Title: Baptism of fire for new Rio Tinto Alcan CEO

Sub-title: A 65% drop in aluminium prices forces Jacynthe Côté to announce the shuttering of two Quebec facilities and the elimination of 1,100 posts


It was a rough way to say hello. Late last month, just a few days before taking on her new position as Chief Executive Officer of Rio Tinto Alcan, Jacynthe Côté met media in the atrium of the company’s Montreal offices to announce that the firm was laying off 1,100 workers and shuttering its Beauharnois Quebec smelter.


 “This is a very difficult situation for all involved,” said Côté. “A large percentage of our facilities are among the most productive in the industry. But times are hard. Aluminium prices have fallen by almost 65 percent during the past several years, which is a lot when you consider the cost of production.”


News of Rio Tinto Alcan’s move hit raw materials producers, many of whom were already reeling from falling demand, hard. The company, which is one of the world’s biggest users of Bauxite, its main raw material input, plans to diminish overall aluminium production by 230,000 tons. That brings total production cuts announced by the metals giant to 450,000 tons, or 11 percent of its total annual capacity.


Rio Tinto Alcan’s substantial planned cost reductions will spread among facilities around the globe. However the cuts will hit Quebec particularly hard. In addition to the permanent closure of the company’s 65-year old Beauharnois smelter, production at its Vaudreuil alumina refinery will be also be dramatically curtailed. The two moves will eliminate 300 jobs from Alcan’s Quebec labour force.


More bad news on the way?

The announcement was a rough baptism of fire for Côté, who formally assumed her new role on February 1rst. But she is used to it. Since joining Alcan in 1988 as a process analyst at the company`s Vaudreuil works in the Saguenay after completing a bachelor`s degree in Chemistry at Laval University, Côté has taken on a series of increasingly tougher challenges.


Prior to taking on her current post, Côté served as CEO of Rio Tinto Alcan’s Primary Metals business unit. Between 2005 and 2007 she managed Alcan’s bauxite and alumina business unit.


However it is far from certain that Côté`s tough days are over. The day that she announced her recent moves the Bank of Canada formally noted what many had long suspected: that the country had followed several other major global economies into a recession that looks to be long and severe.


In short, it is far from certain that the plunge in demand for aluminum has bottomed out. That may mean more bad news for Quebec, because three Rio Tinto Alcan units there, in Arvida, Shawinigan and the Vaudreuil have already been given tough cost control targets, which is an indication that if things worsen, they could be next in line.


In addition to the announced moves, Côté is also carrying out a full review of Rio Tinto Alcan`s organizational structure and operating strategy to determine what adjustments may be necessary to see the company through the current economic hardship.


 Peter Diekmeyer is CIM Magazine’s Quebec correspondent.





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