The Gulliver PUK (Pechiney-Ugine-Kuhlmann) Dossier

502 PUK (Pechiney-Ugine-Kuhlmann)

It is hardly surprising that, worldwide, Pechiney (formerly Pechiney-Ugine-Kuhlmann or PUK) has run into more opposition for its aluminium operations than its nuclear interests. It is the fourth largest aluminium producer in the world (1). It is also France's only aluminium producer (2), and the largest in Europe (47).

Moreover, when it acquired American National Can for US$1bn (48) in 1988, it became the world's largest producer of metal drinks cans (49).

In 1990, it also sealed a deal with Techpack International (TPI), the leading producer of packaging for cosmetics, under which it acquired 39% of the company, with an unusual buyback and buy-out scheme giving LBO of France 44% and management of TPI the remaining 17% (50).

Pechiney is owned 75% by French state interests (10% of which is in the hands of Assurances Generales de France, acquired in 1990 (51,52)). Although plans to privatise Pechiney were high on the agenda (after the group finished restructuring in 1986 (53,54)), the French socialist government has so far applied a brake to both privatisation and nationalisation (51).

By 1988, the company saw an upturn in its fortunes, with the saving of two domestic smelters planned for closure earlier in the decade (53) and construction of another in Normandy (54,55); its nuclear fuels activities proving "highly profitable" (56); a JV under discussion with the USSR which would be the first of its kind (56); and highly successful returns from its ventures in the USA, especially Howmet Turbine (57).

PUK, as it was BM (Before Mitterand), is a prime example of agglomeration - of bigger fleas with little fleas upon their backs to bite 'em (and so on ad infinitum). Pechiney was set up in 1855, began producing aluminium five years later, and - with a spectacular rise in output prior to WW2 - took over several companies on the way. In 1971 it merged with Ugine-Kuhlmann.

For its part, Ugine was formed out of a 1921 merger of three companies which were set up to make industrial use of electrical power. Ugine's specialist knowledge in fluorine chemistry enabled it to play a key part in developing nuclear power (in Comurhex, France's chief producer of uranium hexafluoride, for example). In 1966 Ugine got hitched up with Kuhlmann.

Who was Kuhlmann? Frederic Kuhlmann started manufacturing sulphuric acid in 1825, acquired a chemicals factory in 1847, and laid the ground for the company's expansion into fertilisers, silicates, textiles and petrochemicals. Thus, aluminium, electricity, and chemicals ended up in bed together providing the ingredients for a number of future nuclear and industrial embryos (1).

Between 1978 and 1984 the company was involved in major divestitures of marginally profitable operations, an activity hastened by its nationalisation by the Mitterand government in February 1982 when all its shares were allotted to the French state (1).

Spurred by major losses in its aluminium sector and a downturn in production of 6% in 1983 (2), Pechiney expanded its two French smelters, but was squeezing the rest. The same year, it acquired a stake in a "hypothetical" French nuclear power station in return for cheap power to run its remaining smelting capacity, drawn from any stations run by Electricite de France (3,4). Under the chairmanship of Georges ("I hate to lose money") Besse, the new, beaming, loud-talking, joke-cracking President Directeur General of the company, Pechiney's fortunes were beginning to turn by mid-1984.

Pechiney's chemical assets were sold to Elf-Aquitaine, Rhone-Poulenc and CdF Chemie (5) after Giscard d'Estaing and Mitterand both blocked a potentially lucrative sale to Occidental Petroleum (6). The loss-making steel interests have also been hived off (4). Cash to finance the huge FFr 3,000,000,000 investment programme was to be found in an agreed sale of the Howmet Aluminium Corp to Alumax (7) (a JV between Amax, Mitsui and Nippon Steel) (8). In the event, Howmet remained under Pechiney's control, with Alumax gaining a half interest each in Howmet's Maryland and Washington smelters (9).

This half-sale of Howmet's smelter interests was part of a redeployment of Pechiney's north American aluminium operations from the USA to Quebec (10). In early 1984, the Premier of Quebec, Rene Levesque, and Pechiney signed a C$1.5M deal, under which Pechiney (with a 50.1% share) gets remarkably cheap power for the new Becancour smelter on the St Lawrence river (2) and the Quebecois get both the pollution and the brunt of the cost.

Pechiney was offered 40% of the normal industrial electrical rate to run the smelter for five years, and cheap power for another 15 after that (11). Since Pechiney employs a cheaper aluminium technology than its two superiors, Alcan and Alcoa, its break-even costs would be about 45c/lb; with an average price of 76c/lb, this represents a considerable (many would say unacceptable) profit for the company. It is worth noting that Pechiney began talks on the smelter in 1974 with former Quebec premier Robert Bourassa who paved the way for the James Bay hydro-electric scheme - a project of monumental catastrophe for the Cree and Inuit people of the region (see Bechtel).

After some restructuring of the interests in Becancour, Pechiney Reynolds Quebec (itself a subsidiary of Pechiney and Reynolds Metals) now owns 20% of the smelter, the other partners being Alumax and the Societe Generale de Financement de Quebec. The consortium ABI or Aluminiere de Becancour Inc - started its third potline late in 1990 (12).

In the Netherlands, Pechiney Nederland opened up a controversial smelter in Vlissingen. (Passengers escaping from Olau ferries after collisions with Comurhex nuclear cargoes in the Channel can catch a glimpse of it as they rush to bright lights of Amsterdam). The smelter was the subject of intense public debate, and opposition from environmental groups on health and economic grounds (13).

Environmentalists in New Zealand also fought hard against the siting of a smelter in the beautiful valley of Aramoana, where Pechiney replaced Alusuisse as the chief foreign partner in a consortium headed by Fletcher Challenge and CRA in 1982 (14). But talks over the siting of a power plant for cheap power broke down (15) and the project was shelved (2).

Meanwhile the Spanish government was tussling with Pechiney over who would pick up the bill for losses on the 67%-owned Alugasa aluminium subsidiary (16), and it finally kicked Pechiney out in 1982 (2).

Pechiney has a 35% interest (along with Gove Aluminium, 59% controlled by CSR) in the Tomago smelter in New South Wales which came on stream in late 1983, exporting aluminium to Japan (17): plans to expand the smelter by 50% were underway in 1990 (58).

The construction of the smelter was energetically opposed by local farmers and environmentalists. The smelter is set in the wine-growing region of Hunter Valley (18). A large plant producing 230,000 tonnes of aluminium a year at about $1000/tonne - its ultimate capacity is more than 700,000 tonnes (18). Pechiney is employing a new, secret smelting process, purportedly replete with environmental controls to remove fluoride, and a new form of waste containment using "excavated cells" covered in two metres of clay (19).

Pechiney also has a 20% stake in Queensland Alumina (Comalco 30.3%, Kaiser 28.3%, Alcan 21.41%) which underwent expansion in the early '80s. Bauxite for the refinery comes from Weipa, the region flagrantly robbed by Comalco from its Aboriginal inhabitants in the '60s, and which continues to be one of the major disgraces of northern Queensland (20).

No less controversial is Pechiney's acquisition in 1981 - along with Billiton Aluminium, a subsidiary of Royal Dutch Shell - of a 40% interest in the Aurukun bauxite prospect in the same area, an aboriginal reserve whose occupants are firmly against bauxite mining (21) . To date no firm moves have been made to commence mining, but in 1981 Pechiney announced that it would increase its share in Aurukun to 33.33% (22).

Pechiney participates in Friguia, a holding company which has a 51 % interest in alumina production in Guinea (22). The Frialco consortium is owned 30% by Pechiney, 30% by Noranda, with Alcan and Hydro Aluminium holding 20% each (12). Pechiney also mines bauxite and produces alumina and aluminium in Greece (22).

India got Pechiney's technical advice in 1980 when it drew up plans for a bauxite treatment and aluminium complex in Orissa (23).

Plans were announced in early 1984 to build Europe's first lithium plant in south-east France (24). Lithium is used in alloys and batteries, including those which power the Minuteman missiles (2).

Pechiney is also the principal European producer of fluorspar (2).

Before nationalisation, PUK was involved in virtually every activity related to nuclear fission, apart from the commissioning of nuclear power stations (25). It owns 51 % of Comurhex which operates uranium hexafluoride plants at Pierrelatte and Malvesi. It also controls 51 % of Zirco tube, a manufacturer of fuel elements; 51% of Eurofuel; and 50% of Franco-Belge de Fabrication de Combustibles (in which Creusot-Loire is its partner) (47).

Soon after Bernard Pache took over the helm at Pechiney in 1985 from Georges Besse (who had graduated into the company from Cogema), he began soliciting atomic and other business in Japan, hoping to sell the whole range of Pechiney's nuclear fuel facilities; fuel for light water reactors, fabrication of zirconium products (through its Cezus subsidiary) (47), the production of uranium hexafluoride, and fabrication of fuel elements themselves (59).

Three years later, Uranium Pechiney, together with Cogema and Framatome, took a 49% share in the US fuel supplier Babcock & Wilcox (B&W Fuel Company).

In 1991, Framatome was negotiating to take control over B&W Fuel, as well as B&W Nuclear Service Company (60).

But its most important nuclear role has probably been as the 50% holder of Minatome, which - under the 1982 reorganisation - was bought out by CFP/Total and merged with Total's subsidiary Total Compagnie Miniere (2).

Until 1982, Minatome mined uranium inside France, notably at St Pierre-de-Cantal, using its 94%-owned subsidiary Scumra (25) and producing 100t/year U3O8 (26).

Outside of France, Minatome had shares in uranium mines in Namibia (10% of Rossing), Niger (6.7% of the Somair consortium at Arlit), and has been exploring for the deadly metal in the USA, Australia (at Ben Lomond), Colombia, Brazil, Ireland, Britain and Mauritania (25), not to mention Namibia (27).

Uranium mining activities undertaken by Pechiney in its own name include grabbing a share in the lucrative Cluff Lake project, managed by Amok as the controlling partner in Cluff Mining Ltd; Amok itself is owned as to 25% by Pechiney (22).

Lower down the line, the wholly-owned subsidiary Uranium Pechiney took a share in a uranium-from-phosphoric acid recovery plant operated by Gardinier, planned for the early 1980s (28) but which appears to have closed by 1982 (29).

In Algeria the company was studying uranium reserves in 1977 (30, 31); a contract that year for a feasibility study was awarded to Pechiney and Minatome, Sogerem (a Pechiney subsidiary), and Stec (32, 33).

Five years later, Uranium Pechiney won a US$32M contract to provide processing technology, engineering and equipment for uranium-from-phosphates extraction in Tunisia (34), after Gardinier and PUK conducted a feasibility study on the project (35). The unit was to be built at Gabes on the Mediterranean coast (36), but plans for extraction had not materialised by 1984 (2).

The company's most controversial deals have been with South Africa and in South America. In the late '70s the French nuclear industry won a large part of the apartheid republic's burgeoning nuclear power/weapons programme. The contract for the first South African nuclear power station (Koeberg 1) went to a consortium headed by Framatome (controlled by Creusot-Loire which is itself part of the huge Empain-Schneider group that controlled Pechiney) (2). At roughly the same time, the South African government announced an agreement with a consortium headed by PUK, including Creusot-Loire and Westinghouse, to provide uranium enrichment and fuel fabrication facilities (37). This arrangement was superseded with the development of Nufcor's own Pelindaba enrichment plant (38).

The Argentinian military dictatorship did, however, in the early '80s select a consortium headed by PUK to cooperate with the Argentinian CNEA in opening up the Sierra Pintada uranium deposits (39, 40). The following year the USA stopped its own shipments of uranium to Argentina because the military state refused to sign the Nuclear Non-Proliferation Treaty and, within another year, the Soviet Union was sending the country 20% enriched supplies of U-235 in exchange for grain (14).

Also, at the beginning of 1981, Pechiney announced it had won a contract to build Brazil's first uranium hexafluoride plant for Nuclebras (41). The plant, to be constructed at Resende near Rio de Janeiro, would employ Pechiney's own technology and start up in 1985, with an initial production of 450 or 500 tonnes (42). The deal completed Brazil's attempts for a decade (in fact since the West German-Brazilian nuclear pact) to complete the nuclear fuel chain on its own territory (43).

At the same time PUK was assisting Nuclebras to construct the Pocos de Caldas uranium mining complex, specifically the Otsamu Utsumi mine in Minas Gerais which officially opened in May 1982, although production started in December 1981 (44). PUK participated in the actual construction of the mine and provided technical expertise (42).

Although the West German government built Brazil's uranium enrichment plant (45) in late 1983, the Brazilian regime asked Alsthom-Atlantique, another French-state-controlled engineering company, to supply vital compressors for the plant. The Brazilian Minister of Mines and Energy, Cesar Gais, also visited France to discuss with Pechiney the possibility of using a new uranium mining procedure developed by Pechiney.

Uranium Pechiney developed this process to treat high clay ores and dispersed clays containing uranium, gold and other materials not previously economically recoverable. This "physico-chemical" process purportedly transforms clay into porous granular material ready for solid-liquid separation.

It was later reported that both Pechiney and Cogema were trying to implement a plan to extract uranium and phosphoric acid from openpit ore at Itataia in Brazil - an "innovative" development since the two are not chemically bound together. The US$300M project was agreed in April 1984 and was intended to process up to 20,000 tonnes a day of ore, producing some 2600 tonnes a year uranium, thus making it one of the more important new uranium ventures.

The deposit, 200km south-west of Fortelaza in Ceara state, has an estimated 80,000 tonnes of contained uranium. Pechiney would be responsible for the project engineering and Cogema for the purchase of any of the Itataia uranium (46).

An irony, not lost on anti-nuclear groups concerned with weapons proliferation, is that both the West German and French governments have enormously assisted Argentina and Brazil to acquire nuclear weapons although (one might say because) the two countries, despite a recent nuclear pact, have long considered the other capable of launching an atomic attack on "their" soil (45).

By the turn of the eighties, Pechiney had established itself as one of the world's most important aluminium producers, its most significant manufacturer of metal cans, and one of the few diversified conglomerates not to have reduced its commitment to nuclear fuel production and processing.

In 1991, it saw its plans to start up a smelter at Nasiriva, in Iraq, dashed by the horrendous conflict between the Saddam Hussein regime and the Bush administration for control of Kuwait (12), and had to shelve plans (formed with Austria Metall, Alumined Beheer and RTZ) to build the Atlantal smelter in Iceland (61).

In Venezuela, an agreement with Aluminium del Caroni SA, the state-owned company, to construct a smelter on the Orinoco river, was shelved (62) for financial reasons (63). But, in 1990, Pechiney agreed a new project with Alisa (Aleaciones Ligeras SA) to operate a Venezuelan smelter, to be constructed by Davy McKee (63).

Contact: WISE (Amsterdam), PO Box 18185,1001 ZB, Amsterdam, Netherlands. Tel: 31 20 6392681; Fax 31 206391379.

Save Aramoana, 320 George Street, Dunedin, Aotearoa (New Zealand).

Sytze Ferveda, Rijn-Schelde Instiyuut, Dam 47, 4331 Middelburg, Netherlands.


SOURCE: "The Gulliver File - Mines, people and land: a global battleground" by Roger Moody.

Published in 1992 by Minewatch, 218 Liverpool Road, London Nl ILE, UK, and WISE-Glen Aplin, Po Box 87, Glen Aplin Q 4381, Australia.

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All rights reserved. © Minewatch, 1992.


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