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Alcoa Idles Ferndale, Wash. Smelter As a Result of Agreements with BPA
PITTSBURGH--May 16, 2001--
Alcoa Inc. announced today that it is immediately idling its Ferndale
(Intalco), Washington aluminum smelter as a result of agreements with
the Bonneville Power Administration (BPA). The planned 2001 operating
rate at Intalco had been 115,000 metric tons per year (mtpy); total
capacity is 270,000 mtpy. Alcoa owns 61% of Intalco. There are no
immediate layoffs among the 900 employees there.
As part of the agreements with the BPA, power contracted for the smelter
between now and October 2001 will be sold back to the agency to meet
regional demands for electricity.
In addition, Alcoa will return to the BPA approximately 90% of its
electricity allocation for the period October 1, 2001 through September
30, 2003. In return, Alcoa will receive revenue to compensate a
majority of its employees at Intalco for their wages and benefits. The
remainder of Alcoa's electricity allocation will be used at the
company's magnesium production facility in Addy, Washington and for
lighting, maintenance and security purposes at Intalco.
The net effect of the Pacific Northwest power sales and the
corresponding reduced operations will not have a material impact on
Alcoa's full year 2001 earnings.
“The critical energy crisis in the Western U.S., the expiration of
Alcoa’s existing BPA power contracts, and the growing regional demand
for electricity combined to create a difficult situation for Alcoa and
the aluminum industry in the state of Washington,” said Al Renken, Alcoa
Vice President and President of Alcoa Primary Metals. “Alcoa has forged
an agreement with the BPA which is in the best interests of our
stakeholders. While this agreement is not our preferred outcome, it is
more advantageous to employees, communities and shareholders than the
long-term closures we would have experienced under Bonneville’s
blended-rate approach. We still find it unacceptable as public policy
that the aluminum industry has been asked by BPA to shutter its
facilities, thus carrying a disproportional cost, while other customers
are being asked only to reduce their usage by 5% to 10%.”
Alcoa's worldwide primary aluminum capacity is 4.1 million mtpy. With
this action, Alcoa has 550,000 mtpy of idled capacity.
Alcoa is the world's leading producer of primary aluminum, fabricated
aluminum and alumina. It provides customers in the packaging, consumer,
automotive, aerospace, construction and other markets with a variety of
fabricated and finished products. Alcoa has over 350 operating locations
in 37 countries.
(Alcoa NYSE: AA)
Bonita A. Cersosimo
Charles D. McLane, Jr.
Certain statements relate to future events and expectations and as
such constitute forward-looking statements involving known and unknown
risks, uncertainties and other factors that may cause actual results 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
uncertainties regarding the outcome of the energy crisis in the Western
United States and the other risk factors summarized in Alcoa's SEC