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Labour costs impacting Kitimat smelter project

Russell Hixson
Labour costs impacting Kitimat smelter project

The price tag for an aluminum smelter upgrade in Kitimat, B.C. has reached US$4.8 billion, after project overruns prompted Rio Tinto to increase capital cost estimates by $1.5 billion.

The London-based company’s board announced the funding change last week.

The spending is on top of an additional $400 million that was previously allocated.

Rio Tinto Alcan spokesperson Colleen Nyce said construction on the ground is about 60 per cent complete.

The entire project is about 69 per cent complete overall, including engineering and procurement.

The first production from the Kitimat Modernization Project is expected during the first half of 2015.

Nyce said the additional funds are required due to cost overruns.

The Canadian Press reported that Rio Tinto Alcan’s former chief executive officer, Jacynthe Côté, had said that difficulty in finding the right workers pushed the project off schedule and over budget.

According to the company’s half year report, a review of major capital projects had identified the extra expense.

The overrun evaluation was completed and identified the requirement for additional capital of $1.5 billion to complete the project.

The modernization and expansion of the aluminum smelter is expected to increase annual capacity from  280 kilotons  to 420 kilotons.

The project involves the demolition of several buildings on the site of the existing smelter and clearing space for a new plant.

There are about 1,100 employees at Kitimat and nearly 3,000 people working on the project.

In 2011 Rio Tinto announced that it would upgrade the dated Kitimat smelter, increasing  its aluminum production capacity by more than 48 per cent.

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