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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
"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
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