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July 22, 2005

Alcoa Investing $375 Million for Warrick, IN Facilities

NEWBURGH, Ind.--(BUSINESS WIRE)--July 22, 2005--Alcoa (NYSE:AA) announced today that it is investing approximately $330 Million at its Warrick Power Plant in Newburgh, Indiana, to increase environmental performance, increase power efficiency, lower costs and further secure long-term, low-cost power for its smelter and related downstream business there. Plans include installation of scrubbers on all four operating units, boiler modifications to provide greater fuel flexibility, and installation of new and improved coal handling facilities for increased efficiency. The company announced in May plans to invest $45 Million to purchase equipment and the right to mine coal in nearby Friendsville, Illinois.

"This is a significant investment to reduce emissions well beyond anything required by regulation while increasing the competitiveness of the Warrick Operations and ensure that we have long-term, low-cost power for our smelter and rolling facilities here," said Alan Cransberg, President, North America Primary Metals. "It is a strong demonstration of Alcoa's commitment to sustainability and to the future of Warrick Operations. This investment will help secure jobs, increase work for the area's construction industry, and significantly contribute to a cleaner local environment. The investment also helps ensure that Warrick remains self-sufficient for power. The benefits to the region are immense in addition to assuring a long term molten metal supply to our world-class rolling operation."

"Warrick employees are to be commended for their efforts," said Cransberg. "By reducing costs and increasing efficiency, their hard work has secured this infusion of capital that is not only good news for Alcoa and our employees, but also for the community."

Vectren Corp., which owns a portion of the Warrick Power Plant, has also committed $68 Million to the project, bringing the total investment to $400 Million.

Construction is slated to begin immediately and continue through 2010. During this time, more than 500 local contractors will work at the site with more than 200 onsite every day for 18 months. Their work will result in an integrated environmental control system at the Warrick Power Plant that will include wet Flue Gas Desulphurization spray/absorption towers, flue gas booster fans, and support facilities. More than 25 new employees will be needed to operate the system that will provide many benefits including a 98% reduction in SO2 and an 8 million gallon wastewater reduction.

Major physical changes at the plant will include new stack configurations, new barge loading and unloading facilities, slurry handling and preparation facilities, water treatment facilities to reuse Warrick Operations discharge waters, dry fly-ash handling, an electrical sub-station, new coal handling equipment, and improved control facilities for the entire system.

Alcoa's investment in the Friendsville Mine calls for the addition of a coal preparation facility and material handling infrastructure to enable transport of coal via railcar to the smelter's power plant. The coal is expected to be available for use by Alcoa Warrick Operations by July 2006. Under the terms of the agreement, Alcoa will purchase the rights to mine 2,500 acres in reserve at the mine near Mount Carmel, Illinois for 10 years, with the opportunity to expand from there. The mine will be capable of producing approximately 1 million tons of coal a year, approximately 45 percent of the power plant's fuel requirement. Vigo Coal will provide mining services to Alcoa. The mine will contribute approximately $20 million annually to the local economy.

The Warrick Power Plant is a four-unit, 742 megawatt (MW), coal-fired, steam-electric generating facility. Units 1, 2 and 3, rated at 144 MW each, and one-half of the 300 MW Unit 4 are owned by Alcoa. Vectren, an Indiana gas and electric utility, owns the other half of Unit 4. All of these units were placed in service between 1960 and 1970. Of the Alcoa-owned generation, nearly all of the power is provided to Warrick Operations, with over 90% of this going to the smelter.

About Alcoa

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 131,000 employees in 43 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

About Warrick Operations

Alcoa Warrick Operations is an integrated facility housing a 309,000 metric ton per year (mtpy) primary aluminum smelter and rigid packaging operations that produce aluminum sheet for beverage and food can ends, tabs, and other flat-rolled aluminum products. Alcoa's Warrick Power Plant is a 750 megawatt (MW) coal-fired power plant that provides the power necessary to operate the plant. Warrick Operations is celebrating 45 years of operating in 2005, and is one of the largest aluminum smelting and fabricating facilities in the world with more than 120 acres under roof and 14,000 total acres in the community. Alcoa generates $1 Million a day into the local economy and employees more than 2100 people.