February 2009

Baptism by fire for new Rio Tinto Alcan CEO

By P. Diekmeyer

It was a rough way to say hello. Late last month, just a few days before taking on her new position as CEO of Rio Tinto Alcan, Jacynthe Côté met the media in the atrium of the company’s Montreal offices to announce that the firm was laying off 1,100 workers and shutting 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. Aluminum prices have fallen by almost 65 per cent 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 hard; many were already reeling from falling demand. The company, which is one of the world’s biggest users of bauxite, its main raw material input, plans to diminish overall aluminum production by 230,000 tonnes. That brings total production cuts announced by the metals giant to 450,000 tonnes, or 11 per cent of its total annual capacity.

Rio Tinto Alcan’s substantial planned cost reductions will be 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 also be dramatically curtailed. The two moves will eliminate 300 jobs from Alcan’s Quebec labour force.

The announcement was a rough baptism by fire for Côté, who formally assumed her new role on February 1, 2009. But she is certainly up to the challenge. After completing a bachelor’s degree in chemistry at Université Laval, she joined Alcan in 1988 as a process analyst at the company’s Vaudreuil works in the Saguenay. Since that time, 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 could 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 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.

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