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June 9, 2003

Alcoa Chooses Bechtel and Icelandic Consortium HRV To Build Project in East Iceland

PITTSBURGH & REYKJAVIK--(BUSINESS WIRE)--June 9, 2003--Alcoa today announced that it has chosen Bechtel and its partner, an Icelandic engineering consortium, HRV (Honnun, Rafhonnun, VST), to design and build its new plant in East Iceland, which is being designed for production of 322,000-metric-ton-per-year of primary aluminum.

"We are pleased to have a project team that combines the global breadth of Bechtel and the best talent from Iceland, to leverage the more than 100 years of Alcoa expertise in primary metals," said Mike Baltzell, President of Alcoa Primary Metals Development. "By leveraging Alcoa's leading technology and expertise in metals, the team can design and create a world-class facility that also meets the unique needs of the East Iceland community," he said.

Bechtel and the Icelandic group plan to maximize the use of Icelandic firms and local workers on the project. Design work on the project will begin in the second half of 2003, but work on the site is not expected to start until the fourth quarter of 2005. The project is expected to cost approximately $1 billion and will be completed in the second half of 2007.

The construction and operation of the aluminum plant will help strengthen the economy of East Iceland, which is now heavily dependent on the fishing industry. The construction phase for the facility is expected to involve approximately 2300 man-years, and, when fully operational, the plant will employ approximately 450 people. Another 300 related jobs will be created in related industry, service and commerce.

Bechtel and HRV, with support from K-Home Engineering, will work with Alcoa to design an ultra-efficient plant that has minimal environmental impact. The design will not incorporate an on-site disposal area for spent pot lining, a by-product of the aluminum production process. Carbon anodes will not be manufactured at the Iceland plant, eliminating a source of sulfur dioxide (SO2), nitrogen oxide (NOX) and hydrocarbon (PAH) emissions. The plant will be designed to achieve Alcoa's strict, self-imposed sustainable development objectives, including zero process water discharge.

Bechtel will perform engineering, procurement, and project management functions in Montreal, home of its global Aluminum Center of Excellence. Bechtel established the center in 2002 to strengthen its commitment to Quebec, while recognizing Montreal as a world center for the aluminum industry.

Bechtel Group, Inc. is one of the premier engineering, construction, and project management companies, with 1,000 current projects in more than 60 countries and a workforce of 47,000. Bechtel has served the aluminum industry for more than 30 years, installing nearly 3 million metric-tons-per-year of aluminum smelter capacity.

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.

Note to Editors: There should be an umlaut over the "o" in "Honnun" and "Rafhonnun" above. The umlauts were omitted for transmission purposes.