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August 22, 2008

Alcoa Sets Dates for Employee Layoffs at Rockdale Smelter Due to Local Power Issues

Company Will Continue to Explore Competitive Power Options

Will Seek Damages and Other Relief from Luminant in Ongoing Litigation

PITTSBURGH--Alcoa (NYSE:AA) today said it has set dates for the layoff of approximately 300 employees at its Rockdale, Texas, aluminum smelter where the company has idled half of its production. In addition, approximately 100 contract employees will be affected. The plant was partially shut in June 2008 because of ongoing supply issues with Luminant’s onsite power generating unit, Sandow Unit 4, which have exposed the plant to uneconomical power prices.

Three of the plant’s six operating potlines were idled as a result of the ongoing unit outages and local energy market costs increasing to as much as $2,000 – $4,000 per megawatt hour during peak hours, which is about 100 times the norm. Since the lines were idled, representing approximately 120,000 metric tons per year of production, Alcoa has negotiated with Luminant to resolve the issues resulting from Luminant’s inability to operate Unit 4 reliably and has not been able to come to a satisfactory conclusion. As a result, the company has provided the required notification to bargaining unit representatives. Layoffs for approximately 100 employees will be effective August 31st; layoffs for an additional 60 will be effective September 7th. An additional 140 employees will be notified in the fourth quarter.

“This is in no way a reflection on our workforce. They have been doing an outstanding job,” said John Thuestad, President of Alcoa’s U.S. Primary Products Division. “Unfortunately, the power plant that Luminant operates has not been reliable over the past year. The cost of power resulting from Luminant’s inability to consistently operate the Sandow Unit 4, has forced us to make this decision. We’re continuing to speak with Luminant to see if we can secure competitive power to ease the impact on everyone involved -- and we have been forced to seek damages and other relief from them through ongoing litigation.”

According to Luminant’s website, it is a unit of Energy Future Holdings Corp (formerly TXU), which is owned by KKR and TPG Capital.

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