Alcan Reacts to Loss of Rights to Bauxite Reserve

Alcan Inc. today voiced its extreme disappointment and concern with the Queensland Government's intention to pass legislation aimed at stripping Alcan of its rights to the Aurukun bauxite reserves in northern Queensland, Australia.

"Alcan holds good legal title to the Aurukun lease and we believe in our right to retain it. The Aurukun lease is an important strategic asset for Alcan," said Michael Hanley, President of Alcan's Bauxite and Alumina group.

"The Queensland Government's announced intent is to bypass legal proceedings that are well underway. Alcan was fully prepared to file a defence based upon a strong legal position. We object to their move to circumvent our right to defend our interests in a court of law."

Hanley continued, "Alcan's track record in Queensland is exemplary and, unlike other major projects which have recently failed or are currently struggling in Queensland, we have the proven ability to make things happen."

Alcan only recently acquired control over the Aurukun bauxite reserves as a result of the December 2003 completion of its Pechiney acquisition. At such time, it inherited a complex legal case with the Queensland Government over its rights to the reserves.

Since December 2003, Alcan has pursued, in good faith, written and face- to-face initiatives with the Queensland Government with a view to finding a path forward that would benefit all stakeholders. At no time has the Government raised with Alcan the prospect of terminating the lease through legislation. This decision has far reaching policy implications and could have serious ramifications for the mining industry in Australia.

"The government seems focused on developing the Aurukun reserves and the construction of a new alumina refinery. This focus is consistent with Alcan's own agenda which makes the government's legislative intent all the more curious. Earlier this month, Alcan presented a very strong proposal to Queensland's Premier Beattie, offering an immediate commitment of AUD 15 million to complete a feasibility study on a fast-track basis to determine the economic viability of a bauxite mine and alumina refinery on the Aurukun land," said Richard Yank, President, Bauxite and Alumina, Pacific Operations.

"We have received no response from the Government to our offer and are very surprised given its attractiveness for Queensland. However, we strongly urge the Government to consider it fully and would welcome the opportunity to discuss the reserve's potential development," continued Mr. Yank.

Benefits of Alcan's offer to Queensland:

  • It would mean investment dollars now - no need to wait for an international tender process
  • It would generate employment, fast-track jobs and business opportunities for the local indigenous community
  • It would provide extra income for the Queensland Government and introduce world-class technology that would meet and even exceed
  • Queensland's environmental standards.

Alcan's investment in the Australian aluminum industry is significant and includes operations in Queensland. Nevertheless, much of the Company's future investment activity in Queensland would depend on retaining its rightful ownership of the Aurukun reserves.

Alcan has been in Queensland since 1965. It was a founding construction partner in Queensland Alumina Limited (QAL), the world's largest alumina refinery. It now holds a 41.4% share in the refinery, which provides important export dollars to Queensland.

Alcan's solid foundation in Australia also includes its 100% ownership of the Gove bauxite mine and alumina refinery in the Northern Territory; a 51% stake in the New South Wales Tomago aluminum smelter (one of the largest in Australia); and two bauxite deposits in Queensland - Ely/Ducie-Wenlock and Aurukun. It also has research and development and engineering headquarters in Queensland aimed at maximizing the value of Alcan's bauxite reserves and alumina refining activities.

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