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Alcoa in Profile: Brazil
Accounting for approximately one-fifth of Brazil’s primary aluminum and alumina production in 2004, Alcoa’s operations in this South American country are well positioned to capitalize on future growth due to extensive bauxite reserves, significant hydropower potential for self-generated energy, and some of the highest performing and best maintained facilities in the world.
Alcoa established its Brazilian presence in 1965, with the first plant opening in 1970 at Poços de Caldas, which now includes mining, refining, smelting, and a powder plant. Today, there are eight operating locations that include one of the largest aluminum smelters and alumina refineries in all of South America. In addition to alumina and primary aluminum, products manufactured at these facilities include extrusions, sheet and foil, aluminum powder, industrial chemical products, wiring harnesses, and plastic closures. Beyond local production, Brazil also constitutes a growing market for imported Alcoa products, such as forged wheels, heat-treated sheet and plate for aerospace applications, and fasteners.
“We have very strong operations in Brazil, with many of our facilities being in Alcoa’s top quintile for cost, environment, health, and safety performance,” said Edson Schiavotelo, institutional relations manager for Alcoa’s Brazilian subsidiary Alcoa Alumínio. “More importantly, we are in the process of expanding capacity, with another 63,000 metric tons of primary metal capacity expected to be fully online in the beginning of the second quarter of 2006 at our São Luís smelter. We are also exploring opening a bauxite mine in the northern part of the country at Juruti to feed a possible expansion at the São Luís refinery, and we are further positioning ourselves in various hydroelectric power projects.”
| By the Numbers: Alcoa in Brazil |
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8 production facilities
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5,900+ direct jobs
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301,000 metric tons of primary aluminum produced
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US$755 million in annual revenues
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US$211 million in annual exports
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US$66 million in capital expenditures
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US$859,000 in community
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The Juruti mine would bring a major competitive advantage when it is operational in 2008. Currently, the Brazilian operations buy bauxite from a third party, Mineração Rio do Norte (MRN).
“The new bauxite mine would create significant opportunities to add cost-competitive capacity to our system and boost our production of alumina and primary metal,” said Schiavotelo. “We have the potential to add more capacity in both our refining and smelting operations. To the extent we can tap long-term, cost-competitive bauxite and energy, we can produce more primary metal, supplying our extrusion and flat-rolled products operations with material so they can capture more market share in Brazil and beyond.”
Plans also are being explored to modernize the Poços de Caldas smelter by transferring the latest technology developed in our Norwegian Lista plant to this Brazilian location.
Both the Juruti mine and one of the hydroelectric projects—Barra Grande, in which Alcoa holds a 42% share—have received approval from the Brazilian Government to proceed. The Barra Grande reservoir is currently being filled, and the power plant is expected to be fully operational by the end of the first quarter of 2006.“Environmental and social issues are very important in Brazil,” said Schiavotelo. “Juruti and Barra Grande could only move forward through a proactive process of doing detailed studies and consistently building close relationships with all stakeholders.”Another challenge facing the Brazilian operations is maintaining cost competitiveness.
“Cost is always an issue, because there are new players coming into the global marketplace every day,” said Schiavotelo. “Yes, we are competing with China, but we are also competing with literally hundreds of other companies in both the global and domestic markets.”
Alcoa’s presence in Brazil also means significant investments in the local communities, from funding a new public high school in São Luís to offering health and medical services to implementing employee volunteer programs. Between 1995 and 2004, Alcoa Alumínio, Alcoa Foundation, and the local Instituto Alcoa jointly provided more than US$31 million in grants to local organizations. Employee participation in the Bravo! program is also significant.
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