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October 15, 2003

Alcoa to Continue Operations at Intalco; Uncertainty About Rates Leads to Cutback

PITTSBURGH--(BUSINESS WIRE)--Oct. 15, 2003--Alcoa (NYSE:AA) announced today that it will cut aluminum production at its Ferndale, Washington ("Intalco") smelter, because higher Bonneville Power Administration (BPA) prices have made the plant less competitive. The plant will move to an annual production rate of 90,000 metric tons on November 1, 2003.

"Energy is a key component of aluminum production, and today's BPA energy rates are among the highest in the world for our industry," said Bernt Reitan, President of Alcoa Primary Products. "With a long-term, lower-cost power supply, we could operate Intalco at full capacity but, unfortunately, that is not an option at today's prices. We regret the impact this will have on the local community. Alcoa is committed to working with the government toward a long-term power arrangement so Intalco and the people who work there have a brighter future.

"We are encouraged by recent actions by the Northwest congressional delegation to address financial issues within BPA. We are hopeful that, in the long term, these actions will allow BPA to return to its role as an economic engine for the region. In the meantime, we will operate at a reduced scale to serve our customers in the region and maintain flexibility for the future," said Reitan.

"The Intalco plant is the lowest cost smelter in the Pacific Northwest, and the last to remain operating in the region, but higher BPA rates have taken a toll," said Mike Tanchuk, President of Alcoa Primary Metals Northwest Operations "Our employees have put their heart and soul into making this plant competitive and I'm proud of their work. Support from our community leaders and elected officials has been tremendous, and they continue to explore ways to help. Our employees and our community deserve a more certain future."

Production and Energy

Alcoa is currently running two full pot-lines at the Intalco plant with 180,000 metric tons per year of production. Alcoa's interim power supply agreement with BPA expired last month, and the company now has a contract with BPA that runs through September 2006.

BPA recently announced that the rate could be reduced if a settlement of a lawsuit between investor-owned and public utilities can be reached. The outcome of settlement negotiations remains uncertain, and BPA has imposed a 2.2 percent rate increase that is in effect.

Impact on Workforce

As production is scaled back Alcoa will reduce its payroll at the plant by approximately 200 employees out of a workforce of about 600.

Alcoa Smelting Capacity

When the curtailment is complete, Alcoa will have approximately 595,000 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, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 127,000 employees in 40 countries. For more information go to