Ruling hampers suit by Kitimat

The town of Kitimat, B.C., known mostly for its Alcan (AL-T) aluminum smelter and hydroelectric facilities, has suffered a setback in its bid to sue the aluminum giant for reducing aluminum production and jobs and then selling the excess electricity at a premium to the U.S.

The province’s Supreme Court recently ruled the town has no legal standing on which to pursue the matter further, stating Kitimat had no right to challenge Alcan’s compliance with an agreement signed in 1950.

Kitimat, a town of about 11,000 in north-central British Columbia, near Prince Rupert, argued in a suit filed in January 2004 that the sale of electricity violates a 1950 agreement that gave Montreal-based Alcan the right to use inexpensive hydroelectricity in return for building and operating an aluminum smelter. The smelter’s existence ultimately led to the town’s creation, in 1951.

Kitimat argues Alcan hurt the town’s economy by cutting jobs and production, and says it should be compensated it for its losses.

“We are very pleased with today’s decision and hope that Alcan and the District of Kitimat can now focus on working together to address the economic challenges of our region,” said Paul Henning, Alcan’s director of operations for British Columbia.

The mayor of Kitimat says the town will likely continue its challenge.