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Alcoa Plans to Recommence Three U.S. Aluminium Smelters

Alcoa (NYSE:AA) today announced plans to restart idled potlines at three aluminum smelters in the United States, creating approximately 260 new jobs through recall and hiring.

The restarted facilities will increase Alcoa’s aluminum production by 137,000 metric tons over the course of 2011 and by 200,000 metric tons on an annual basis thereafter. The restarts allow Alcoa to take advantage of long-term, low-cost power options that will continue to move Alcoa down on the aluminum cost curve and improve overall competitiveness.

Capacity will be restarted at the Massena East facility in Massena, NY; Wenatchee Works in Malaga, WA; and Intalco in Ferndale, WA. The restarts are occurring now to help Alcoa meet anticipated growth in aluminum demand and to meet obligations outlined in power agreements with energy providers.

“We compete in a global economy and power is a major cost in our operations,” said John Thuestad, Executive Vice President and Group President of Alcoa Primary Products. “Thanks to continued partnerships with our energy providers and government officials, we have been able to secure our power needs to meet future demand, improve Alcoa’s competitive position and provide this positive economic impact.”

Power rates at Wenatchee and Massena, where long-term contracts have been secured, are about 40% below worldwide averages. Intalco is operating under its current 17-month contract. All the restarts will be powered by sustainable, renewable hydropower and will be free-cash-flow and earnings accretive in the first year.

“We are pleased to bring jobs back and increase our economic impact in each of these communities,” said Bob Wilt, President of Alcoa’s U.S. Primary Products. “Alcoa’s decisive response to the economic downturn and favorable power rates have put us in a position to take this action. We believe this additional capacity will be absorbed in the market as Alcoa meets rising demand for light, strong and recyclable aluminum from customers around the world.”

Restarting one potline at Wenatchee ensures Alcoa will meet the requirements of a new contract with the Chelan County Public Utility District. The new 17-year hydropower contract goes into effect in November, 2011 and provides enough energy for increased production of 42,000 metric tons annually, bringing another 80 new jobs to the region.

At Massena East, a new agreement with the New York Power Authority allows three potlines to restart and preserves the company’s ability to modernize the plant in the future. It replaces an agreement that was set to expire in April, 2011. The restart will provide about 120 new jobs through recall or hiring, and secures the future of a total of approximately 385 jobs that support Massena East.

Intalco is currently operating under a 17-month contract with the Bonneville Power Administration (BPA) that provides 320 megawatts of power at the Industrial Power rate. The restarts will bring about 60 new jobs to the region while negotiations on a long-term contract with BPA continue.

“We are grateful for the support we’ve received from our energy partners and federal, state and local officials throughout this process,” said Wilt. “It’s through their help, and the ongoing support of our employees and communities, that these restarts are possible.”

The restarts should be completed during the first half of 2011. Once these restarts are complete, Alcoa will have 674,000 metric tons of idle capacity remaining.



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