October 20, 2011
Alcoa discontinues development of Bakki Smelter

Alcoa has announced that the company has decided to discontinue the development of a proposed aluminum smelter in Bakki near Húsavík in Northern Iceland after concluding that a long-term, competitively priced power supply would not be available.  The conclusion follows more than five years of project development.

“At this time, we are unable to acquire the amount of power we need, at a competitive price in order to consider building a smelter in Bakki,” said Tomas Sigurdsson, Managing Director of Alcoa Iceland.  
 
Following talks between Alcoa and energy provider Landsvirkjun as well as high level contacts with the Icelandic Government, Alcoa has concluded that there would not be enough power available in the near future, at a competitive cost, to justify Alcoa’s investment in the smelter.
 
“We carefully and thoroughly reviewed our options and currently see no way to overcome significant hurdles,” said Mr. Sigurdsson.  “Lately we have been offered only half of the power originally envisioned for the project by all parties. In addition the timeframe for delivery of the energy has been extended significantly. Thus we are looking at a totally different scenario now than we were five years ago when we started to work on the project.“
 
Alcoa joined the Bakki smelter project by signing an MOU with the government and the municipality of Nordurthing in early 2006. Consequently, MOUs between Alcoa and Landsvirkjun/Theistareykir and Landsnet were signed. The MOU with Landsvirkjun expired in 2008 and a year later, the MOU between Alcoa, the Government and the municipality of Nordurthing expired. Alcoa‘s request for an extension of the MOU, was rejected by the Icelandic Government. 
 
Following the expiration of the MOU, Alcoa decided to continue to invest in the project and futher develop the joint EIA process for the smelter, power plants and power transmission lines in the area.  This process was finished in November 2010. 

"We are very appreciative of the cooperation and support we have received for the Bakki project from the people of North Iceland and want to thank our partners for the good work that has been done over the years, but see no alternative than to stop the further development of the Bakki smelter,“ says Sigurdsson.

About Alcoa
Alcoa is the world’s leading producer of primary and fabricated aluminum, as well as the world’s largest miner of bauxite and refiner of alumina. In addition to inventing the modern-day aluminum industry, Alcoa innovation has been behind major milestones in the aerospace, automotive, packaging, building and construction, commercial transportation, consumer electronics and industrial markets over the past 120 years. Among the solutions Alcoa markets are flat-rolled products, hard alloy extrusions, and forgings, as well as Alcoa® wheels, fastening systems, precision and investment castings, and building systems in addition to its expertise in other light metals such as titanium and nickel-based super alloys. Sustainability is an integral part of Alcoa’s operating practices and the product design and engineering it provides to customers. Alcoa has been a member of the Dow Jones Sustainability Index for 10 consecutive years and approximately 75 percent of all of the aluminum ever produced since 1888 is still in active use today. Alcoa employs approximately 59,000 people in 31 countries across the world. More information can be found at www.alcoa.com.