Alcan to build $550M AP50 smelting plant in Quebec

Alcan plans to build a US$550 million pilot plant at its Complexe Jonquiere site in Canada to develop the company's proprietary AP50 smelting technology. This pilot plant is expected to produce approximately 60,000 tons 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 10-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 to 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 CEO, Alcan Inc., at a press conference at the facility's future site in Complexe Jonquiere. "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 Rhone-Alpes region."

Jonquiere AP50 Pilot Plant
The AP50 pilot plant is the initial step in creating up to 450,000 tons 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 CEO, 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 Jonquiere."

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 tons 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, 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," said 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 tons; one alumina refinery, with a 1.4 million ton 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.