Growth and Economic Impact

 

We are proud of the economic value we generate for our customers, shareowners, employees and the communities which host our operations. Our capital projects, purchases of goods and services, taxes and income taxes, wages and various community investments benefit our stakeholders.
 

New development program for Alcoa in Quebec

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Disciplined financial management is essential to ensure our long-term success as well as that of our stakeholders. This involves the application of rigorous financial controls, maintaining a prudent financial structure, making strategic investments and implementing cost reduction initiatives.

 

In 2011, we announced an agreement with the Government of Québec relating to Alcoa’s new development program in Québec. This program will result in considerable improvement to the competitiveness of Alcoa’s cost structure while reducing its environmental footprint. This investment plan, initially planned for a five-year period, totalled $2.1 billion for the three aluminum smelters. The program, which includes electricity supply contracts for 25 years at the regular tariff (L tariff) allows the Baie-Comeau Smelter to complete the last engineering step for its modernization, with start-up of new potlines now expected by the end of 2019.

 

Economic conditions have forced Alcoa to reduce its global aluminum production by 460,000 mt/year. The company announced in May 2013 that it would shut down the A and B potlines in the Söderberg plant, with a capacity of 105 mt/year, in August/September 2013, which is earlier than expected. The job elimination in the Söderberg plant was already planned and announced as part of the modernization and we do not intend to make any additional layoffs since we are counting exclusively on attrition.

 

At the same time, Alcoa announced a new investment of $30 million for upgrading the casthouse at the smelter to support the rapidly growing automotive manufacturing industry. This is in addition to the $75 million already invested in the renovation of the port facilities to meet the smelter’s current and future needs.

 

From an environmental perspective, this is positive news since the shutdown of the Söderberg plant will result in a 40% reduction in the smelter’s greenhouse gas (GHG) emissions, much faster than expected.

 

Despite the change in timeline, the construction phase of the Baie-Comeau Smelter’s modernization will create approximately 6,800 person-years of employment and generate economic benefits in the order of $500 million.

 

Many aspects of the investment plan have not changed. At the Deschambault Smelter, thanks to technological innovation at Alcoa global Center of Excellence, the operating amperage will increase to 405,000 amperes by 2016, thereby increasing the production capacity by 25,000 mt/yr.

 

Alcoa’s $50 million contribution to the Economic Development Fund managed by the Government of Québec, is also maintained, as is the Alcoa Sustainable Communities Fund, with $25 million to be invested over 25 years in the three communities where our smelters are located (See Sustainable Communities).

 

An economic force for communities

In 2012, Alcoa Canada Global Primary Products facilities generated revenues of $2.3 billion in Québec and economic benefits of about $1.5 billion. These numbers represent only direct economic benefits, namely the salaries we pay our 3,100 employees, the taxes and income taxes paid to the province of Québec, and purchases we made from our suppliers, most of whom are local.

 

The substantial investments announced for the next several years, the resulting increase in the competitiveness of our facilities, the operational and environmental benefits related to the modernization of the Baie-Comeau Smelter, and the long-term nature of our operations, confirm that Alcoa Canada Global Primary Products will remain a major economic force in our host communities and in Québec as a whole.

 

Economic conditions are uncertain and competition is increasingly fierce. But our engagement towards communities, as well as that of Alcoa Foundation, and above all Alcoa’s decision to make Québec its North American hub for aluminum production, give us confidence in the future of our company and in the communities  we are growing with.

  

Economic spinoffs of Alcoa Canada Global Primary Products plants in Québec, in 2012*

 

Baie-Comeau Smelter

Bécancour Smelter**

Deschambault Smelter

Bécancour Rod Plant

Direct spinoffs, in salaries, purchases, taxes and income taxes

$601M

$445M

$373M

$36M

Including direct local spinoffs of

$270M

$180M

$120M

$12M

* As at December 31, 2012

** The Bécancour Smelter Inc. (ABI) is 74.95% owned by Alcoa and 25.05% by Rio Tinto Alcan.