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10. March 2008

Alcoa secures power contract for three smelters in Quebec

New York, NY (USA)- Alcoa has reached an agreement with the government of the province of Quebec on a new, renewable energy contract to supply all three of the company's aluminum smelters in the province -- Baie Comeau, Becancour (ABI), and Deschambault -- through the year 2040. The contract also enables Alcoa to invest $1.2 billion to upgrade and expand Baie Comeau production to 548,000 metric tons per year (mtpy).

Initial engineering studies for the upgrade and expansion activity at Baie Comeau will begin in early 2008, with the vast majority of the investment planned for the final stages of the project. It is expected that conversion and upgrade of the smelting technologies at the plant to a more environmentally friendly one, as well as the expansion of output at Baie Comeau by 110,000 mtpy, will be completed by 2015. The upgrade will eliminate PAHs emissions from the Soderberg pots and reduce greenhouse gas (GHG) emissions at the plant by 40%.

During the upgrade and expansion phase of the project, an estimated $540 million of added economic value will be created in Quebec over a period of four years, supporting the equivalent of 6,800 job-years of employment. Following construction, the continued operations will then generate -- onsite as well as for suppliers and subcontractors -- an added economic value of $470 million per year, supporting 3,900 jobs.

Prior to this agreement, Alcoa's three smelters in Quebec produced more than 1.1 million metric tons of aluminum per year and employ more than 3,600 people directly. In addition to the direct benefits, the facilities will generate more than $1.8 billion in economic spin-offs annually in the province as a result of this agreement.

Under terms of the agreement, which is conditional on Alcoa upgrading and expanding production in Baie Comeau, power contracts to supply all three Quebec smelters -- as well as the energy needed to support the expansion -- will be extended through the year 2040 at the regulated industrial "L" rate. Alcoa will also receive financial support from the government in the form of a loan guarantee.

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