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March 5, 2003
Alcoa to Invest over $1 Billion to Expand Its Deschambault Aluminum Plant and Create 1,500 Jobs
DESCHAMBAULT--(BUSINESS WIRE)--March 5, 2003--Quebec Premier
Bernard Landry and Alcoa (NYSE:AA) Chairman and CEO Alain Belda have
signed a memorandum of understanding (MOU) for expanding Alcoa's
aluminum plant in Deschambault. This MOU, which is the result of
negotiations that began in the fall of 2001, will allow the plant to
increase its annual production capacity from 250,000 to 570,000 metric
In attendance at the announcement of the signing were Roger
Bertrand, Minister for Health, Social Services and Youth Protection
and the MNA for Portneuf, Jacques Brouille, mayor of
Deschambault-Grondines and more than 500 plant employees and guests.
The expansion will entail investments of more than $1 billion
(Canadian) and the creation of 6,500 direct and indirect jobs for the
length of the construction period. For its part, Alcoa agrees to
create a minimum of 1,250 jobs, most of which will be in the Quebec
aluminum processing industry and more than 250 jobs for the expansion
of the Deschambault plant. It will be assessed heavy penalties if it
cannot meet this commitment.
Premier Landry noted: "The goal of the Parti Quebecois government
with this MOU is clear- speed up the implementation of a world-class
facility for secondary and tertiary aluminum processing and put our
hydro-electricity to work for the economic development of Quebec. This
innovative approach forms part of our work to implement our Horizon
2005 action plan, through the announcement of a highly structuring
project for the National Capital Region that will create thousands of
When the expansion of Alcoa's Deschambault and Baie-Comeau
aluminum plants has been completed, the combined capacity of the
company's three plants in Quebec will be 1,400,000 metric tons a year.
As a result, Alcoa's Quebec plants will be among the leading aluminum
producers in the world.
Mr. Belda noted, "Since the start-up of the Deschambault plant in
1991, its employees have all worked hard to make it a top performer.
The investment being announced today offers recognition of their
accomplishments. It is also the means that will allow the plant to
continue beating its own production records and remain one of the
world's most highly-performing aluminum plants, which make excellence
their everyday priority."
Alcoa has set January 2006 as the start date for the project, with
a production start date of 2008. The new facilities should be ready
for full operations no later than 2013.
'We certainly hope that the project will start in 2006, but the
overall aluminum market will determine the timing. This agreement will
give us the flexibility to start construction as soon as market
conditions warrant,' added Mr. Belda.
The project is eligible for tax exemptions available for major
projects. It is also eligible for support under the FAIRE program,
which will provide financial support in the form of an interest-free
loan that could be as much as $260 million. Hydro-Quebec will provide
the 500 MW necessary for the plant's expansion at the regulated
industrial power rate, commonly called the "L" rate.
The investment at Deschambault, combined with the one announced in
December 2002 for the upgrading and expansion of Alcoa's Baie-Comeau
aluminum plant, means the company will be investing more than $2
billion (Canadian) in Quebec over the next ten years, in addition to
its operating costs, investments in environmental protection, and
ongoing initiatives to optimize its plants' performance in a world
where only the most competitive ones have a future.
With its team of 550 persons, Alcoa's Deschambault aluminum plant
produces 250,000 metric tons of aluminum a year. It is part of the
Alcoa Primary Metals Northeast Group, which includes the Becancour and
Baie-Comeau aluminum plants, and the Becancour aluminum rod production
With its 19 plants and facilities in Canada, 10 of which are in
Quebec, Alcoa offers leading-edge products and solutions to several of
the country's major markets. Its Quebec aluminum production and
processing plants have an annual output of more than 1.3 million
metric tons, made up of ingots, castings, billets and rods. Alcoa also
manufactures parts for the aerospace and automobile industries, as
well as construction and packaging materials.
Alcoa has more than 4,000 employees in Quebec. Its sales in Quebec
in 2002 came to $2.3 billion. Alcoa Inc. is the world's biggest
producer of aluminum and aluminum-fabricated products, with worldwide
sales in 2002 of $20.3 billion US.