A BILLION DOLLAR The Terrace Standard, Wednesday, August 20, 1997 - AS DEAL Politicians remain coy about compensation for Kemano, but the stock markets estimate the deal is worth big bucks By DERRICK PENNER THE PROVINCE dodges any effort to pin down exactly how much its power-for-jobs deal with Alcan will cost B.C. taxpayers. Premiers Mike Harcourt and Glen Clark both maintained B.C. taxpayers would not have to pay to compensate Alcan for the province’s 1995 decision to kill the Kemano Completion Project. But the final arbiters of a company’s value — the stock markets — have concluded Alcan is now worth on the order of $1.1 billion more than it was in the weeks before the agreement. Critics had long suspected the planned deal would amount to taxpayer-subsidized power for Alcan, amounting to a big chunk of the $500 million Alcan spent on the massive hydroclec- tric project before work was halted. Company share prices shot up $2, from around $48 to $50, just after Premier Clark an- nounced legislation July 23 which would enable the province to sell power due to B.C. from the Columbia River Treaty. Those share prices continued the steep rise through announcement of the deal — which gives Alcan cheap power in exchange for build- ing a new aluminum smelier al some point in the future. Alcan shares on the Toronto Stock Exchange peaked August 5 at $55.70, close to $8 above their July 22 price of $48. The price has since ‘sellled in at around $53. That tanslates into an increase in the overall value of Alcan in the order of $1.1 billion, based on the Toronto Stock Exchange prices. “The company with that settlement is worth a Clark optimistic for new smelter Share price $ Alcan stock 56 B.C., Alcan sigit jobs-far-power deal to end Kemano talks 54 B.C. gains Columbie 52 | | Alver Traaty power 50 July15 July22 July29° Aug5 Jot more than the company without the seltle- ment,” noted Peter Kennedy, a professor of economics at Simon Fraser University. He explained uncertainty among stock market players about whether or not Alcan would reach an agreement with the province likely held the price of shares, and the value of the company, down. ‘Usually the market can guess what's going to happen in a settlement, but it’s never really sure. And because it’s never really sure, the price doesn’t match what it would be if an agreement was in place,’’ he said. If an agreement matches what buycrs anticipated, Kennedy noted, the price will make a sudden jump to what it ought to have been. Ray Castelli, Alcan’s director of corporate af- fairs in B.C., agreed the spike in ils share prices is an important development for the company. “(The agreement) makes the company that much more valuable, and I think the market had discounted a lot of the value out of KCP and hadn't really expected much to come out of il,” he said. Castelli added the fact Alcan did get an agree- ment, which retained some value compared to KCP, and opened up the opportunily to build a new smelter in a competilive way, has peaple looking at the company in a positive light. “That and the fact metal prices are getting stronger and inventories are going dowa, people are looking favourably at the industry. This just helped give (Alcan) a boost,”” he said. ‘Castelli noted while the company’s share . price may fluctuate fairly widely over a given period, company officials look for an upward trend in the price. And Alcan has seen an upward Irend, its share prices on the TSE more than doubled between the end of 1992, when they traded at over $22.50, and the end of 1996 when the price was $46.25. EE CORRESPONDENCE FOR THE TERRACE STANDARD DESPITE Alcan CEO Jacques Bougie’s words of caution, Premier Glen Clark predicts expansion: of the Kitimat smelter wil] go ahead. “Without a smelter, one would wonder why Alcan would agree to this,”’ he said, suggesting the com- pany wouldn’1 have done so unless it intended to proceed with the pro- ject, Bougie virtually contradicted the buoyant premier when the deal was announced, saying the deal cleared the way for ‘‘potential’? expansion, wilh the word ‘potential’ ‘underlined three times.”’ As for Bougie’s comments, Clark suggested, ‘‘he was being overly cautious, I think, here because of past experience,”’ a reference to a proposed smelter in Manitoba that ultimately did not go abead, He also noted the power pricing formula in the agreement gives the company an incentive to build sooner rather than later. “We could have got a settlement with Alcan a year or so aga,'’ Clark suggested, ‘but they didn’t want... to be committed to building a smiter in Kitimat.” Everything the government had done, he said, was to drive that connection between a settlement and a smelter, ‘“That’s what we've got here.”’ Admitling there were still some hurdles for Alcan to clear before any such project could go alcad, Clark said the provincial govern- ment would be putting together a project team “to blast away at any af those hurdles.” Jt, for example, Alcan ran into a problem with labour supply, the government would try to provide training. And although it could not and would not interfere in the environ- mental review process, it could help out by “ensuring a short time frame.” Clark said he had also talked to Bougie about maximizing the BC’ and local content in the construc- tion and eventual fulltime jobs in a new smelting operation. *‘There’s a lot of work for the government here,’’ he said. For Skeena MLA Helmut Gies- brecht, the announcement offered the opportunity to close a ‘‘foot and a half thick file’? on RCP. ' “Tt wil be nice to close the old file on the history and start a new one dealing with the future and results of this agreement,’’ he added. Giesbrecht said he had ‘‘vivid memories” of being in that same Riverlodge Community Room in January 1995 when then-premier Mike Harcourt had announced the cancellation of KCP. **¥You will recall he got a very warm reception,” he said, drawing laughter. Since then, he said he had dis- THE DEAL Power tied to UNPOP:"LAR DAY: Premier Mike Harcourt personally delivered the bad news in January, 1995 that the B.C. government would not allow the massive Kemano Completion Project io go ahead. Le? cussed KCP with members of the government and his own and oppo- sition parties. What made it dif- ficull, he explained, was cancella- tion was ‘‘the popular move’’ in their ridings. “Tf at times the citizens of Kitimat {elt alone in the province, I shared in that feeling.’’ Thanking Clark for living up to his commit- ment to the people of Kitimat, Giesbrecht also did the same to Bougic and Alcan, noting it took more than one party to make an agreement, Kitimat turns page on uncertain decade aluminum prices THE AGREEMENT between B.C, and Alcan says the province would provide up to 175 megawatts of hydroelectric power for an expan- sion of Kitimat Works operations. One third of that would be at a‘ price equiva- lent to “KCP overhead and maintenance costs for the production of an equivalent amount,’ That price would hold until Jan, 1, 2024, The price of the remaining power would be charged at a percentage of the price of aluminum on the London (UK) Metals Ex- change, starting at 13.5 per cent in 2003 and rising to 16.5 per cent for the years 2009-2024, ‘sPart of the compensation is in the energy block made available to Alcan for expansion,’ Alcan CEO Jacques Bougie pointed out, If the company did not proceed with the smelter project, it would lose that part of the compensation package, And although there was no deadline for Al- can to take advantage of the power prices, Bougie noted the escalating price formula 1 means the optimal date to start up a new plant would be the years 2003 or 2004, What odds would he put on expansion? | “Pm not a betting man, so I don’t take odds and [don't offer odds.” TEN LOST YEARS. That’s how Kitimat mayor Rick Wozney describes the interval between the 1987 Kemano Completion Project deal and the announcement of the KCP cancellation settlement. A decade ago, he pointed out, any positive thinker would have scen the Kemano Completion Praject as a slepping stone to an ex- pansion of smelling capacity in Kitimat and all the jobs that would bring. And it also signalled a giant construction project with hundreds of jobs gener- ating spinoffs throughout the northwest, “We've lost thal. We'll never recover that, never, and that’s unfortunale for our community.” In his eat- lier speech, Wozney had reminded those present just what cancellation had cost Kitimat, pointing to a pept- lation decline of sore than 2,000 as people who | Rick Wozney couldn’t wait any longer for ‘the boom” left town. ‘T'm still saddened that KCP did not proceed as scheduled,”’ he admitted, adding the latest agreement was a first step in repairing the economic damage suf- fered here. In a jater Interview, Woz- ney also warned Kitimat could not ‘‘falt asleep’’ as it had afier 1987. Then, he recalied, peaple here as- sumed ‘‘iogic and reason would carry the day.” This time around, if oppo- sition started to build, he suggested Kitimal may have to adopt similar tactics to those being used by Joggers in their battle against Green- peace. ‘We're gaing to have to become a little more proac- tive as opposed to always reacting,’’ he added. Apart froin that, it would now be the job of the cily to keep talking about Kitimat, keep making the point that it is part of B.C. and that it al- ready produces nine per cent of ihe province’s gross domestic product. So we're not talking small potaloes, we're talk- ing a fairly major contribu- tion to the province.” The Mail Bag _ Fightin’ words An Open Letter To Helmut Giesbrecht: Helmut you are way off base when you say that the recall movement is about fighting the last election. You stil! don’t get it If you had spent more time representing your Skeena constituents in Victoria and less time representing Vic- toria to your Skeena constituents, there wouldn’t have had to be a recall. . Your response to our recall initiative was typical — “Put up your dukes.” You bet, Helmut! The gloves are off. Lorne Sexton Terrace, B.C. Boarders treated badly Dear Editor: This letter is in regards to the unfair treatment of skateboarders, and free style bikers in Terrace. These recreational sports have been growing in popularity over the past couple of years, so much so, that now we have our own board shop. Skateboarding as a sport has received world wide media coverage, as well as community support. The popular place to skate right now is at the Evangelical Free Church, but the residents in the area have the police patrolling the area almost every hour, Why are they patrolling? Are they afraid of us? I have never seen anyone complain about roller bladers or about the young children that ride their bikes around. I would like to know why? They do exactly the same thing as we do. Why is there so much prejudice against skateboarders? At first the complaints were about the noise. We are aware of the noise by-law that starts at 11:00 pm, but we are being kicked out as early as 7-8 pm. I would like to state that the noise thal we produce is nothing compared to what comes ont of the mall park- ing lot, The people that hang out there are blaring their car stereos, squealing their tires, drag racing down main and drinking in public. Why are they not being penalized for breaking the by-law? And do not try to tell me that they are not in a residential area because they can be heard all the way down by Loen Ave. If I was a parent, I would rather have my child skat- ing in a well known area where they are doing some- thing positive, rather than getting into mischief to cure their boredom. Why is the community treating skateboarding as if it were a crime while rollerblading is a totally accepted sport? Skateboarders are not hoodlums that beat people up with their skate decks, They ate just like everyone else. We are bored with nothing to do, so we skate. Terrace in itself is growing, but it scems that every- one. still thinks of it as litte old Terrace. I suppose when the residents of Texrace accept change maybe they will accept skating too, oN Soper tart I would like to take this opportunity to thank Rich McDaniel and Tara Valk ‘for-theit hard work dnd dedication to the skate park. We are all in great debt to both of you. Thank You. Angela Boutilier Terrace B.C. _ Stop the fingerpointing Dear Sir: I read with interest about your MP Mike Scott's neg- ative comments about foreign protesters posing such a threat to the forest industry. that they should be expelled from Canada, and that domestic protesters should have a criminal record check. 1 suppose this is all part of the fingerpointing that goes on in a economic crisis, but | would like to ask a simple question. What does the shutdown of the northern mills have to do with anything done by environmentalists, whether they come from Germany, Schenectady or Telkwa? The NDP government, which has deceived people domestically and internationally with the Forest Prac- tice Code, would love unemployed forest workers to vent their anger at the ‘‘cnemies of the state’ identified by Premier Clark. In the meantime these workers would believe government and industry are blameless, As forests disappear, governments which fail to change will misdirect public anger for as long as they can. Scott’s whining and Clark’s hate mongering are two excellent cases in point. Men of this ilk would do well to remember the grade school epigram often used by teachers to break the cycle of blaming so common among children: “When you point your finger at your neighbour, there are three more pointing back at you.” Government and industry have policies of high grad- ing, clear cutting, sympathetic administration, mechan- ization, waste and raw log export. All are leading to the downfall Terrace is experiencing. How many billions of dollars worth of wood have Hed the country in the last ten years? Repap broke? Give us a break, They have cut and run, leaving their political supporters behind running at the mouth. Ean Hanilten Nelson B.C. Labour code under attack Open Letter to Minister of Labour John Cashore: Al this juncture, 13 or 14 months after the last provincial election, the labour code is again at the fore- front. , Thirteen months ago, 14,000 unionized workers at Safeway & Overwaitea were protected from replace- ment workers taking their jobs during a strike/lock-out situation, Why? Because the BC, Labour Code said so, a labour code that terrifies some but that protects many more, The labour code is again at the fore and under attack; under attack by a force that could care the least about its work force when it comes to decent wages and benefits and working conditions. Those who know what a labour code is and does, continue to support this fair legislation, For those who don’t, you should, Norm Lavallee President of the Kitimat- Terrace & District Labour Council