Alcoa Takes Full Ownership of Intalco and Eastalco Smelters in Washington and Maryland; Signs Agreements For NW Power

Affiliates of both Mitsui & Co. Ltd. and YKK Corporation will selltheir combined 39 percent stake in the two smelters, which will resultin Alcoa having sole ownership of the two facilities. Alcoa willreceive undisclosed cash consideration to cover liabilities relatingto the prior operation of the smelters. The transaction is expected tobe completed by the end of the month.

The Intalco smelter is a 278,000 metric ton per year facility andis operating at approximately one-third its capacity. The 195,000metric ton per year Eastalco smelter was temporarily idled in December2005 because it could not secure a competitively priced long-termpower arrangement. The company is continuing to work with union,community, and elected officials to explore long-term power optionsthat would allow the plant to reopen.

In the Pacific Northwest, Alcoa has signed agreements with theBonneville Power Administration (BPA) and Public Utility District No.,1 of Whatcom County (Whatcom PUD) that provide financial benefits tohelp reduce the cost impact of market-based power purchases from otherenergy suppliers after its current contract with BPA expires inOctober, 2006.

The agreements follow a BPA Supplemental Record of Decision (ROD)issued earlier this month that provided the three remaining Northwestaluminum companies financial benefits in lieu of cost-based, directservice currently provided by BPA. Under the terms of the ROD, eachcompany is entitled to a benefit of $12/MWh based on its historicalenergy contracts.

In addition to the Intalco smelter, Alcoa operates the Wenatcheesmelter in the BPA region. Wenatchee is operating at approximatelyone-half of its capacity.

"The financial incentives will certainly help," said AlanCransberg, President, Global Manufacturing Alcoa Primary Products."But even with the incentives, our energy costs in the Northwest willincrease significantly. We are exploring all possible options toremain viable at Ferndale during the transitional period from October2006 to 2011," Cransberg added.

"Any viable long-term option for Intalco must include several keycomponents -- among them is the ability to secure long-term, globallycompetitive power. The long-term future of Intalco hinges onsuccessful negotiation of a cost-based energy contract with BPAbeginning in 2011. We view the 2006 to 2011 contract as a bridge tothat time period where we hopefully would be able to purchase power inthe same manner as other key industries in the region," saidCransberg.

Alcoa is the world's leading producer and manager of primaryaluminum, fabricated aluminum and alumina facilities, and is active inall major aspects of the industry. Alcoa serves the aerospace,automotive, packaging, building and construction, commercialtransportation and industrial markets, bringing design, engineering,production and other capabilities of Alcoa's businesses to customers.In addition to aluminum products and components, Alcoa also marketsconsumer brands including Reynolds Wrap(R) foils and plastic wraps,Alcoa(R) wheels, and Baco(R) household wraps. Among its otherbusinesses are vinyl siding, closures, fastening systems, precisioncastings, and electrical distribution systems for cars and trucks. Thecompany has 129,000 employees in 42 countries and has been named oneof the top most sustainable corporations in the world at the WorldEconomic Forum in Davos, Switzerland. More information can be found atwww.alcoa.com