Alcan plans to build a US$550 million pilot plant at its Complexe Jonquière site in Canada to develop the Company's proprietary AP50 smelting technology. This pilot plant is expected to produce approximately 60,000 tonnes of aluminum per year and will be the platform for future generations of AP50 technology. As the world's first of its kind, this development plant is the first step in a planned ten-year US$1.8 billion investment program in Quebec's Saguenay-Lac-Saint-Jean region. This overall investment will create 740 highly skilled jobs, in addition to an expected 1,200-1,500 related to construction. The new AP50 pilot facility will be the cornerstone of an industrial strategy developed by Alcan with the support of the Government of Quebec.
"This AP50 pilot plant underlines Alcan's position as the world leader and partner-of-choice for aluminum smelting technologies, further reinforcing its unique competitive advantage in line with Alcan's objective of maximizing long-term sustainable value," said Dick Evans, President and Chief Executive Officer, Alcan Inc., at a press conference today at the facility's future site in Complexe Jonquière. "This element of Alcan's strategy, developed in concert with the Government of Quebec, will make Quebec the crossroads of the aluminum industry, yielding sustainable benefits for both the region and shareholders. This pilot plant will be complementary to Alcan's breakthrough aluminum technology R&D initiative announced earlier today in France's Rhône-Alpes region," he added.
Jonquière AP50 Pilot Plant
The AP50 pilot plant is the initial step in creating up to 450,000 tonnes of new generation AP smelting capacity, based entirely on clean, renewable hydroelectricity.
"Today's announcement is the product of much hard work and support from the Government of Quebec and the Canadian Auto Workers (CAW) union," said Michel Jacques, President and Chief Executive Officer, Alcan Primary Metal, "The signing of a long-term contract in June by the CAW union created the winning conditions that have accelerated the realization of this project in Jonquière," he added.
Engineering for the plant will start in the coming weeks and construction is expected to begin in 2008, with first metal coming on stream in late 2010. This initial phase would be followed by up to an additional 390,000 tonnes of new capacity in the Saguenay-Lac-Saint-Jean region by 2015.
AP50 will operate at an unsurpassed 500 kilo amperes (kA), and is focused on productivity and reduction of full economic cost. When the pilot plant becomes operational, the Arvida Research and Development Centre (ARDC) will lead the on-going R&D related to the industrialization of AP50 technology.
While speaking to employees at Alcan's Voreppe R&D facility in France earlier today Mr. Jacques said, "Alcan's R&D efforts will support the industrial application and further development of the AP50 technology by focusing on breakthrough aluminum technologies, aimed at reducing energy consumption and greenhouse gas emissions."
Industrial Strategy in Quebec
This strategy and the investment in Quebec have been developed hand-in-hand with the Government of Quebec, which has provided financial support by means of R&D tax incentives and loans, and has made available up to 225 MW of additional power to support the investment program. Support from the Government of Canada is expected to be provided through existing R&D incentive programs. The constructive partnership with the SNEAA-CAW trade union - which represents approximately 80 percent of Alcan's unionized workforce in the Saguenay-Lac-Saint-Jean region - and the support from local stakeholders were also key factors in making this investment possible.
The agreement with the Government of Quebec also reinforces Alcan's electrical power position in Quebec through the long-term extension of hydraulic leases and new power contracts which, taken together with Alcan's proprietary system, provide a secure supply of approximately 2,600 MW of low-cost power through the year 2045. In connection with this agreement, the Government of Quebec has retained various rights which allow it to cancel some or all of the new entitlements and benefits relating to water and power, including financial support, should there be either an acquisition of control of Alcan or a change in the location of its headquarters which has a negative impact on the Company's positive commitment to or presence in Quebec.
"This agreement reaffirms the outstanding partnership Alcan has historically enjoyed with Quebec - its government and communities. For decades to come, each party will prosper through mutually beneficial commitments, assuring Quebec's leadership position in the aluminum sector," concluded Mr. Evans.
Today, Alcan employs approximately 8,000 people in Quebec. In addition to the ARDC, the Company owns alone or with partners eight primary aluminum smelters in Quebec, for a total Alcan capacity of 1.5 million tonnes; one alumina refinery, with a 1.4 million tonne capacity, and one specialty aluminas plant; six hydroelectricity power stations, with an annual average capacity of 2015 MW; port facilities; a railway system; three fabrication and two packaging facilities; and a Regional Industrial Development Office. Alcan's global headquarters have been located in Montreal for approximately 80 years.
Alcan Inc. (NYSE, TSX: AL) is a leading global materials company, delivering high quality products and services worldwide. With world-class technology and operations in bauxite mining, alumina processing, primary metal smelting, power generation, aluminum fabrication, engineered solutions as well as flexible and specialty packaging, today's Alcan is well positioned to meet and exceed its customers' needs. Alcan is represented by 65,000 employees in 61 countries and regions, and posted revenues of US$20.3 billion in 2005. The Company has featured on the Dow Jones Sustainability World Index consecutively since 2003. For more information, please visit: www.alcan.com.
This press release must be read in context with the additional information in the appended backgrounder document.
Statements made in this press release and appended backgrounder document which describe the Company or management's objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of securities laws. All statements that address the Company's expectations about the future including statements about objectives, operations or results are forward-looking statements that may be based on the Company's own research and analysis. The Company cautions that, by their nature, forward-looking statements involve risk and uncertainty and that the Company's actual actions or results could differ materially from those expressed or implied in such forward-looking statements or could affect the extent to which a particular projection is realized. Reference should be made to the Company's most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K for a list of factors that could cause such differences.
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Backgrounder
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ALCAN TO PILOT ADVANCED AP50 TECHNOLOGY THROUGH
US$550 MILLION FACILITY IN QUEBEC
QUEBEC TO BECOME CRADLE FOR AP50 GLOBAL DEVELOPMENT
December 14, 2006 - With today's agreement, Alcan reaffirms the outstanding partnership it has historically enjoyed with Quebec, its government and communities through the following mutually beneficial commitments:
ALCAN:
- Build a world-leading US$550 (CAN$600) million AP50 technology platform
in the Saguenay-Lac-Saint-Jean region;
- Invest more than US$1.8 (CAN$2.0) billion over the next decade in the
Saguenay-Lac-Saint-Jean region;
- Create up to 450,000 tonnes of new generation AP smelting capacity;
- Create 740 highly skilled jobs, in addition to an expected
1,200-1,500 related to construction;
- Facilitate the development of a local network of globally competitive
suppliers to AP50 - proactively facilitated through a Regional
Industrial Development Office;
- Create a US$9 (CAN$10) million fund to support equipment manufacturers
and support the industrial development of the Beauharnois and
Shawinigan regions;
- Maintain Arvida Research and Development Center (ARDC) and Regional
Industrial Development offices at similar or increased levels of
activity.
QUEBEC:
- Finance:
- A 30-year US$355 (CAN$400) million interest-free loan;
- US$100 (CAN$112) million of various tax benefits;
- Federal and Provincial R&D tax incentives, subject to further
discussions.
- Energy:
- Extension of current energy (342 MW) and power contracts with
Hydro-Quebec from 2023 to 2045;
- Extension of Alcan's existing water rights to the Peribonca River
until 2058. This lease supports 900 MW of self-generated power;
- An additional 225 MW power block at the L-rate beginning in 2010.
- Environment:
- Implementation of a rapid approval process to protect the
confidentiality of AP50's first industrialization phase;
- Consolidation of Alcan's SO2 commitment across Quebec.
- In connection with the agreement, the Government of Quebec has retained
various rights which allow it to cancel some or all of the new
entitlements and benefits relating to water and power, including
financial support, should there be either an acquisition of control of
Alcan or a change in the location of its headquarters which has a
negative impact on the Company's positive commitment to or presence in
Quebec.
Canadian Auto Workers (CAW):
- Labour stability with long-term labour contracts;
- Skilled and dedicated workforce.
This backgrounder document must be read in context with the appended press release of the same date.
>>
For further information: Media Contact: Anik Michaud, (514) 848-8151, media.relations@alcan.com ; Chrystele Ivins, Tel.: +33-1-56-28-24-18, chrystele.ivins@alcan.com; Investor Contact: Corey Copeland, (514) 848-8368, investor.relations@alcan.com; %B M %C 1,2,3,5,28,34,36,38, %D Investment in Quebec