CHECK AGAINS DELIVERY
Merci, et bonjour Mesdames et messieurs … je suis très heureuse d’être ici aujourd’hui pour vous parler d’un sujet qui est non seulement vital pour la planète, mais qui me tient également beaucoup à cœur.
Le reste de ma présentation sera faite en anglais … mais il me fera grand plaisir pendant la période de questions de répondre en français ou en anglais selon votre préférence.
I am very pleased to be here today to talk to you about a topic that is not only vital to the planet but also extremely close to my heart — Mining Sustainability….or as my title outlines…’Unearthing the Infinite Value of Finite Resources’.
But first, recognizing that most of us are somehow involved with the mining and metals sector but not necessarily aluminum, I would simply like to take a few minutes to touch upon aluminum, Alcan and my specific areas of focus…bauxite mining and alumina refining.
Aluminum is a young industry compared to most other mining and metals sectors, it is barely into its second century. In fact, one third of all primary aluminum ever produced was made in the last decade.
[Slide 2: Aluminum - the material of choice]
As most of you likely know, aluminum is the most common metal on earth, constituting 8% of the planet’s crust.
It wasn’t until 1886, with the discovery of the Hall-Héroult electrolysis process that large-scale production of aluminum became economically feasible. During World War II, aluminum played a decisive role in the development of the aeronautical industry. After the war, the metal rapidly became part of everyday life.
[Slide 3: Alcan’s Role in Development]
Our company has been a vital part of the aluminum industry pretty much since the beginning. The first aluminum produced in Canada was cast way back in October 1901, in Shawinigan, Quebec, by a company that was later to become part of Alcan.
When Alcoa divested most of its interests outside the United States in 1928, Alcan was formed as a separate company from Alcoa to assume control of those interests, which included operations in half a dozen European countries as well as Japan and Guyana. In the following years, Alcan aggressively expanded its operations around the world, becoming a truly multinational company. So, while words like ‘globalization’ may be today’s buzzwords to many, their concepts are nothing new to Alcan.
[Slide 4: Alcan Business Groups]
Without question, the past few years have seen an unprecedented period of solid growth for us. We were a $US 9-billion-a-year company in 2000. By 2004, following the merger with algroup and the acquisition of Pechiney, we had become a US$ 24-billion enterprise. Having spun-off our rolled products business (as Novelis) in 2005, today’s Alcan is a global leader in bauxite, alumina, aluminum production, engineered products and packaging with 68,000 employees in 61 countries and regions and revenues of $US 23.6 billion in 2006.
Slide 5 – B&A’s Global Presence]
For my part, I oversee Alcan’s Bauxite and Alumina refinery group, which has 16 production facilities in 11 countries.
We are active in most of the world’s bauxite-rich regions, which are circled here on this slide.
[Slide 6: Advantaged Platform]
Globally, Alcan has many strengths to build on, including modern, low-cost assets that enable us to remain profitable even in the lows of the market cycles.
We also have best-in-class technology and strong R&D capabilities — particularly since the combination of algroup, Pechiney and Alcan. In fact, six million tonnes of global smelting capacity is already equipped with Alcan’s AP smelting technology and a further one million tonnes of additional capacity is currently under construction with the technology.
On the alumina refining side, over the past 25 years, 8 greenfield projects as well as 14 brownfield projects have used Alcan’s proprietary technology.
Alcan is also increasingly reflecting the diversity of the world in which we operate. The Company is benefiting from the integration of a range of languages, cultures, races, religions, know-how, and business practices.
[Slide 7: AIMS ― A worldwide standard]
Alcan has taken its knowledge and experience and translated it into best practices in the way that Alcan does business worldwide. We call this the Alcan Integrated Management System, or AIMS. Wherever we operate in the world, Alcan tries to bring technological expertise, management know-how, rigorous environment, health, and safety practices, and a universal code of employee and business conduct.
[Slide 8: EHS FIRST — Recordable case rate reduction]
A specific example of the benefits of AIMS, as you can see here on this slide, is our strong and steady performance in safety. Leveraging EHS FIRST, one of the four pillars of AIMS, we have managed to reduce our total recordable injuries by 25% year over year and will continue to do so. [This reduction will include all medical treatments, restricted work as well as lost time injuries.]
[Slide 9: International recognition for our contributions]
The success of EHS FIRST has made Alcan a recognized role model in the vital areas of environment, health and safety.
In fact, in November 2006, we received the coveted Robert W. Campbell Award from the United States’ National Safety Council, for global leadership in integrating EHS into corporate management systems.
Receiving this award brings Alcan one step closer to realizing the vision in EHS FIRST, which is to “be a recognized leader of EHS excellence, in everything we do and everywhere we operate”.
Alcan’s leadership continues to attract international recognition from some of the world’s most prestigious organizations.
A week from now, Alcan will accept the prestigious World Environment Center’s Gold Medal for International Corporate Achievement in Sustainable Development.
And as a member of the Dow Jones Sustainability Indexes for the past five years, Alcan was once again named a “Super-Sector Leader” for 2006 — a category that includes all basic resource companies.
The recognition culminated last month with Alcan being named the world’s most admired metals company by Fortune Magazine in its annual survey.
Alcan ranked first in the metals industry in each of the nine evaluated areas and, in a follow-up issue of Fortune, was also included among 10 “green giants” of the international business world, showcased in Fortune’s first-ever “green issue”.
We are extremely proud of such kudos as they are always nice to receive but, at the end of the day, what really counts is what happens on the ground…at each of our facilities…day after day.
Which brings me to the main topic of today’s discussion…
[Slide 10: Sustainability defined…]
Today’s globalized world is a world confronted with environmental and social challenges but, we are convinced that there is an increasingly close relationship between the protection of the environment, socio-economic progress and competitive advantage.
Definitions of sustainability abound but the common denominator among all of them is what you see here: “Sustainability is about making decisions and taking actions to create economic, environmental and social conditions that generate the most value for everyone, today and for generations to come.”
Today, I will focus first on the environmental component of sustainability, and then the social component, by looking at some of the key global issues… connecting them to Alcan’s business and demonstrating how we are facing these challenges head-on.
[Slide 11: A picture is worth a thousand words…]
As human beings, we know that there are limits to the rate at which we can produce and consume without causing harm to the earth and ultimately its inhabitants…especially when we go beyond its ability to recover and regenerate.
Signs that this delicate balance of giving and taking are off kilter include emerging issues such as climate change, energy and water shortages, accelerated loss of biodiversity, persistent extreme poverty and an ever-widening gap between the rich and poor.
[Slide 12: Not something that can be put on ice…]
These challenges cannot be put on ice. On the contrary, they will increasingly impact society and business and thus, sustainability is the subject of intense discussion and debate, in the world’s newsrooms and corporate boardrooms…even in our homes…with our children who are inherently more sustainability-minded while being bombarded by consumerism like never before.
[Slide 13: Global warming…a world unconvinced….?]
Let’s start with the environmental component of sustainability…in particular, global warming…THE hot-button issue, which even took centre stage at this year’s Academy Awards when Al Gore’s “An Inconvenient Truth” won for best feature film documentary. Mr. Gore took the opportunity that night to remind us all that global warming is not an ideological or political issue but rather the biggest moral challenge facing our civilization.
[Slide 14 – The Gathering Storm]
On a related note, I recently read a speech by the United Kingdom’s Foreign Secretary, Margaret Beckett, which she titled ‘CLIMATE CHANGE — THE GATHERING STORM’. The Gathering Storm was the title of Winston Churchill’s book; in which, he chronicled the inter-war years, from 1919 to 1939. It was a time when Churchill, perceiving the dangers that lay ahead, struggled to mobilize the political will and industrial energy to meet those dangers. He did so, often in the face of strong opposition and not always with success. But, in the end, it was his foresight to prepare for a threat, which was still seemingly distant and uncertain, that ultimately guaranteed the liberty and survival of many countries. Climate change is the gathering storm of our generation.
[Slide 15 – Global warming…Is the problem real?]
I am sure that we have all asked ourselves the same question: Is global warming real? Not only is there mounting physical scientific evidence, but there is also growing social and political awareness.
In fact, a recent report presented in Paris by the Intergovernmental Panel on Climate Change assigns a 90 percent certainty that global warming is caused by our activity as a species.
This slide is taken from a recent study by the consulting firm McKinsey. It shows the projected impacts if the planet’s temperature were to increase between one and three degrees centigrade in future decades.
It is interesting or distressing to note that the projected mortality impact of coastal flooding may be minor compared to the many deaths that would likely be caused by disease and fresh water shortage.
[Slide 16: The ultimate free ride and who will pay?]
Along with the rest of the world, Alcan does believe that global warming is real and that it is the critical sustainability issue. The real question is not ‘can it be solved’ but 'when and who will pay for the solution?’
[Slide 17 – Global cost curve of GHG abatement opportunities]
When it comes to global warming, the truth is that the technology to slow and even reverse the GHG build up in the atmosphere is either readily available today or could be developed within a decade at a reasonable cost.
McKinsey recently compiled a list of available and near-available technologies to contain the growth of GHGs and ranked them in terms of net cost per tonne of carbon saved, from least to most expensive.
The most attractive solutions such as building insulation or higher efficiency cars have not only no net cost, but actually generate positive economic returns. Even the more expensive solutions such as clean coal or nuclear power have costs that could be funded and absorbed in the global economy.
At Alcan, we believe that business should help identify market-based mechanisms that make economic and environmental sense.
One of the best alternatives is the institution of a cap and trade system.
Emissions trading, if well designed – which is not a simple task, is the most cost-efficient means to capture value for reduction initiatives.
It allows business to make or buy reductions based on a price discovery and signals for the marginal cost of reduction.
It also decreases the overall societal cost of mandatory emissions reduction compliance.
But business cannot and should not do it alone.
[Slide 18: What climate change means to Alcan]
At Alcan, by leading the debate, we feel that we can help lead change. That is why we were proud to chair the Executive Forum on Climate Change in 2005, to take part in the Carbon Disclosure Project, participate in the UN Global Compact among others. And, just last week, we announced that Alcan will join the United States Climate Action Partnership — or USCAP — a coalition of leading companies and NGOs that is calling on the U.S. government to quickly enact strong national legislation to achieve significant reductions of greenhouse gas emissions. Dick Evans, Alcan’s CEO, is representative of the only Canadian member-company.
[Slide 19: TARGETing climate change at Alcan]
Between 1990 and 2005, Alcan’s total GHG emission intensity was reduced by 25 percent. On February 19, Alcan announced a commitment for a further 10 percent reduction in direct C02 equivalent emissions intensity from 2006 to 2010.
Naturally, we take pride in these results but let me also cite three ‘tangible’ Alcan examples, which are contributing to these reductions that you may find interesting…
[Slide 20: The world’s most advanced smelting technology]
First, in both our primary metal and bauxite and alumina businesses, Alcan is focused on developing assets that are in the first quartile of the industry cost curve, underlined by overall improvements in our energy efficiency.
Our AP35 aluminum smelting technology is the most energy and GHG efficient technology in use in the world today.
And, while we continue to enhance that platform, we are also investing in its future, namely AP50, by building a US$550 million pilot plant in Quebec, relying entirely on renewable hydro-electricity which will be even more energy/ghg efficient and will pave the way for our future plants.
And on that point, I might add that Alcan generates more than 90 percent of its primary metal energy needs in Canada, and more than 50 percent around the world, through clean, renewable hydropower.
[Slide 21: Automotive lightweighting]
As a second example, we are a large supplier to the world’s largest auto makers such as Volkswagen/Audi, DaimlerChrysler, General Motors, PSA Peugeot Citroën and Honda.
Replacing conventional steel parts with one tonne of aluminum has the potential to eliminate 20 tonnes of CO2 over the life of an average vehicle.
And, when that vehicle is finally scrapped, 99 percent of the aluminum can be recycled.
Furthermore, the secondary production of aluminum saves 95 percent of the energy required to produce it from virgin materials, therefore also saving 95 percent of the potential emissions.
As you can see from this chart, Europe is well ahead in designing lightweight automotive solutions, but raising energy costs have forced and will continue to force progress in all regions.
For Alcan, lightweighting represents not only another way we can make a practical and immediate contribution to the sustainability of this planet, but also a profitable – and therefore sustainable – business opportunity.
[Slide 22: Innovative Products]
The third example I want to highlight is the development of innovative sustainable products in our Packaging and Engineered Products businesses.
Alcan supplies rolled sheets of bright aluminum as key components of innovative solar cookers, which produce potable water for people in the developing world by capturing and boiling water using the sun’s own heat.
Solar cookers are designed to replace wood-fired stoves in developing countries — saving CO2 emissions and mitigating deforestation for firewood.
We are also the largest producer of Balsa wood which is used in composite panels to produce windmill components, high speed train panels and a whole set of other light-weight applications.
[Slide 23: Bauxite residue challenge — Mt. Rosser, Kirkvine, Jamaica]
Before moving to the social component of sustainability, I would like to say a few words on bauxite residue which is an intrinsic part of our process in Bauxite and Alumina and a key priority on our environmental agenda:
Because we are the industry leader in terms of bauxite residue management and know-how, we are always looking for new and innovative ways to reduce our bauxite residue footprint.
This residue, composed 40 per cent of bauxite (red earth) and 60 per cent of chemical liquid that is a low-level caustic, is what remains when alumina is extracted from bauxite. Even though it is a natural by-product, we continue looking at ways to limit storage space while developing sustainable alternatives for a secondary usage. For example:
Since 2001, our Vaudreuil refinery in the Sagueney region of Quebec has been using bauxite residue to replace the sand, gravel and clay traditionally used to build the very dikes that contain the residue, which has produced numerous economic benefits.
While in Gardanne France, several viable commercial applications for ‘bauxite residue’ were developed over last few years including the by-product ‘Bauxaline’, which can be used as a colorant in smaller applications such as plastics, cement, rubber floors, ceramics and paints; while, it can be used in larger applications for road construction, artificial reefs and as a covering to rehabilitate public landfill sites.
I would just like to add at this point that, during the Easter weekend, we experienced an unfortunate bauxite residue spill at our Vaudreuil facility in the Saguenay—Lac-St-Jean region of Quebec. And, while the spill had no harmful environmental consequences; naturally, the temporary orange-red color of a large expanse of the Saguenay river appeared rather spectacular to the surrounding community and caused a certain amount of apprehension. This unfortunate event certainly underscored the importance of continuing our efforts to find alternative solutions.
At the end of the day, we are not perfect but we are completely committed to continuous improvement and thus we learn from these events.
[Slide 24: Social sustainability — The Utkal Project (Orissa, India)]
Now, to move on to the social aspect of sustainability, which is truly the ultimate balancing act.
Clearly, successful corporations need a healthy society and a productive workforce, just as a healthy society needs successful companies that create jobs, wealth and innovations that improve standards of living and social conditions.
If a company views corporate sustainability as a way to appease pressure groups, it will be stuck reacting defensively. This approach focuses on the tension between business and society rather than on their interdependence, and it is their interdependence that offers infinite potential to create real and sustainable value for both business and society.
The Utkal Project is a minority partnership that Alcan is in the process of selling, which involves development of a new bauxite mine and alumina refinery in the Indian state of Orissa. This project has been a good learning experience for Alcan.
The project, which was first initiated in the mid-90’s, has been plagued by controversy for a number of years. We realized early on in the game that, in order to make a balanced investment decision, we would need to engage civil society (and other stakeholders) to ensure that our final investment decision would be aligned with Alcan’s commitment to sustainable and profitable growth that maximizes value for its shareholders.
At the end of the day, even though we were under a lot of pressure, we took the time we needed and we carefully weighed the opportunity and risk presented by the Project. And, even though the project is expected to have good financial returns, due to constraints within the governance structure that limited Alcan’s ability to participate in key decisions, including but certainly not exclusively related to sustainability, the Company took the decision to sell in the best interests of all our stakeholders.
The Utkal Project, and others that we have in our growth pipeline, have reinforced our views that the world is changing faster than ever. And, that the rules of engagement, defined in large part by NGOs, lobby groups, governments, private citizens, communities and shareholders are evolving rapidly.
In short, Alcan wants to remain ahead of the game. Some may call it enlightened self-interest, but Alcan’s commitment to sustainability and the responsible stewardship of the resources it uses builds on decades of independent, often voluntary initiatives.
The roots of this commitment lie in our corporate values of integrity, accountability, teamwork, trust and transparency.
Fully embedding the social component of sustainability as an integral part of our business strategy, within our day-to-day operations, continues to evolve as we deepen our understanding of its link to long-term value creation.
While we are a recognized leader in sustainability, we do not claim to have it all figured out. We still struggle at times to work out how to best serve both our bottom line and a better world.
But one thing has become crystal clear to us: Alcan cannot succeed in a society that fails. And even more important, with humility we realized that we cannot do it alone and that to succeed we need to engage and partner…
[Slide 25: Community Development — Gove, Australia]
From India to Australia now…..Alcan has been part of Australia’s aluminium industry since 1967. Today, Alcan’s Australian operations represent its largest capital base outside of Canada.
We have developed long-term partnerships with our key stakeholders, including Traditional Owners from whom Alcan leases its land in the Northern Territory.
We actively support Indigenous culture, training and employment through initiatives such as the award winning YNOTS Indigenous training program and cross-cultural awareness programs for employees and contractors.
This adorable picture that you see here was taken at the internationally-acclaimed, and Alcan-sponsored, Garma Festival that is held annually in North-East Arnhem land. For days, they enjoy their traditional dances with tremendous pride.
Because bauxite is generally found in tropical regions with sensitive populations, mining can bring tremendous improvements to standards of living, but it can also significantly change communities. This is why managing the social aspect of sustainability through construction, operations, growth and eventual closure is a key challenge for our business group and host communities.
All of us here today in the mining industry face very similar sustainability challenges and opportunities regardless of the mineral that we mine.
This remains absolutely true in developed and developing regions.
Doing the right thing, the right way, not only ensures good stewardship of resources but also enhances our ability to access new ones and to develop them at an acceptable level of risk. In our capital-intensive business, doing the right thing at the outset of a project can significantly reduce a project’s risk and in fact, be a true competitive advantage.
A critical component of natural resource stewardship relates to rehabilitation practices at the end of a mine's useful life. It is a significant challenge and one in which community stakeholders have a lot of interest and high expectations. As in any mining activity, it is widely expected that rehabilitation of closed mining sites will allow for productive human or natural use once closed.
[Slide 26: Natural Resource Management — Burntisland, Scotland]
For example, when we announced that we were closing our Burntisland alumina facility in the U.K. in 2002, it represented a dramatic shift for local residents because the plant had been a community partner since 1917.
After 85 years of industrial activity, converting the site to new uses was a complex undertaking.
Working closely with stakeholders in a spirit of transparency and mutual respect, we engaged and partnered and could provide retraining and enable 85% of the plant’s 400 employees to find new jobs. We also successfully addressed environmental issues and transformed the land from an economically unviable specialty aluminas plant into a high quality residential housing development of 350 homes and apartments.
Although there were inevitable emotions surrounding these events, the town of Burntisland is returning to its roots by exploiting its natural beauty and increasing its value as a quality residential area. The Burntisland closure and remediation is now a best practice for Alcan.
Closer to home, in January 2004, Alcan announced the permanent shutdown of its old technology potlines at Arvida Works in Quebec. At the time, Alcan committed to zero layoffs related to the closure, to take care of employees and to work hard with stakeholders to promote and support regional industrial diversification in order to help communities manage change and position themselves for sustainable growth. A variety of initiatives has helped to diversify the economic base and develop regional competencies in the area of R&D and manufacturing.
This solid partnership helped Alcan create a solid platform, to proceed with further investment, one of them being to build a US$550 million pilot plant at the very site where Arvida had been located — to develop its AP50 smelting technology.
The social component of sustainability goes way beyond compliance. It is really about generating competitive advantage and long-term value.
Within Alcan Bauxite and Alumina, we have learned that, when the playing field is level and competition is fierce for limited resources like bauxite, a solid track record in sustainability can tip the scale in our favour and open the door to some of the world’s most attractive projects.
Within the past year alone, our leadership in sustainability has played a key role in securing two important projects in Africa.
I would like to take this opportunity to profile Alcan Bauxite and Alumina’s new stakeholder engagement framework that entails partnering and making a real difference to those most in need, simply by aligning our social sustainability objectives with the development objectives of our operating communities. Essentially, we are using a multi-stakeholder approach to address community needs by establishing, sharing and working towards common objectives.
[Slide 27: Alcan’s three-prong approach to sustainability]
The framework is aligned with Alcan’s three-prong approach, which consists of:
· Thinking broadly about issues and impacts – which we incorporate into our strategic plans and site operating agendas;
· Making connections across our business by integrating sustainability into our day-to-day business; for example in: safety, cost, volumes, customer service, etc.;
· And even more important…engaging and partnering.
[Slide 28: Stakeholder engagement framework — Matching Commitment with Resources and Action]
As you can see from this slide, in developed countries, we establish common objectives through regional development plans; however, in developing countries, we are doing so through the Millennium Development Goals framework.
As many of you are likely aware, in 2000, 189 heads of state and government came together at the United Nations for the Millennium Summit. During the Summit, leaders firmly committed to fight against poverty and hunger, gender inequality, environmental degradation, and HIV/AIDS, while improving access to education, health care and clean water. These wide ranging commitments gave birth to the eight Millennium Goals (MDGs).
This framework represents a fundamental shift in how Alcan Bauxite and Alumina manages the social dimension of sustainability. Until now, when we developed in remote communities, beyond creating employment, we created and supported social programs where little existed before. While this was done with the best of intentions, the result was that we were viewed as the community patron towards which the community turned for resolution of issues that were simply not core to the Company’s business
I strongly believe that by employing our multi-stakeholder approach, we will be able to add more value for the benefit of Alcan and society in general. An excellent illustration of this approach is in Awaso, Ghana where, since 1974, Alcan has held 80 percent in a bauxite mine that employs just over 300 people.
[Slide 29: Community Development — Awaso, Ghana]
For many years, Alcan has owned and operated a hospital, which serves more than 10,000 people in the mines’ district. Alcan has also been managing such things as provision of water, electricity and maintenance.
In June 2006, Alcan announced that, by supporting the development plans of this district, it would support the Government of Ghana’s efforts to achieve the MDGs through a 3-year collaboration.
Alcan is now supporting Ghana’s Ministry of Local Government, Rural Development and Environment and the Ministry of Water Resources, Works and Housing in partnership with the World Bank, Agence française de développement (AFD), the European Union and SNV in providing sustainable access to safe drinking water and basic sanitation (MDG #7).
As well, in collaboration with the same partners and others, Alcan is identifying actions to support the Government in addressing universal primary education (MDG #2), reducing child mortality (MDG #4), improving maternal health (MDG #5), and combating HIV/AIDS, malaria and other diseases (MDG #6).
Alcan is also exploring other such partnerships in Guinea (where it has long had had equity in Compagnie des Bauxites de Guinée) and where so much is needed…as well as putting more rigor into the way we engage/partner in all other operations around the world.
We are aware that our presence can create challenges but are determined to engage with partners, build consensus around difficult issues and pursue business opportunities that strengthen Alcan's position while providing a sustainable environment for future generations. Essentially, by partnering, not only do we increase our financial leverage and execution capability, we also benefit from best practices, international standards and an independent ‘check and balance’. We have realized that we can play an important role in an NGO’s capacity to deliver value and support long-term development, just as they can in ours.
Strategic sustainability unearths infinite value by investing in areas that strengthen a company’s competitiveness. Each of us needs to identify the sustainability challenges that we are best equipped to help resolve and from which we can gain the greatest competitive advantage.
Because we are competing for finite resources in a world that is increasingly sustainability focused, we really have no choice but to step up to the plate, to move from policy and words to practice and actions in order to help create vigorous and proud communities that will thrive long after we leave.
We are convinced that there is an increasingly close relationship between the protection of the environment, social economic progress and competitive advantage. We therefore believe that some of today’s risks are also becoming tomorrow’s business opportunities
By being proactive and ahead of the curve on sustainability, Alcan’s striving to be a shaper rather than a follower in this important area. Sustainability is the right thing to do….it is clever thing to do and it is key to ensuring that our industry continues to prosper.
On a more personal note, I am very proud to lead Alcan’s Bauxite and Alumina group. First, for the obvious reasons, which are that it’s a good business with excellent growth opportunities but beyond that, what makes this business truly special is the outstanding opportunity that one is afforded to make a true and sizable difference within Alcan’s operating communities and beyond… I feel quite certain that if we continue to do the right things, the right way, our business will become ‘rather’ attractive to the younger generation that are also increasingly looking for a way to ‘partner’ and ‘make a difference’.
Thank you!
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