Alcoa Announces US$83 Million (Euro 70 Million) Modernization Project in Hungary.

SZEKESFEHERVAR, Hungary & NEW YORK -- Alcoa (NYSE:AA) announced today a US $83 million (Euro 70 million) investment in a major modernization project at Alcoa-Kofem Ltd., its operations in Hungary. The modernization includes the expansion of flat-rolled mill products capability and related infrastructure, addition of Dura-Bright(R) aluminum wheel production in Hungary, and launching a new manufacturing operation for airfoil castings. The modernization project will create nearly 200 new jobs at Alcoa-Kofem. Alcoa expects the project to be completed by the end of 2007.

"This decision strengthens Alcoa's presence in Europe and its long-term strategic investment in Hungary," said Bela Forgo, Country Manager Hungary and General Manager, Alcoa-Kofem. "This modernization project renews the product mix at Alcoa-Kofem toward higher value added products."

The core of the investment is the modernization of Alcoa-Kofem's Flat Rolled Products manufacturing unit, which involves expansion of its brazing sheet capability to offer a full range of gauges. Brazing sheet is used primarily in the automotive and heat exchanger markets. Kofem currently produces sheet, coil and some brazing sheet at Szekesfehervar.

Expansion of Offerings

In addition, Alcoa-Kofem, which has been producing forged aluminum wheels since 1997, will begin production of Dura-Bright(R) aluminum wheels in Hungary. Dura-Bright(R) is a patented treatment that penetrates the wheels and helps keep them bright and shiny, reduces overall labor costs and downtime, and protects the wheels from oxidation and corrosion. Dura-Bright(R) wheels are available for a broad range of applications including truck and trailer, RV and motor home, and bus and motor coach.

Finally, the new airfoil manufacturing operation in Kofem will support Alcoa Howmet's growing jet aircraft and industrial gas turbines business in Europe.

About Alcoa

Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active 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, Alcoa also markets consumer brands including Reynolds Wrap(R) foils and plastic wraps, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 131,000 employees in 43 countries and has been named one of the top three most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at www.alcoa.com

Alcoa's History in Hungary

In 1993 Alcoa acquired a majority stake in Hungary's state-owned aluminum company. In 1996, Alcoa acquired full ownership of the formerly state owned Szekesfehervar Light Metal Works, renamed Alcoa-Kofem Ltd.

Alcoa is the fifth largest company in Hungary, and the second largest US investor in the country. It is the 12th largest employer in Hungary, employing 5,500 people.

Further investments:

--1994: Alcoa Closure Systems International (CSI), Szekesfehervar (manufacturing plastic closures)

--1995: Alcoa-Fujikura (AFL)., Mor (manufacturing wire harness for automobile)

--1997: Alcoa Wheel Products, Europe (AWPE), Szekesfehervar (manufacturing wheels for trucks, lorries and buses)

--2002: Alcoa Fastening System (AFS), Nemesvamos (manufacturing fastening systems for aerospace industry).

Kofem originally had four manufacturing units:

    Casthouse (producing rolling slabs, extrusion and forging
    billets),

    Flat Rolled Products (sheets, coils and circles),

    Extrusions (profiles, rods, tubes), and

    Automotive structures and Truck Body.

In 2003 the manufacturing activities of CSI, AWPE, and AFS were integrated into Kofem. As a result, Kofem has seven manufacturing units.

Between 1993-2004 Kofem sales revenue increased fourfold, its productivity more than doubled.

Alcoa also established two regional centers on Kofem's premises: the European Financial and Administration Centre in 2002, and European Data Centre in 2003.

Application of the Alcoa's worldwide operational rules and norms has made the company a benchmark in the Hungarian economy in safety, environment protection, healthy workplace, labor training, and work ethics.

Alcoa has also brought to Hungary an integral part of its business culture: the corporate social responsibility. The corporation humanitarian arm, the Alcoa Foundation has extended its support to the Hungarian civil sector, too since 1993.

During the last 12 years the Foundation has approved grants totaling $3.1 million, which supported some 200 projects in the Hungarian education, research, public health, environment protection and culture. This amount makes Alcoa the biggest corporate donator in Hungary. Alcoa and its Foundation has received several national recognitions for its support extended to the Hungarian civil sector.

Alcoa has been instrumental in Hungary's successful economic transformation. Its core activities are contributing to Hungary's export driven economic growth, and its social responsibility sets examples to other economic factors.