In response to the difficult economic situation in 2008, Alcoa has taken a strong stand to minimise costs and position our business in Australia to address the current challenges and be ready to grow when the time is right.
During 2008, we reviewed our capital expenditure, put much tighter controls on capital and people approvals, reviewed all contractors and consultants, froze salaries, matched production to demand, and continually sought opportunities for greater efficiencies.
As part of our strategic response to the economic downturn, we postponed the expansion of our Wagerup alumina refinery in Western Australia until overall market conditions improve and there is greater security in the Australian energy supply. We also implemented a small production curtailment at the Portland Aluminium smelter in Victoria due primarily to the fall in the aluminium price and a drop in world demand.
We continue to focus on energy security, which is one of the most vital issues confronting Australia and specifically its industry. It is pivotal to the big issues of climate change and Australia’s capacity to respond to the economic downturn. There is an urgent need to facilitate domestic gas growth to reduce greenhouse gas emissions, while maintaining sustainability and competitiveness.
Despite the current energy and economic challenges, our commitment to the strength and vitality of the communities surrounding our facilities is unfaltering. In Wagerup, for example, we anticipate the expansion project will ultimately move forward, as it offers a strong investment return. We also continue to provide ongoing benefits to communities in the area through the Wagerup Sustainability Fund.
The Wagerup Sustainability Fund is an innovative approach to community partnering. It’s structured to share decision-making with the community on how Alcoa’s community contributions should be used. A charitable trust has been established into which Alcoa will make annual donations. The trust is managed by an independent Trustee, the Western Australian Community Foundation, of which Alcoa is a Cornerstone partner. Funding decisions are made by local committees with representation from local councils and communities, as well as Alcoa.
The fund acts as a catalyst for building partnerships and programs with other organisations essential for the vibrancy and sustainability of surrounding communities by supporting social, economic, and environmental projects that promote the growth of the region.
Specifically, we have linked our annual donation to the fund to production at the refinery. Therefore, when we benefit from production improvements, the community and the region will directly benefit, too.
To complement Alcoa’s annual contribution, the fund also makes provision for any individual or business to make a donation. We recognize that many people in regional communities often want to give where they live. The fund is the perfect vehicle to achieve that.
While the economic downturn has been a challenge, it has also provided an opportunity to improve—to focus on the really important elements of our business and our relationships with the communities in which we operate.
There will always be challenges, whether it’s the demands of a carbon-constrained world, energy security, or economic upheaval.
The future of Alcoa in Australia remains bright, because we have one of the most efficient, integrated aluminium production systems in the world.
We have access to excellent bauxite reserves, energy-efficient alumina refineries, and integrated aluminium smelters and rolling mills. Our employees live in the communities in which we operate, and we believe we are an integral part of those communities. We also continue to focus on managing the social, environmental, and economic aspects of our business.
Driving our focus are the results of the Australian Stakeholder Perception Survey. Partnering with the Australian Centre for Corporate Social Responsibility and using the stakeholder 360° methodology, we invited 1,600 stakeholders to participate in a survey in 2008. The goal was to gain a better understanding of the perceptions our stakeholders have of our performance around key social, economic, and environmental indicators.
The survey was used to build an accurate picture of what matters to our stakeholders when assessing our commitment to community, investment in environmental management, and support for economic development in the communities in which we operate.
In addition to providing baseline data on key performance indicators, the results from the survey will be used to revitalise our stakeholder engagement strategy, identify opportunities and risks for proactive engagement with stakeholders, better anticipate future expectations our stakeholders have on how we should be engaging with the community, and provide clear direction around leading indicators that matter to the business and our stakeholders.
Specifically, the survey focused on perceptions of our performance and reputation, which are strongly driven by the extent stakeholders perceived they experienced both just treatment in their interactions with Alcoa and high quality relationships.
In this study, just treatment was defined as stakeholder perceptions of ethical and consistent decision making and feeling respected and satisfied with Alcoa’s explanations.
The quality of our stakeholder relationships was measured by assessing the level of social capital in the relationships between stakeholders and Alcoa and between the stakeholders themselves. Social capital is described as the trust, mutual understanding and shared values between members of the community and the company that enable them to work together for shared outcomes.
Key results showed the following:
- Alcoa’s overall performance is viewed positively, with the lowest average ratings of at least 3 out of 5;
- Alcoa’s reputation is high across most sites with the exception of Wagerup, which was the only site to rate less than 3 out of 5;
- Stakeholders felt Alcoa treated them justly, with scores of at least 3.5 out of 5; and
- The satisfaction of stakeholders in regard to their relationship with Alcoa is also generally high, with most sites rating more than 4 out of 5.
The overall rating for each operational site was as follows:
- Point Henry: 4.35
- Anglesea: 4.03
- Portland: 3.97
- Pinjarra: 3.73
- Kwinana: 3.68
- Yennora: 3.5
- Mining: 3.44
- Wagerup: 3.23
Results from the site-level analyses led to recommendations specific to each site. Most are aimed at strengthening already good relations. At Wagerup, however, we recognise there is a need to increase our communication and improve our relationships with some stakeholders.
Key learnings from the survey are directing our efforts on the following:
- Developing an Australia-wide stakeholder engagement framework;
- Reviewing and refreshing community consultation networks; and
- Increasing stakeholder motivation to collaborate with Alcoa on shared issues.
We are now working to share the learnings from the survey with our stakeholders and integrating them into site-based community relations strategies. You can read more about our community outreach in our Partnering Stronger Communities section.
