Not one watt?

Aluminum producer Alcoa, Newfoundland and Labrador Hydro, and the government of Newfoundland recently finished a joint study on the feasibility of building an aluminum smelter that would use power from hydroelectric plants on the lower Churchill River.

The agreement between the government, the utility and Alcoa raises the possibility that — if the economic circumstances warrant — Alcoa may put up part of the cost of building the Lower Churchill development, and may also want to buy power for other Alcoa plants outside the province.

The partners have so far been silent on the subject of a source of bauxite feed for a Newfoundland smelter. Even the national industry minister — Newfoundland’s former premier Brian Tobin, who does not commonly feel much constrained by facts — has refrained from making comments about Labrador having “the most exciting bauxite deposit on the planet Earth.”

That silence has been echoed by major bauxite-producing countries, who have offered no protest about sending ore offshore to be smelted in Newfoundland. Their attitude contrasts strongly with that of Tobin and current premier Roger Grimes, who have made it very clear that nickel ore from Voisey’s Bay should not leave the province unsmelted.

All the same, given that the value added in processing aluminum consists almost entirely of the electrical power that goes into the process, we have to register some surprise that we haven’t heard Premier Grimes insisting that “not one watt” of Lower Churchill power will go into producing aluminum ingot elsewhere in the world. It appears that, in the government’s eyes, trade in power and bauxite is perfectly fine whereas trade in nickel concentrate is not.

Those experienced in generating hydroelectric power are aware that water does not flow uphill. Neither does the comparative advantage of provinces or nations, no matter how hard you fling it.