintaining this model.
The leaders seemed on Wednesday to be hopeful of reaching an agreement with Quebec. Without wanting to go into “confidential negotiation” details, Mr. Ross indicated that Rio Tinto, which has its own hydroelectric facilities, could support Hydro-Québec during peak periods by “jointly optimizing [leurs] reservoirs”. All this in the context where Hydro-Québec plans to have to increase its production capacity by at least 50% by 2050 to meet the needs of the energy transition.
Mr. Simard recalled the role of aluminum in this transformation of the economy. “The battery is meaningless if the aluminum isn’t there to encase it inside the car, to make aluminum wiring transmission lines, or to make solar panels that go supply electricity,” he said.
Remember that aluminum was added to the list of critical Canadian minerals in 2021.
If not in Quebec, investments in aluminum smelters could be made in the Middle East or elsewhere in the world Jean Simard”