Alcoa: News: News Releases: Alcoa To Curtail Operations at Intalco on September 30, 2003; High Power Prices Undermine Plant's Competitiveness

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April 23, 2003

Alcoa To Curtail Operations at Intalco on September 30, 2003; High Power Prices Undermine Plant's Competitiveness

PITTSBURGH--(BUSINESS WIRE)--April 23, 2003--Alcoa (NYSE:AA) announced today that it has decided it will temporarily curtail production at its Ferndale, Washington ("Intalco") aluminum smelter on September 30, 2003 if planned higher Bonneville Power Administration's (BPA) prices are implemented. The price increase announced by BPA earlier this year would sharply increase the 170,000 metric ton per year-plant's energy costs and undermine its competitiveness globally, at a time when raw material costs are high and market conditions are relatively soft.

"We prefer to operate Intalco, but the projected price increase would leave us no alternative in the current environment," said Bernt Reitan, President of Alcoa Primary Metals. "We regret the very real impact this closing will have on the community and the workforce, but no aluminum smelter in the world could operate under the burden of the energy costs in the Northwest of the United States. The plant will curtail operations on September 30, 2003 unless there is significant change in the power price or market conditions overall."

"The Intalco plant is by far the lowest cost smelter in the Northwest, but today's record high power prices and the uncertainty of the BPA process make operation extremely difficult," said Mike Tanchuk, President of Alcoa Primary Metals Northwest Operations. "This operation needs certainty in power supply at a competitive price so the employees, who have worked hard to make this plant competitive, aren't constantly looking over their shoulders at closure."

Production and Energy at Intalco

Alcoa is currently running two full pot-lines at the Intalco plant with 170,000 metric tons per year of production. Alcoa's interim power supply agreement with BPA is scheduled to expire on September 30, 2003, and the power price increases are scheduled to go into effect at that time. If the price increase goes into effect, Alcoa will temporarily curtail production.

Impact on Workforce

In the coming weeks, Alcoa will begin to reduce its payroll at the plant to prepare for the complete shutdown, returning to the level of employment that existed before the restart of the two pot-lines in May 2002. As the September 30, 2003 deadline approaches, further reductions will be necessary. Moving forward, Alcoa will adjust production at the facility as economic and market conditions warrant.

Alcoa Smelting Capacity

If the Intalco curtailment is implemented, when combined with the temporary reductions at Alcoa's Massena, New York smelters, the company will have approximately 675,000 mtpy of idled capacity on a base primary aluminum capacity of 3.9 million mtpy.

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina, 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 as a single solution to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) aluminum foil, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, precision castings, and electrical distribution systems for cars and trucks. The company has 127,000 employees in 40 countries. For more information go to www.alcoa.com

Forward Looking Statement

Certain statements in this release relate to future events and expectations and as such constitute forward-looking statements involving known and unknown risks and uncertainties that may cause actual results, performance or achievements to be different from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include Alcoa's inability to achieve the cost-savings for the facility, power costs, economic incentives and other risk factors summarized in Alcoa's Form 10-K for the year ended December 31, 2002.