SAGUENAY, Que. — The Quebec government has reached an agreement in principle with Rio Tinto Alcan that would extend the aluminum producers remaining Arvida operations in Saguenay until the end of 2020, protecting 1,000 jobs.

Rio Tinto Alcan Primary metal North America chief operating officer Étienne Jacques said, This agreement will provide Rio Tinto Alcan with the necessary operating permit and a competitive energy rate that will allow us to continue operating at full capacity beyond 1 January 2015. I am proud of the operational excellence exhibited by the employees of the Arvida smelter. Their continued efforts, along with this new agreement, will allow the Arvida smelter to continue competitively producing aluminium from clean renewable energy for years to come.

The agreement gives Rio Tinto Alcan a low preferential electricity price and requires it to sell excess energy to Hydro-Quebec at the same price.

The metal company also agreed to increase its annual output by 35,000 tonnes to 150,000 tonnes.

The deal was announced in the Lac-St-Jean region by Premier Phillipe Couillard and Economic Development Minister Jacques Daoust.

Commissioned in 1941, the smelter uses Soderberg technology, which is to be phased out of all Quebec primary aluminium smelters by Dec. 31 in compliance with provincial environmental regulations.

Rio Tinto and rival Alcoa have been looking to reduce the cost of aluminum production as they adjusts to low metal prices.

Rio also operates its AP60 research and development centre at a nearby facility in Arvida that uses new technology to produce metal more efficiently.