Alcan: Canada Built It, The World Bought It, and We Called It a Net Benefit

In early 2016, workers moving equipment into a new tower next to the Bell Centre in Montreal took down a brand name. Nobody stopped work. No statement was issued. No elected official spoke. No one was protesting out front.

The name was Alcan.

The story starts in 1902, in Shawinigan, Quebec, where the Northern Aluminium Company, a Canadian subsidiary of the American giant Alcoa, planted itself because the St. Lawrence basin had cheap, abundant hydroelectric power. It still does.

The energy was Canadian.

The capital was American.

The ore came from Africa.

By 1928, Alcan formally separated from Alcoa and began its life as an independent Canadian industrial company. What it built over the next 8 decades was one of the most ambitious industrial enterprises in Canadian history, a fully integrated global manufacturer that took a country better known for supplying raw materials and moved it up the value chain.

For most of the twentieth century, Alcan owned the entire chain. Bauxite mines in Jamaica and Guinea. Alumina refineries to process the ore. Smelters in Quebec and BC to produce primary metal. Fabricating plants for aerospace components, cable, and automotive parts, the consumer packaging business, and the Alcan foil in the navy blue box on Canadian grocery shelves.

Alcan did big things in Canada and opened a remote part of BC. In 1951, Alcan spent $500 million to dam the Nechako River, build a power station inside a mountain at Kemano, and run an 82-kilometre transmission line to a new aluminium smelter on the BC coast. Then it hired Clarence Stein, the New York urban planner who had designed Radburn, New Jersey, and built the town of Kitimat, BC for the workers who would operate the smelter. Maclean's called it a model city. Alcan expected the population to reach 50,000. Today Kitimat has ~8,236 people, so just a bit short of their prediction.

Kitimat was chosen because the Douglas Channel, a deep-water fjord on BC's north coast with direct open-ocean access to Japan and the Pacific Rim, sat at the bottom of the only geography in BC able to deliver the enormous volumes of hydroelectric power aluminium smelting demands, and the flat valley on the coast wide enough to hold both an industrial smelter and a city.

As Alcan moved up the value chain from mining, to smelting raw metal, to producing the material new high paying and skilled jobs were created

By 1971, Alcan was shipping more fabricated and semi-fabricated product than raw ingot. It stopped being a smelter and became a manufacturer employing skilled workers in good paying jobs. It grew to own parts of the supply chain outside of Canada, which secured supply and provided stability to their operation.

By 2007, Alcan Packaging had US$6.2 billion in revenues and 130 facilities in 31 countries and was the second-largest aluminium producer in the world, with operations on six continents, revenues of US$23.6 billion, and 68,000 employees globally. In 2006, it posted record earnings, net income of US$2.786 billion, return on capital employed of 12.3%, cash from operations exceeding $3 billion.

Debt was declining. Every financial target was met or exceeded. The company was in the best shape of its life when Alcoa came looking to buy it back.

In May 2007, Alcoa launched a hostile bid valued at approximately US$73 per share, a mix of cash and Alcoa stock. Alcan's board rejected it as inadequate and went looking for a better offer. Rio Tinto put in a competing bid so the board had two very different offers on the table, which would determine Alcan's brand and operating footprint.

Alcoa (USA) was also an integrated aluminium manufacturer, making Reynolds Wrap and aerospace components. It offered $73 per share and stated the plan was to keep Montreal as the global headquarters for primary products and maintain most of the downstream businesses because those businesses were adjacent to what Alcoa already knew how to run. Regulatory divestitures would have been required to satisfy competition law, but they would have been targeted removals, not a wholesale liquidation of downstream value.

Rio Tinto offered $101 per share, all cash. On the same day it made the offer, it announced the packaging business would be sold and its CEO was clear the downstream businesses did not fit the company's strategic focus on upstream mining. Rio Tinto wanted the smelters, the hydropower, and the bauxite. Not the manufacturing.

The board chose Rio Tinto. Not because Rio Tinto was the better steward of what Alcan had built, it wasn't the better deal for Alcan employees. They chose the deal because Rio Tinto offered $25 more per share.

Nothing in Canadian law required anyone to ask what the company would look like on the other side of it.

Alcan was not sold because it failed. It was not struggling. It was sold because it was a widely held public company with a single class of common shares, no controlling Canadian anchor shareholder, and no legal framework requiring its board to consider any interest beyond maximizing the share price for whoever happened to hold the stock that week.

The moment Alcoa launched its hostile bid, 100 million shares, roughly 30% of Alcan's stock, changed hands in four days. Hedge funds and arbitrageurs flooded in, holding for the exit. The board did its job. Its job was not to protect Canadian industrial capacity or jobs.

The contrast with the United States is instructive. Pennsylvania, where Alcoa is headquartered, has anti-takeover statutes requiring boards to consider the interests of workers, suppliers, customers, and communities, not only shareholders. A board can legally reject a financially attractive bid if it concludes it does not serve those broader interests. No such equivalent exists in Canadian corporate law.

Canada built Alcan into a world-class integrated industrial company over a century, structured its ownership in a way that guaranteed it could not be defended when a large enough bid arrived, and had no mechanism to distinguish between a transaction that served shareholders and one that served employees, customers, and Canada.

The Investment Canada Act approved the deal because the net benefit test was designed to approve acquisitions, not interrogate them. It measures job commitments over a fixed window. It cannot measure the loss of the profit stream over the life of the asset. It cannot measure the departure of the corporate talent ceiling. It does not ask what Canadian investors will do with the premium they collected, whether they reinvest in Canadian industry or find the next deal on a global stock exchange.

In October 2007, the largest acquisition in Canadian corporate history closed at $38.1 billion US. CEO Tom Albanese said the deal would be "positive for Canadian jobs, investment and research and development." Stephen Harper approved the sale. Canadian Alcan investors collected a substantial premium and moved on.

Two months after closing, the packaging business was listed for sale.

Rio Tinto's timing was unfortunate and it cost jobs, including the CEOs, because China flooded the market with cheap aluminium almost immediately, driving down commodity prices. The math on a $38.1 billion acquisition built on 2007 commodity assumptions stopped working before the ink was dry on the deal.

By April 2009, less than two years after closing, Rio Tinto cut between 120 and 140 positions from the Montreal headquarters. The Beauharnois smelter, built in 1943, closed. In January 2009, 1,100 jobs were cut globally, including 300 at Quebec smelters.

In November 2013, the Shawinigan smelter, commissioned in 1941 closed permanently, putting 425 workers out of work. The chief operating officer said the market had simply caught up with the plant's old technology making the plant obsolete.

In 2015, the Montreal office layoffs eliminated between 110 and 170 positions in a building that had employed roughly 800 people.

By the time the name came off the building in 2016, Quebec aluminium employment had fallen from approximately 12,000 at the time of acquisition to around 4,500.

To service the debt on the purchase, Rio Tinto broke Alcan into pieces and sold off the parts it was not interested in running. Every piece of the integrated vertical value chain Alcan spent a century assembling, from bauxite to smelting to packaging to engineered products, was distributed across five different foreign buyers on four continents within four years of the deal closing.

The physical plants in Canada largely kept operating under new foreign ownership. The jobs on the factory floor, in many cases, stayed. What left was control, the profit stream, the decision-making authority, the head office functions, the engineering leadership, the patent portfolio, and the strategic planning. These do not show up in a net benefit calculation measured over a fixed window, they compound over decades.

Rio Tinto was clear about it's intentions in the offer, the board knew what accepting their offer meant for the Alcan company's future. Rio Tinto didn't buy Alcan just to break it up and sell it off for scrap, they did want a specific part of the business, the smelting part.

Rio Tinto spent C$6 billion rebuilding the Kitimat smelter into one of the most efficient and lowest-carbon aluminium facilities in the world. An independent Alcan, carrying its own debt through a 60% aluminium price collapse after 2008, would likely have closed Kitimat rather than rebuilt it. Rio Tinto had the capital to weather the lower commodity prices, especially after selling off the downstream parts to pay off the debt of buying it in the first place.

The Kitimat smelter now produces some of the lowest-carbon primary aluminium on earth, powered entirely by the Kemano hydroelectric system.

In 2018, Rio Tinto and Alcoa (USA) launched ELYSIS, a joint venture backed by Apple and both levels of Canadian government, to develop a carbon-free aluminium smelting process that eliminates all direct greenhouse gas emissions to produce oxygen instead of CO2.

The R&D centre is in the Saguenay, Quebec. Canadian engineers are doing the work.

On November 13, 2025, ELYSIS announced the successful start-up of a 450-kiloampere inert anode cell at the Alma smelter, the first implementation of this technology at commercial scale anywhere in the world.

This is genuinely world-leading science happening on Canadian soil.

Canada and Quebec governments helped fund it. When Rio Tinto and Alcoa launched ELYSIS in May 2018, the federal government and Quebec each put in C$60 million. Apple added C$13 million. Rio Tinto and Alcoa contributed C$55 million in cash plus their IP. Over the years more funding was required, as of 2026, the total verifiable Canadian public investment in Rio Tinto's Quebec operations since 2018 exceeds C$730 million.

Not all of it was free money. The federal Strategic Innovation Fund operates primarily as a repayable loan with some loan forgiveness options. Quebec took a 3.5% equity stake in ELYSIS in 2018 as a limited partner. Subsequent Quebec contributions came through venture loans and equity subscriptions. Canadians tax dollars are being used to safeguard Canadian jobs, create Canadian innovation, and help foreign owned companies on Canadian soil meet their objectives.

Canadian tax payers help fund the development of new technology and when it commercializes, when zero-carbon aluminium smelting becomes the global standard, the licensing revenue flows to Rio Tinto in London and Alcoa in Pittsburgh, not Canada.

The government's own Strategic Innovation Fund evaluation acknowledged this gap directly, warning that without public support, high-growth firms become "more reliant on foreign investment, resulting in a dilution of Canadian ownership and putting them at increased risk of foreign acquisition, ultimately resulting in a loss of Canadian IP and talent." If the point of the fund is to help Canadian owned business avoid being bought by foreign interests, why do we fund foreign owned business projects?

Foreign investment is not the problem.

Canada does not have the domestic investor base to build the industries that employ Canadians without foreign capital. Rio Tinto had the pockets to hold the smelter doors open through depressed commodity pricing cycles. This matters to the families in Alma and Jonquière and Kitimat whose livelihoods depend on it.

The problem is Canadian public money going into foreign-owned assets without Canada getting lasting value in return. A loan is not the same as an investment. When a foreign company takes Canadian public funds, those funds are redirected from other services benefiting Canadians, so there needs to be a benefit reflecting the size of the public contribution that lasts beyond the repayment window. They need to start looking beyond promised job numbers to long-term structural commitments to Canada's industrial capacity.

The question Alcan forces is whether Canada ever seriously tried to build the industry to last beyond the attention of foreign capital interests?

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Shannon Peel is a Brand Narrative & Communications Leader based in Vancouver, open to senior roles in brand strategy, marketing, or communications leadership.

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Sources: Alcan Inc. SEC filings 2005-2007 (Forms 8-K, 10-K, and quarterly press releases); Rio Tinto acquisition announcement press release, July 12, 2007 (SEC Edgar); Rio Tinto investor seminar, November 2007; DBRS credit rating report on Rio Tinto, November 2007; Institute for Governance of Private and Public Organizations, "Who Will Decide Alcan's Fate?" Allaire and Firsirotu, May 2007; The Canadian Encyclopedia, Alcan Incorporated; CBC News, Rio Tinto Alcan, Shawinigan closure, August 2013; Globe and Mail, Rio Tinto Alcan coverage 2007-2016; Government of Canada, Investment Canada Act approval documentation; Government of Canada, Strategic Innovation Fund evaluation; ISED Canada, Strategic Innovation Fund impact report; Fasken Martineau, Investissement Québec ELYSIS financing, April 2021; ELYSIS press releases 2018-2025; Rio Tinto Canada, news releases 2018-2026; Rio Tinto BC Works, riotinto.com; House of Commons Standing Committee on Industry, ELYSIS hearing, 2024; Urban History Review, "Modern Living hewn out of the unknown wilderness," Volume 45, 2016; Kemano Wikipedia; Kitimat Grokipedia, 2026.