Alcoa Idles Ferndale, Wash. Smelter As a Result of Agreements with BPA.

Business Editors

PITTSBURGH--(BUSINESS WIRE)--May 16, 2001

Alcoa Inc. (NYSE:AA) announced today that it is immediately idling its Ferndale (Intalco), Washington aluminum smelter as a result of agreements with the Bonneville Power Administration (BPA).

The planned 2001 operating rate at Intalco had been 115,000 metric tons per year (mtpy); total capacity is 270,000 mtpy. Alcoa owns 61% of Intalco. There are no immediate layoffs among the 900 employees there.

As part of the agreements with the BPA, power contracted for the smelter between now and October 2001 will be sold back to the agency to meet regional demands for electricity.

In addition, Alcoa will return to the BPA approximately 90% of its electricity allocation for the period October 1, 2001 through September 30, 2003. In return, Alcoa will receive revenue to compensate a majority of its employees at Intalco for their wages and benefits. The remainder of Alcoa's electricity allocation will be used at the company's magnesium production facility in Addy, Washington and for lighting, maintenance and security purposes at Intalco.

The net effect of the Pacific Northwest power sales and the corresponding reduced operations will not have a material impact on Alcoa's full year 2001 earnings.

"The critical energy crisis in the Western U.S., the expiration of Alcoa's existing BPA power contracts, and the growing regional demand for electricity combined to create a difficult situation for Alcoa and the aluminum industry in the state of Washington," said Al Renken, Alcoa Vice President and President of Alcoa Primary Metals. "Alcoa has forged an agreement with the BPA which is in the best interests of our stakeholders. While this agreement is not our preferred outcome, it is more advantageous to employees, communities and shareholders than the long-term closures we would have experienced under Bonneville's blended-rate approach. We still find it unacceptable as public policy that the aluminum industry has been asked by BPA to shutter its facilities, thus carrying a disproportional cost, while other customers are being asked only to reduce their usage by 5% to 10%."

Alcoa's worldwide primary aluminum capacity is 4.1 million mtpy. With this action, Alcoa has 550,000 mtpy of idled capacity.

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina. It provides customers in the packaging, consumer, automotive, aerospace, construction and other markets with a variety of fabricated and finished products. Alcoa has over 350 operating locations in 37 countries.

Alcoa Inc. (NYSE:AA)

Certain statements relate to future events and expectations and as such constitute forward-looking statements involving known and unknown risks, uncertainties and other factors that may cause actual results to be different from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include uncertainties regarding the outcome of the energy crisis in the Western United States and the other risk factors summarized in Alcoa's SEC reports.