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ABI Lockout Costs Alcoa, Rio Tinto $150 Million – and Counting

BÉCANCOUR, Que. – First-quarter results released today by aluminum giant Alcoa feature a major blemish – losses of $150 million to date from its decision to lock out workers at its ABI smelter in Quebec in January.

“Just how much is Alcoa willing to lose before getting back to the bargaining table?” asked Clément Masse, President of United Steelworkers (Syndicat des Métallos) Local 9700, representing the 1,030 locked-out ABI employees.

“The lockout has been a terrible financial decision from the beginning, considering that shutting down and eventually re-starting the smelter’s potlines will cost $100 million alone,” Masse said.

In addition to the $100-million cost associated with the production shutdown and eventual restart, revenue losses from the ABI lockout amount to US$16 million a month – approximately $50 million since the lockout began, the Steelworkers union says.

The estimate of revenue losses is very conservative and is based on data from the Commodities Research Unit (CRU), the union says.

Given Alcoa’s 74.9% stake in the ABI smelter, its share of the estimated $150-million cost of the ABI lockout amounts to about $112 million, compared to about $38 million for co-owner Rio Tinto.

“The hole is getting deeper by the day,” Masse said. “It’s at least $16 million a month and probably much more, given that the smelter has stopped producing value-added products such as aluminum billets and slabs.”

The Steelworkers say the estimated losses from the ABI lockout are conservative because they are based on prices and production costs for the smelter’s aluminum ingots only. The estimates don’t take into account the fact that three-quarters of ABI’s normal production consists of value-added billets and slabs, which generate greater profits than ingot production.

Furthermore, the company’s balance sheet is taking a significant hit from fixed operating costs that remain even though the smelter is operating at only one-third capacity during the lockout, the union notes.

Prior to the lockout at ABI, the union’s bargaining committee had agreed to consider the creation of a new pension plan for all employees – in direct response to the employer’s concerns. Rather than continue negotiations to reach a settlement on the remaining two outstanding issues, the company broke off talks and forced a vote on a final offer that was predictably rejected by workers. The company then locked out its employees on Jan. 11.

“This charade has gone on long enough. The 1,030 workers and their families have given up a lot, an entire regional economy is suffering, Hydro-Québec has lost $60 million and counting,” Masse said. “Even ABI is losing US$16 million a month. It’s time for Alcoa and Rio Tinto to end their ideological inflexibility and take a new approach to rational negotiation.”

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For further information:

Clairandrée Cauchy, United Steelworkers/Syndicat des Métallos Communications, 514-774-4001, ccauchy@metallos.ca

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