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Rio Tinto is always extorting the Québec government for preferential rates on power to make aluminum. I don't understand why governments let companies hardball

Rio Tinto is always extorting the Québec government for preferential rates on power to make aluminum. I don't understand why governments let companies hardball them like that. The c-suite and the trademarks can leave, the factory, the expertise and the market will still mostly be there, governments could invest and rebuild something they/the people actually have ownership of.

chongli 3y ago
I don't understand why governments let companies hardball them like that Moral hazard [1]. Government officials make these decisions because they can win political points by doing so. Usually, they get to take credit for being “job creators.” Opposition politicians who try to raise the issue of risks, potential debts, environmental degradation, etc. can be quickly branded as anti-jobs and their valid criticisms dismissed. Down the road, when the chickens come home to roost, the politicians who approved the deal are nowhere to be found. Since there’s no law allowing the public to hold those politicians financially accountable for their past decisions the effect of moral hazard has run its full course, leaving the public holding the bag. As for why (even new generations of) politicians would continue to cave to these companies’ demands: no one wants to be left taking the blame for job losses. [1] https://en.wikipedia.org/wiki/Moral_hazard https://en.wikipedia.org/wiki/Moral_hazard
- woah 3y ago
  Why would you hold elected officials “financially accountable” for doing what the voters want?
colechristensen 3y ago
If they actually throttle them during peak usage aluminum plants should get a discount. Because much of the electrical part is more or less the equivalent of charging a shitty battery, it can be throttled really easily and being able to eat up extra capacity during low electrical usage is really environmentally friendly, as is aluminum as a material for making stuff being infinitely recyclable.
- lostlogin 3y ago
  > If they actually throttle them during peak usage aluminum plants should get a discount. Why? They could build their own power source. That said, I’d like a discount when my internet line speed drops below advertised due to everyone else using the internet.
  - colechristensen 3y ago
    Efficient use of capital and resources. Idle power plants waste resources and make things more expensive. Consider every dollar spent as an interest baring loan. Spending money on a power plant not used wastes it and making everything more expensive. Scalable loads makes the return on investment for variable load renewables and constant load nuclear much better. The most expensive power are the peaker plants that have to run only a handful of hours per day. More scalable grid connected loads like aluminum processing makes building capacity and especially renewable capacity cheaper.
    - lostlogin 3y ago
      In the example here, the power plant was made to supply the smelter. The taxpayer built the plant for the smelter and now Rio Tinto are dictating the power price. The power plant can’t easily supply the National grid, as the lines aren’t there with sufficient capacity. The lines are being built but Rio Tinto have used these facts to get to a position where they are subsidised by the rest of the country. The power plant also has a finite life, and it’s passed its midpoint. Additionally, that smelter has also had government subsidies to stay open. I see no great loss in letting it die.

chongli 3y ago

I don't understand why governments let companies hardball them like that Moral hazard [1]. Government officials make these decisions because they can win political points by doing so. Usually, they get to take credit for being “job creators.” Opposition politicians who try to raise the issue of risks, potential debts, environmental degradation, etc. can be quickly branded as anti-jobs and their valid criticisms dismissed. Down the road, when the chickens come home to roost, the politicians who approved the deal are nowhere to be found. Since there’s no law allowing the public to hold those politicians financially accountable for their past decisions the effect of moral hazard has run its full course, leaving the public holding the bag. As for why (even new generations of) politicians would continue to cave to these companies’ demands: no one wants to be left taking the blame for job losses. [1] https://en.wikipedia.org/wiki/Moral_hazard https://en.wikipedia.org/wiki/Moral_hazard

woah 3y ago
Why would you hold elected officials “financially accountable” for doing what the voters want?

colechristensen 3y ago

If they actually throttle them during peak usage aluminum plants should get a discount. Because much of the electrical part is more or less the equivalent of charging a shitty battery, it can be throttled really easily and being able to eat up extra capacity during low electrical usage is really environmentally friendly, as is aluminum as a material for making stuff being infinitely recyclable.

lostlogin 3y ago
> If they actually throttle them during peak usage aluminum plants should get a discount. Why? They could build their own power source. That said, I’d like a discount when my internet line speed drops below advertised due to everyone else using the internet.
- colechristensen 3y ago
  Efficient use of capital and resources. Idle power plants waste resources and make things more expensive. Consider every dollar spent as an interest baring loan. Spending money on a power plant not used wastes it and making everything more expensive. Scalable loads makes the return on investment for variable load renewables and constant load nuclear much better. The most expensive power are the peaker plants that have to run only a handful of hours per day. More scalable grid connected loads like aluminum processing makes building capacity and especially renewable capacity cheaper.
  - lostlogin 3y ago
    In the example here, the power plant was made to supply the smelter. The taxpayer built the plant for the smelter and now Rio Tinto are dictating the power price. The power plant can’t easily supply the National grid, as the lines aren’t there with sufficient capacity. The lines are being built but Rio Tinto have used these facts to get to a position where they are subsidised by the rest of the country. The power plant also has a finite life, and it’s passed its midpoint. Additionally, that smelter has also had government subsidies to stay open. I see no great loss in letting it die.