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June 18, 2004
Alcoa Finalizes Power Supply Agreement to Alumar; Brazilian Upstream Expansions Could Total More Than $1 Billion
PITTSBURGH--(BUSINESS WIRE)--June 18, 2004--Alcoa (NYSE:AA) today announced that its Brazilian 100% equity owned subsidiary, Alcoa Aluminio S.A., has signed a 20-year agreement with Eletronorte, a Brazilian regional energy producer and seller, to buy up to 500 megawatts of hydro-powered electricity annually to supply Aluminio's share of production at the Alumar aluminum smelter in Sao Luis.
Having secured this future power supply, Aluminio will now proceed with the authorization requests and approvals to expand its share of the smelting operations in Sao Luis by 30 percent, bringing Alcoa Aluminio's share of smelting capacity there to 262,000 metric tons per year (mtpy).
A final decision on expansion, which will require investment of approximately $130 million, is expected in the third quarter of 2004, with groundbreaking in the same quarter, and production starting up in the third quarter of 2005.
Upon completion of this expansion, total smelting capacity at the Alumar consortium will increase from 370,000 mtpy to 433,000 mtpy. When complete, Alcoa's share of output from the overall smelter will grow from 54 to 60 percent. The Alumar facility is jointly owned with BHP Billiton.
In addition, Alcoa intends to proceed with a brownfield expansion of the alumina refinery on the same site by 2 million mtpy. Preliminary design studies have already been completed.
The alumina expansion calls for a retrofit of the existing unit and the addition of a second, state-of-the-art unit at the refinery. Upon completion, the facility's capacity will be 3.3 million mtpy. A final decision to move forward with the proposed $680 million project is expected to be made in the second half of 2004. Assuming successful approval processes with government environmental and others agencies it is expected the project will be completed by early 2007.
The Alumar refinery is jointly owned by BHP Billiton (36%), Alcan (!0%), Alcoa Aluminio (35.1%) and Abalco S.A. (18.9%). Abalco is part of the Alcoa World Alumina and Chemicals (AWAC) enterprise, owned 60% by Alcoa and 40% by Alumina Ltd.
Additionally, Alcoa also is exploring the possibility of developing the Juruti bauxite reserve in Brazil. A decision to move forward on this bauxite reserve project, which is estimated to require investments of approximately $350 million, is also expected to be made in the second half of 2004. The project would be implemented consistent with Alcoa's sustainability principles.
Alcoa's share of the Machadinho and Barra Grande hydropower projects will supply the full energy needs of its Pocos de Caldas smelter. The company continues to pursue competitive and environmentally sound energy projects in Brazil to increase its energy self-sufficiency and make further upstream expansion possible.
Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) foils and plastic wraps, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 120,000 employees in 41 countries and has been a member of the Dow Jones Industrial Average for 45 years and the Dow Jones Sustainability Indexes since 2001. More information can be found at www.alcoa.com