ORourke

Alcoa’s Experience in Russia : 

Alcoa’s Experience in Russia William O’Rourke President, Alcoa Russia 2006 Moscow Business Dialogue October 31, 2006

Alcoa is a Global Leader in Value Added Products: 

Alcoa is a Global Leader in Value Added Products #1 #2 #1 #1 #1 #1

Alcoa’s Global Business : 

Alcoa’s Global Business 43 Countries 130,000 Employees Russia

Alcoa - Russia: 

Alcoa - Russia Moscow Region: Alcoa Rus (Trade House & Corporate Services) Alcoa CSI (Closure Systems International) Samara Region: Samara Metallurgical Plant (40% of the Flat Rolled Products in Russia; located in the center of Russian Aerospace Industry) Rostov Region: Belaya Kalitva Metallurgical Plant (20% of the Flat Rolled Products in Russia; major opportunities for development esp. in forging and aerospace plate)

Alcoa Russia, Samara Plant: 

Alcoa Russia, Samara Plant Samara Four Businesses: - Cast House, Extrusions, Rolled Products and Forgings 388 acres of property 7.3 million square feet under roof (168 acres) 5,800 employees ISO Certified – 14001 and 9001 Largest forging press/largest extrusion press

Alcoa Russia, Belaya Kalitva Plant: 

Alcoa Russia, Belaya Kalitva Plant Belaya Kalitva Four Businesses: - Cast House, Extrusions, FRP, Forgings 190 acres 3.5 million square feet under roof (80 acres) 4,600 employees ISO Certified – 14001 and 9001

Business Landscape for Alcoa - Russia: 

Business Landscape for Alcoa - Russia Opportunities: Excellent local tradition of metallurgy Highly skilled, educated workforce, with reasonable wages Competitive direct costs for local production Marketplace waiting to explode: aluminum per capita consumption: ~ 4 kg per year (vs. ~ 40 kg in the US and Western Europe) dramatically outdated fleet of local aircraft International and local car industry growing fast with environmental awareness Overall, reasonable (although bureaucratic) regulatory environment No inappropriate political pressure experienced Greenfield (primary) growth opportunity in the Far East of Russia

Business Landscape for Alcoa - Russia: 

Business Landscape for Alcoa - Russia Challenges: Pending new regulations on foreign investments into strategic industries State getting more involved into direct/indirect control of the business: VSMPO-AVISMA Titanium producer bought back by the State Russian enterprises including competitors get bigger and consolidate: Rusal, Sual and Glencore announced merger Election season comes: Parliamentary elections in Fall 2007, then Presidential election in March 2008 Overall political stability, but decisions seem to be slowing and some of them may be dependant on the political moment No clarity yet about Russia’s accession to the WTO Some Bureaucracy issues Shortage in project managers and some specialist positions.

The World Fleet Will More Than Double : 

2004 2024 The World Fleet Will More Than Double 16,800 airplanes 35,300 airplanes 18,500 Growth Airplanes 7,200 Replacements 9,600 Retained Fleet Regional jets Single-aisle Twin-aisle 747 and larger Source: Boeing 2005 Current Market Outlook

Russian Market Opportunity: 

Russian Market Opportunity Russia Rolled Products Consumption CAGR 15% CAGR 6% Source: CRU Tons ,000

Alcoa - Russia: Strategic Priorities: 

Alcoa - Russia: Strategic Priorities Vision Investments in Growth Resources People, Technology, Capital & Equipment. Best Practices. Values Integrity Safety … To invest in the people and the facilities so we are ready to capture anticipated demand for aluminum in Russia and to supply the global market with Russian aluminum products

Alcoa - Russia: Achievements: 

Alcoa - Russia: Achievements Invest in Facilities: Investments are now happening, and will continue Operational Capability – 25% growth second year from the first year Housekeeping Invest in People Education, Training and Development Environment, Health & Safety Commitment Fatality Risk Reduction Personal Protective Equipment Employee Health and Medical Programs Environmental Compliance Demonstrate our Community Responsibility

Alcoa Investments in Russia : 

Alcoa Investments in Russia Approved Investments of > $200M in the next two years Rolling Forging Extrusion Casting Energy Examples: Aerospace Plate Program in Belaya Kalitva Rolling Mill Modifications – in Samara Cast House Improvements – for the Aerospace Industry

Alcoa Belaya Kalitva: Furnace Investment ($37M): 

Alcoa Belaya Kalitva: Furnace Investment ($37M)

Alcoa Samara: Slitter Investment Installed ($6M): 

Alcoa Samara: Slitter Investment Installed ($6M)

Investment in Training & Development: 

Investment in Training & Development Education –Training & Development EHS, ABS, TPM; English and Learning Visits to Overseas Locations More than 250 Russian Leaders visited 17 Alcoa Locations in the US and Europe.

Alcoa Russia – Lost Working Day Rate 2006 vs. 2004: 

Alcoa Russia – Lost Working Day Rate 2006 vs. 2004 Alcoa Inc: 0.07 Alcoa Acquisition

Total Productive Maintenance (TPM): 

Total Productive Maintenance (TPM) Largest Ever TPM Event 802 Alcoa Employees at Samara

Community Involvement in Russia: 

Community Involvement in Russia Alcoa Foundation Grants Support to WW II Veterans in Samara and BK Donation of an Ambulance car to BK city hospital Volunteerism Alcoa Technical Education Support program Other projects Andy Warhol Art Exhibits throughout Russia BK – collaboration with local NGOs, Museums etc. Samara – Fund of Charity & Health Moscow – ToyRun initiated by employees

Closing Comments of a Foreign Investor in Russia: 

Closing Comments of a Foreign Investor in Russia Encourage Stability and Predictability in legislation Continue to Streamline the Bureaucracy Be intolerant of Corruption Tell the “good” stories of people, cooperation, productivity and success Speak-out when we have observations. (WTO) In strategic matters – comply with the laws and commitments. Share. Together we are better.

Slide21: 

Thank you! Огромное спасибо! The Alcoa-Russia Samara Plant