A couple of days ago, Alcoa Inc (NYSE:AA) announced that it was ready to go ahead with the next modernization phase of its operations in Massena, New York.
The company said it would be spending $42 million on the former Reynolds plant in Massena it purchased in 2000, and will be shelling out another $10 million for the North Country Economic Development Fund (NCEDF).
This $10 million will be spent for economic development in counties in the North Country, along with the Akwesasne Mohawk Reservation. The $10 million fund will be administered by the NYPA in partnership with another entity named by the state.
These investments are part of a 2008 agreement the company entered into with the New York Power Authority (NYPA) for low-cost hydropower, in return for which Alcoa committed to spending $600 million on modernization.
The only problem is that Alcoa cannot go ahead with the expansion unless the U.S. Environmental Protection Agency (EPA) gives Alcoa its approval of a cleanup plan of the Grasse River. Alcoa and officials in New York have been pushing the EPA for years to give its Record of Decision (ROD).
The issue dates back decades, when Alcoa and the Reynolds plant along the banks of the St. Lawrence and Grasse rivers were still using polychlorinated biphenyls (PCBs) in their aluminum production process. PCBs were banned in 1979, but the fish in the Grasse River still show high levels of PCBs.
Alcoa was the only one involved after they purchased the Reynolds plant, and the company has been working with the EPA for years trying to get one of a dozen possible cleanup plans approved.
The actual PRAP (Proposed Remedial Action Plan) was released in Oct 2012, and a tentative date for approval has been set for April 2013. EPA’s initial estimate for the plan’s cost was at about $245 million.
Alcoa needs to get the final ROD and know the exact cost, which is going to have a direct bearing on the rest of their investments, including the $600 million modernization they agreed to.
U.S. Senator Charles E. Schumer (D-NY), who was instrumental in getting the EPA to release the PRAP for public comment, urged the EPA to act fast and complete the process in April, since the lack of finality was undermining Alcoa’s ability to make expansion plans.
“The light is clearly visible at the end of the tunnel, and it will beckon a brighter future for the North Country’s economy and its environment,” added Schumer.
Alcoa, which has its headquarters in New York and in Pittsburgh, Pennsylvania, operates in 31 countries and is the world’s third largest producer of aluminum. Their operations in Massena provide employment for 1,100 people, and contribute $340 million in spending, payroll and taxes to the local economy.