The Government of Québec and Alcoa agree on the company's major axes of development in Québec - The Alcoa smelter in Baie-Comeau will be modernized thanks to an investment of $1.2 billion

    BAIE-COMEAU, QC, March 4 /CNW Telbec/ - Mr. Jean Charest, Prime Minister
of Québec, and Mr. Alain Belda, Chairman of the Board and CEO of Alcoa,
concluded a historic agreement this morning in Baie-Comeau. This agreement
will oversee the company's development in Québec until at least 2040, and will
contribute to the economic development of Québec over the same horizon.
    It is in this context that the company announced an investment of
$1.2 billion to ensure the modernization of its aluminum smelter in
Baie-Comeau. "I am very proud and very happy to be among our employees today,"
declared Mr. Belda. "Their work and their commitment to the success of their
smelter constitute a guarantee of Alcoa's future in Québec. Recently, each of
our Québec smelters celebrated the anniversary of their start-up: 50 years in
Baie-Comeau, 20 years in Bécancour, and 15 years in Deschambault. We can now
face the future with confidence," he added.
    This investment will not only reduce greenhouse gas emissions and
eliminate the PAH emissions stemming from the Soderberg cells, it will ensure
the longevity of the smelter and very significantly contribute to the economic
development of the Town of Baie-Comeau and of Québec.
    Mr. Bernt Reitan, Senior Vice President of Alcoa and President of Alcoa
Primary Products Group, stressed the importance of the contribution of all
those who made this announcement possible: "Thanks to the leadership of the
Prime Minister and his core team, thanks to Hydro-Québec and our communities,
we can now forge ahead with our future projects in Québec."
    For his part, Mr. Jean-Pierre Gilardeau, President of Alcoa Canada,
underlined how this announcement sets out the principles of sustainable
development that played an important role in this decision: "The modernization
of our smelter in Baie-Comeau guaranties a future for the generations to
come," he stated. "Indeed, it will improve the environment, contribute to
maintaining employment, further regional économic development, and ensure
enviable long-term quality of life."

    This agreement comprises four components, each of which constitutes an
    important axis of development.

    Renewal of power supply contracts

    By virtue of this agreement, the Government of Québec authorizes
Hydro-Québec to renew the power supply contracts of Alcoa's three Québec
smelters, namely the smelters in Baie-Comeau, Deschambault and Bécancour.
Alcoa will pay these 1,562 MW of power at Hydro-Québec's large power rate
(Rate L) approved by the Régie de l'énergie. The current contracts will be
renewed for a period of 25 years upon their expiry in 2015.
    It must be noted that the economic contribution of these three smelters
is very significant for Québec as well as for the three regions where the
smelters are located. The figures speak for themselves: over 3,600 direct
jobs, presently, over $1.5 billion in economic spin-offs per year.

    Modernization of Alcoa's aluminum smelter in Baie-Comeau

    The modernization of Alcoa's aluminum smelter in Baie-Comeau will namely
include the conversion of 542 Soderberg cells and of the 480 AP-18 technology
prebake cells into cells using technology that is more advanced, particularly
as regards the environment. The smelter's production capacity will be
increased to 548,000 metric tonnes per year, which represents an increase of
110,000 metric tonnes. The project is slated to begin in 2008 and to end in
    The new smelter will use an additional power block of 175 MW consented to
the company at the applicable Rate L. Alcoa will also benefit from the
government's financial support in the shape of an interest-free loan guarantee
of $228 million.
    Roughly 6,800 job-years will be sustained during the construction works
which will generate $540 million in economic spin-offs. Once it has been
modernized, the plant's continued operations are expected to generate economic
spin-offs valued at $470 million per year, bringing the company's total
economic spin-offs in the province to almost $2 billion per year. The
modernized plant will support over 3,900 jobs, directly and indirectly.
    The modernization of the aluminum smelter will also have a positive
impact on the reduction of greenhouse gases (GHG). Furthermore, PAH emissions
will be virtually eliminated, while GHGs, measured in terms of CO2 equivalent,
will be reduced by 40%.
    In a sustainable development perspective, and with a view to prepare work
succession and curb the migration of youth to urban areas, Alcoa wishes to pay
$5 million into a fund the conditions of which have yet to be determined. This
strategy, which aims at ensuring work succession, would focus on skills
acquired through vocational training, technical college training and
university studies. Alcoa has initiated discussions with the Government of
Québec and has invited the Government to participate financially in the
project, along with the Town of Baie-Comeau. Such a program would also involve
local businesses, community and business organizations, as well as the
academic arena.

    Negotiations leading to the expansion of the Alcoa plant in Deschambault

    The Government of Québec and Alcoa also wish to rapidly reach an
agreement that would allow to double the capacity of the Alcoa smelter in
Deschambault and, in the process, make it an important lever in terms of
wealth creation. In fact, the Memorandum of Agreement provides that the
Government of Québec and Alcoa will pursue these negotiations at a good pace.
    Should such an agreement be entered into, Alcoa would invest $1.4 billion
in the project. Also, thanks to an additional power supply, Alcoa would
increase the Deschambault smelter's annual production by 306,000 metric

    An additional power block is awarded

    By virtue of the agreement entered into this morning, the Government also
authorizes Hydro-Québec to sell to Alcoa an additional block of 200 MW,
thereby enabling the company to meet additional needs and increase the current
flow to the cells. These needs stem from the increasingly efficient use of the
electrolytic process. It is in keeping with this performance that Alcoa has
committed itself to the optimal use of the power blocks awarded to the company
under this agreement.
    Recognizing the added value of this additional production, Alcoa and the
Government of Québec have agreed on a rate equal to Rate L increased by
$5.00 per MWh.
    In Québec, Alcoa Canada Primary Metals (ACPM) is comprised of the
Baie-Comeau, Bécancour and Deschambault smelters, as well as the Bécancour Rod
Plant. These four plants have an annual production capacity of over one
million metric tonnes of ingots, plates, billets and aluminum rods. ACPM
counts roughly 3,600 employees and its activities generate over $1.5 billion
in economic spin-offs per year in the province.
    Alcoa is a major socioeconomic player that is fully integrated into the
communities where it is present. Because of its social commitment and its
strong sense of belonging to these communities, Alcoa wishes to contribute to
the quality of life in these areas in a sustainable development perspective.
Further information can be found by visiting the Web sites and

    Alcoa is the world's leading producer and manager of primary aluminum,
fabricated aluminum and alumina facilities, through its growing position 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 to customers. In addition to aluminum products and
components including flat-rolled products, hard alloy extrusions, and
forgings, Alcoa also markets Alcoa(R) wheels, fastening systems, precision and
investment castings, structures and building systems. The Company has
97,000 employees in 34 countries and has been named one of the top most
sustainable corporations in the world at the World Economic Forum in Davos,
Switzerland. More information can be found at


    - Technical fact sheets on Alcoa Canada and the Baie-Comeau, Deschambault
      and Bécancour aluminum smelters
    - Fact sheet on the modernization of Alcoa's smelter in Baie-Comeau
    - Fact sheet on the environmental gains resulting from the modernization
      of Alcoa's smelter in Baie-Comeau
    - Fact sheet on the Fonds de la relève, Baie-Comeau
    - Photos of the three aluminum smelters in Baie-Comeau, Deschambault and


                                 Alcoa Canada

    In Québec

    Alcoa Canada Primary Metals (ACPM) comprises the Baie-Comeau,
Bécancour(*) and Deschambault smelters, as well as the Bécancour Rod Plant.
These four plants, all of which are ISO 9001: 2000 and 14001 certified, have
an annual production capacity of over one million metric tonnes of T-ingot,
sheet ingot, billet and rod. ACPM counts roughly 3,600 employees and its
activities generate over $1.5 billion(xx) in economic spin-offs per year in
the province.

    In Canada

    In addition to ACPM's production of primary aluminum, Alcoa Canada
operates processing plants serving the aerospace, automobile, food packaging
and construction industries. Its facilities and plants are mainly located in
Québec and Ontario.
    Alcoa aspires to be the best company in the world in the eyes of its
clients, shareholders, communities, and employees.

                                  Alcoa Canada      Alcoa Canada in Québec
    Number of employees                  5,200                       4,100
    Sales(xx) (billions of $)              3.6                         3.2
    Other data                       21 plants                   13 plants

    Alcoa Canada Primary Metals
                     Baie-Comeau  Bécancour(*)  Deschambault     Bécancour
                         smelter       smelter       smelter     Rod Plant
    Start date              1957          1986          1992          1992
     of $)(xx)              1.65          1.65          1.00   $49 million
    Production           T-ingot       T-ingot       T-ingot           Rod
                     Sheet ingot   Sheet ingot
                          Billet        Billet
    Number of
     (add number of
     regional employees
     to these numbers)     1,630         1,000           530            69
     tonnes/year)        438,000       400,000       253,000        90,000
    Total spin-offs
     in Quebec in
     salaries, taxes,
     and purchases
     (millions of $)         548           500           306            19
     local spin-offs
     of (millions of $)      231           210           103

    (*)  L'Aluminerie de Bécancour Inc. (ABI) is 74.95% owned by Alcoa and
         25.05% by Alcan.
    (xx) All the figures in this data sheet are given in Canadian dollars as
         of December 31, 2006. Where necessary, data in American dollars were
         converted at the exchange rate in effect on that date (US$1 (equal
         sign) CA$1.1653).

    A sustainable development approach and highly regarded governance

    At the 2007 meeting of the World Economic Forum in Davos in 2007, Alcoa
found itself, for the third year in a row, among the multinationals that are
most engaged in sustainable development in the world (Global 100 Most
Sustainable Corporations in the World). Corporate Knights Inc., publisher of
the magazine read by everyone in the world who is interested in corporate
responsibility, created this listing in 2005.
    In its 2006 report, Governance Metrics International (GMI), an independent
and worldwide ratings agency specialized in the field of corporate governance,
attributed Alcoa a global score of 9.5 out of 10. The average rating in the
industrial metals sector was 6.5.
    Alcoa also received the best mark in ethics in the mining and metallurgy
sector awarded by Covalence, a European organization that evaluates the ethics
of multinational firms.
    In its report on corporate governance and climate change, CERES, the most
important coalition of investors and environmental and public interest
organizations in North America, classed Alcoa in second place among all firms
in the United States.
    Alcoa has also figured in the Dow Jones Sustainability Indexes since 2001.
    In addition, the company is a founding member of the U.S. Climate Action
Partnership (USCAP), a partnership to combat greenhouse gas emissions that
includes large firms and nongovernmental organizations that wish to work with
the American government to slow down, halt, and reverse the process of
climatic warming.

    The Alcoa Foundation

    Established in 1952, the Alcoa Foundation actively invests in improving
the quality of life in the countries where Alcoa operates. The Foundation's
grants address global and local needs in four areas of excellence:

        Conservation and sustainability
        Global education and workplace skills
        Business and community partnerships
        Safe and healthy children and families

    The Alcoa Foundation manages Alcoa's ACTION and Bravo! programs supporting
the employees' volunteer service by awarding grants to the organizations they

    In the world

    In 2006, the Alcoa Foundation awarded more than $303 million
(US$26 million) in grants in 215 communities around the world.
    Every year, Alcoa's community activities enjoy effervescent activity in
October, the Worldwide Month of Service. In 2006, these volunteer activities
rallied over 15,000 Alcoa employees in 200 communities located in
36 countries.

    In Québec

    In 2006, Alcoa Canada Primary Metals and the Alcoa Foundation awarded over
$1 million in Québec's communities. As many as 27 ACTION group projects were
accomplished and more than 300 ACPM employees participated in the BRAVO!
program which supports individual volunteer initiatives.

    Source:      Pierre Després
                 Vice President, Public and Government Affairs
                 Alcoa Canada


                                 Alcoa Canada

                The Baie-Comeau Smelter Modernization Project

    Alcoa's Baie-Comeau smelter, with its five (5) series of electrolytic
cells, has an annual production capacity of 438,000 metric tonnes of primary
aluminum. The smelter currently consumes in total 780 MW of electric power.
Two series of 240 prebake cells (AP-18) produce more than 275,000 metric
tonnes, about 60% of the total output. The other 40% (162,000 metric tonnes)
comes from the three (3) series of Soderberg cells, which comprise a total of
542 cells.
    In all, 1,630 employees work at the smelter. The Alcoa Baie-Comeau smelter
is among the three Alcoa plants in North America producing aluminum at the
lowest cost.
    The smelter modernization project represents an investment of about
$1.2 billion. The work will begin in 2008 and will continue until 2015.

    The following tasks will be accomplished:

     -  Replace the three series of Soderberg cells-a total of 542 cells-that
        operate at 114,000 amps by a series of 320 prebake cells that will
        operate at 240,000 amps;
     -  Convert the two series, D and E, so they may operate at 240,000 amps.

    The results obtained when this project is completed are:


    - The levels of emissions to which workers are exposed will meet Alcoa's
      2008 limits for industrial hygiene.
    - Emissions of PAHs to the environment will be virtually eliminated.
    - Fluoride emissions are largely below the emission standard expected for
      the prebaked anode potrooms.
    - Emissions of greenhouse gases, measured in terms of CO2 equivalent,
      will be reduced by 40%.
    - Total fluoride emissions will be reduced by 25%.
    - The plant will be one of the best in the world in terms of emissions to
      the environment.


    - Since production costs at the Baie-Comeau smelter will be reduced, the
      plant will be more competitive and in a better position to assure its
    - The total capacity of the smelter will be increased by 110,000 metric
      tonnes/year to reach a total of 548,000 metric tonnes. Its total
      consumption of electric power will thus be raised by 175 MW.
    - The efficiency of the installed technology and of the related
      infrastructure will guarantee that its lifetime will last several

    Jobs and economic spin-offs

    - The vast majority of jobs will be retained. The staff reductions
      entailed by the modernization will be made by natural attrition.
      Towards the end of the construction period, some 1,450 employees will
      work at the smelter.
    - Roughly 6,800 job-years will be maintained during the construction
      operations, which will generate economic spin-offs of $540 million.
      Then the operations of the modernized plant will account for economic
      spin-offs of $470 million per year, and support 3,900 jobs.

    Source:      Pierre Després
                 Vice President, Public and Governmental Affairs
                 Alcoa Canada


                                 Alcoa Canada

     Environmental benefits of the modernization of the Soderberg cells
                       at Alcoa's Baie-Comeau smelter

        Emissions of greenhouse gases (GHGs) from anode effects alone, in
                           tonnes of CO2 equivalent

                 2007          Completed Project         Percent reduction
              693,000                     23 000                      96.7%
        GHGs from both anode effects and anode consumption, in tonnes of
                               CO2 equivalent
            1,456,000                    887,570                        39%

    In 2007, the Soderberg portion of our operations emitted 637,000 tonnes of
CO2 equivalent from anode effects, making us the number-one emitter of GHGs
among large firms in Quebec. Once completed, this project will reduce GHG
emissions by 96.7%-that is, a reduction of 570,000 tonnes of CO2
equivalent-which amply compensates for the increase in GHGs that will be
caused by the increase in carbon consumption.

                             Fluoride, in tonnes

                 2007          Completed project          Percent reduction
                  383                        287                        25%

    The replacement of Soderberg cells by prebake cells will lead to a
reduction of our fluoride emissions of at least 25%. Though considerable
progress has been made in our Soderberg cells, so that they almost meet the
requirements of future regulations, the conversion to the prebake process
assures a performance with remarkably lower emissions that amply compensates
for the increased production.

                               Dust, in tonnes
                 2007          Completed project         Percent reduction
                1,111                        448                        60%

    Our Soderberg cells already meet the requirements of future regulations
for air purification, but the conversion to the prebake cells will lead to a
60% reduction in dust generated.

                               PAHs, in tonnes
                 2007          Completed project         Percent reduction
                   31                          0                      100%

    As in the case of dust, the PAH-emissions standard in future regulations
on air purity was already respected. Nevertheless, since the prebake procedure
does not generate PAHs, the modernization project will completely eliminate
emission of this pollutant, which would not have been possible with the
existing technology.

    Source:      Pierre Després
                 Vice President, Public and Government Affairs
                 Alcoa Canada


                                 Alcoa Canada

              Fact sheet on the Fonds de la relève, Baie-Comeau

    The citizens of several neighbouring regions are concerned about the
migration of youth to central and urban areas. ln large part, these young
citizens leave their birth region not only because they feel that their
chances of finding interesting and gainful employment are slim, but also
because the usual facilities for post-secondary studies (cegeps, vocational
schools) do not offer the training they seek or are simply nonexistent
(universities). This is exactly what is happening in the region of
    The North Shore region is faced with an important population decline.
According to the Institut de la statistique du Québec, between 1971 and 2001,
the Québec population grew by 22.7% while that of the North Shore region
dropped by 4.5%. This phenomenon is further exacerbated by the migration of
youth. Every year, the North Shore loses to other regions of Québec almost 1%
of its population aged 15 to 29.
    Alcoa employs roughly 1,600 people at its Baie-Comeau facility. This work
force is ageing, and within a window of 5 to 10 years, a growing number of
employees will retire. It is imperative to prepare the replacement of the work
force. We must offer the youth of Baie-Comeau the chance to occupy these
positions. However, current and future jobs require extremely specialized
professional qualifications.
    As it announces major investments to ensure the modernization of the
Baie-Comeau aluminum smelter, Alcoa is taking the opportunity to establish a
structuring program with local partners with a view to provide the young in
the region with incentives to acquire vocational, technical and post-secondary
training. Thus, they can replace part of the company's current employees who
are reaching retirement, and occupy positions, in their own environment and
upon completion of their studies, that match their qualifications and
professional expectations.
    Such a strategy is in keeping with the Québec policies to further labour
management planning. It would have a considerable impact in the Baie-Comeau
area and would likely prompt the young to pursue their studies.
    In light of this, the proposal is put forward that a fund of $5 million be
created by Alcoa with a view to sustaining this strategy on the basis of three
distinct orientations:

    - vocational training;
    - technical college studies;
    - university studies.

    Thanks to this fund, reserved specifically for the knowledge-based
economy, players in the academic arena will be called upon to present
structuring projects likely to further regional development and manpower
retention, and thereby consolidate the Baie-Comeau smelter's work replacement
plan for the years to come.
    Alcoa has initiated discussions with the Government of Québec and has
invited the Government, along with the City of Baie-Comeau, to participate
financially in this project. Such a program would also involve local
businesses, community and business organizations, as well as the academic

    Source:      Pierre Després
                 Vice President, Public and Government Affairs
                 Alcoa Canada


                                 Alcoa Canada

               Photos of the three aluminium smelters in Quebec

    Baie-Comeau Smelter:

    Bécancour Smelter:

    Deschambault Smelter:


For further information:

For further information: For Alcoa Canada: Pierre Després, (514)
904-5054,; For Alcoa inc.: Kevin Lowery, (412)
553-1424,; Mr. Jean-Pierre Gilardeau, President of
Alcoa Canada, will be available for telephone interviews on March 4, between
1:15 p.m. and 2:15 p.m. Please call (418) 296-7036.

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