Alcoa Reaches Power Agreement to Improve Competitiveness of Québec Smelters, Secure 3,000 Jobs
Alcoa (NYSE:AA) and the Government of Québec have reached an agreement to improve the competitiveness of Alcoa’s three smelters in Québec, securing approximately 3,000 jobs. Under the agreement, Hydro-Québec will renew Alcoa’s power supply contracts for the Becancour and Deschambault facilities until 2030 and for the Baie-Comeau plant through 2036.
The agreement enables Alcoa to proceed with $250 million of planned investments at the smelters over the next five years to further improve their competitiveness. As part of that investment, Alcoa will increase production of aluminum used for auto manufacturing and reduce production of commodity-grade aluminum at the Baie-Comeau casthouse to capture demand from automakers as they turn to aluminum for more fuel-efficient vehicles. According to automakers, aluminum body sheet content in North American vehicles is expected to quadruple by 2015 and increase tenfold by 2025, from 2012 levels.
“These actions support our strategy to lower the cost base of our upstream businesses while capturing demand for higher-margin, value-add products,” said Bob Wilt, president of Alcoa Global Primary Products. “The agreement will help Alcoa achieve its goal of moving down the global aluminum cost curve, and the casthouse optimization will help meet growing demand for aluminum in the North American auto market.”
In addition to the planned investments, Alcoa has agreed to support the government’s electric transportation strategy by considering the Baie-Comeau facility as a potential source of aluminum for emerging technology applications, including aluminum-air batteries. Alcoa recently entered into a joint development agreement with clean technology company, Phinergy, to further develop its battery, which can be used in electric vehicles and runs on air and aluminum. Alcoa will also provide financial support and lend technical expertise to government-led programs focused on lightweighting vehicles with aluminum.
The previously planned modernization of the Baie-Comeau facility, through which Alcoa would have constructed a new potline to replace the two Söderberg potlines it closed last year, is not included in this agreement and will no longer be pursued.
“This agreement marks a new start for our Québec smelters and we applaud the Premier and her team for their vision and commitment to Alcoa, our employees and community stakeholders,” said Martin Brière, President of Alcoa Canada Global Primary Products. “Alcoa’s facilities in Québec can now concentrate on meeting growing global demand for aluminum and continuing to provide important economic benefits to the region.”
About Alcoa in Canada
In Québec, Alcoa Canada Global Primary Products (GPP Canada) is composed of the Bécancour (ABI), Baie-Comeau and Deschambault smelters, as well as the Bécancour Rod Plant. These four plants have an annual production capacity of almost one million metric tons of ingots, castings, billets and aluminum rods. Alcoa has approximately 3,000 employees in Québec and its activities generate more than $1.5 billion in economic impact annually in the province. More information is available at www.alcoa.com/canada.
About Alcoa
A global leader in lightweight metals engineering and manufacturing, Alcoa innovates multi-material solutions that advance our world. Our technologies enhance transportation, from automotive and commercial transport to air and space travel, and improve industrial and consumer electronics products. We enable smart buildings, sustainable food and beverage packaging, high-performance defense vehicles across air, land and sea, deeper oil and gas drilling and more efficient power generation. We pioneered the aluminum industry over 125 years ago, and today, our 60,000 people in 30 countries deliver value-add products made of titanium, nickel and aluminum, and produce best-in-class bauxite, alumina and primary aluminum products. For more information, visit www.alcoa.com, follow @Alcoa on Twitter at www.twitter.com/Alcoa and follow us on Facebook at www.facebook.com/Alcoa.
Forward-Looking Statements
This release contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipate,” “estimate,” “expect,” “goal,” “plan,” “will,” or other words of similar meaning. All statements that reflect Alcoa’s expectations, assumptions or projections about the future other than statements of historical fact are forward-looking statements, including, without limitation, forecasts concerning demand growth for aluminum or other trend projections, targeted financial results or operating performance, and statements about Alcoa’s strategies, outlook, and business and financial prospects. Forward-looking statements are subject to a number of known and unknown risks, uncertainties, and other factors and are not guarantees of future performance. Important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: (a) material adverse changes in aluminum industry conditions, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices and premiums, as applicable, for primary aluminum, alumina, and other products, and fluctuations in indexed-based and spot prices for alumina; (b) deterioration in global economic and financial market conditions generally; (c) unfavorable changes in the markets served by Alcoa; (d) Alcoa’s inability to successfully realize the goals established in each of its four business segments, at the levels or by the dates targeted for such goals (including moving its alumina refining and aluminum smelting businesses down on the industry cost curves and increasing revenues and improving margins in its Global Rolled Products and Engineered Products and Solutions segments); (e) Alcoa’s inability to successfully capture demand for higher-margin, value-add products, whether due to market conditions, changes in regulatory requirements, a failure to successfully implement technologies, or other factors; and (f) the other risk factors discussed in Part I, Item 1A of Alcoa’s Form 10-K for the year ended December 31, 2013, as well as other reports filed with the Securities and Exchange Commission. Alcoa disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.
Contact
Alcoa
Investor Contact:
Kelly Pasterick, + 1 212-836-2674
Kelly.Pasterick@alcoa.com
or
Media Contact:
Christa Bowers, + 1 212-836-2605
Christa.Bowers@alcoa.com
or
Alcoa Canada
Lysane Martel, +1 514-906-2537
Lysane.Martel@alcoa.com
