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| March 4, 2008
Alcoa, Government of Quebec Reach New Renewable Power Agreement For Three Smelters in Province
New Energy Arrangement Secures Power
Through 2040, Enables $1.2 Billion Upgrade, Expansion of Baie Comeau
Smelter; Accelerates Negotiations to Expand Deschambault Smelter
NEW YORK--(BUSINESS WIRE)--Alcoa (NYSE:AA) today announced it has reached an agreement with the
government of Quebec on a new, renewable energy contract to supply all
three of the Company’s aluminum smelters in
the province – Baie Comeau, Becancour (ABI),
and Deschambault through the year 2040 and enabling Alcoa to invest $1.2
billion to upgrade and expand Baie Comeau production to 548,000 metric
tons per year (mtpy).
Initial engineering studies for the upgrade and expansion activity at
Baie Comeau will begin in early 2008, with the vast majority of the
investment planned for the final stages of the project. It is expected
that conversion and upgrade of the smelting technologies at the plant to
a more environmentally friendly one, as well as the expansion of output
at Baie Comeau by 110,000 mtpy, will be completed by 2015. The upgrade
will eliminate PAHs emissions from the Soderberg pots and reduce
greenhouse gas (GHG) emissions at the plant by 40 percent.
“This is a great day for Quebec, the
communities of Baie Comeau, Becancour and Deschambault, our employees,
and for Alcoa,” said Alain Belda, Alcoa
Chairman and Chief Executive Officer. “With
the agreement to supply competitive long-term power for our three
facilities in Quebec, we in turn can now invest in upgrading and
expanding in order to make our already good operations in the province,
even better.”
During the upgrade and expansion phase of the project, an estimated $540
million of added economic value will be created in Quebec over a period
of 4 years, supporting the equivalent of 6,800 job-years of employment.
Following construction, the continued operations will then generate –
onsite as well as for suppliers and subcontractors –
an added economic value of $470 million per year, supporting 3,900 jobs.
Prior to this agreement, Alcoa’s three
smelters in Quebec produced more than 1.1 million metric tons of
aluminum per year and employ more than 3,600 people directly. In
addition to the direct benefits, the facilities will generate more than
$1.8 billion in economic spin-offs annually in the province as a result
of this agreement.
Under terms of the agreement, which is conditional on Alcoa upgrading
and expanding production in Baie Comeau, power contracts to supply all
three Quebec smelters -- as well as the energy needed to support the
expansion -- will be extended through the year 2040 at the regulated
industrial “L”
rate. Alcoa will also receive financial support from the government in
the form of a loan guarantee.
In addition to the power agreement for all three smelters and the
additional power for Baie Comeau, both the government of Quebec and
Alcoa will accelerate their negotiations regarding securing additional
power to support expansion of the Deschambault smelter. Alcoa has said
it would invest and expand the facility if additional,
competitively-priced, long-term power could be secured.
“Thanks to the efforts of Premier Charest,
the Premier’s entire team, HydroQuebec, our
communities, and many others who helped, we have taken great steps to
secure the future for the communities of Baie Comeau, ABI and
Deschambault,” said Bernt Reitan, Alcoa
Executive Vice President and Group President –
Global Primary Products. “In addition to
beginning work on the upgrade and expansion of Baie Comeau immediately,
we will also now accelerate our discussions to see if we can secure
enough competitively-priced, long-term power to enable us to invest and
expand Deschambault as well. In fact, we would like to more than double
the output there to 570,000 metric tons per year.”
About Alcoa
Alcoa is the world leader in the production and management of primary
aluminum, fabricated aluminum and alumina combined, through its active
and growing participation 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 including
flat-rolled products, hard alloy extrusions, and forgings, Alcoa also
markets Alcoa® wheels, fastening systems,
precision and investment castings, and building systems. The Company has
97,000 employees in 34 countries and has been named one of the top most
sustainable corporations in the world at the World Economic Forum in
Davos, Switzerland. More information can be found at www.alcoa.com
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