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Alcoa Unfazed By Iceland Vote

Blocking Smelter Expansion

<font face="arial, geneva, helvetica" size="2">Alcoa Inc (AA) is unfazed by a referendum blocking the expansion of a rival aluminum smelter in Iceland, and said Monday it has "good support" for its own two projects from the local community there.&nbsp;</font>

<font face="arial, geneva, helvetica" size="2">"Both our projects have very good local support," said Alcoa spokesman Kevin Lowery, adding that the company is watching the situation in Iceland unfold.</font>

<font face="arial, geneva, helvetica" size="2">Over the weekend, residents of a small municipality just south of Iceland's capital Reykjavik voted against a planned $1.2 billion expansion at Alcan Inc.'s (AL) Isal smelter in Straumsvik. The expansion would have boosted capacity by 280,000 metric tons, representing some 8% growth in the company's aluminum smelting capabilities.</font>

<font face="arial, geneva, helvetica" size="2">The vote result has raised questions over the fate of other Icelandic smelters and projects, including Alcoa's as well as that of U.S. producer Century Aluminum (CENX).</font>

<font face="arial, geneva, helvetica" size="2">But Lowery told Dow Jones Newswires that the first of Alcoa's two projects in Iceland, the Fjardaal smelter, would be up and running in the next few weeks.</font>

<font face="arial, geneva, helvetica" size="2">"The smelter should see first production of aluminum metal by around late April," he said. The first of the smelter's alumina, the raw material needed to produce aluminum, arrived in the port near the plant Wednesday. The 39,000-ton alumina cargo came from a refinery in Western Australia.</font>

<font face="arial, geneva, helvetica" size="2">And Alcoa is currently exploring the possibility of a new smelter at Husavik in Bakki, northern Iceland. "We're conducting feasibility studies on the second smelter project," Lowery said. The project could conceivably be the world's first geothermal powered smelter, Lowery said.</font>

<font face="arial, geneva, helvetica" size="2">"The studies are underway, and as we carry them out, Alcoa is meeting with the community. We have very good local support for our second smelter," he added.</font>

<font face="arial, geneva, helvetica" size="2">No construction is expected to begin before 2010, should a decision to go ahead be made.</font>

<font face="arial, geneva, helvetica" size="2">The 'no' vote for Alcan's smelter has come amid fresh concerns over rising inflation and fears of a repeat of last year's financial crisis that sent shockwaves through global emerging markets.</font>

<font face="arial, geneva, helvetica" size="2">Alcan has been unavailable for comment since the vote, but last week mooted it may leave Iceland if the expansion cannot go ahead.&nbsp;</font>

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