Baie-Comeau, March 4, 2008 – 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 2015.

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 tonnes.

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 www.alcoa.com/canada/en/home.asp and www.aluminumispeople.com.

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® 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 www.alcoa.com.