L1 - Introduction to Alcoa

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Introduction to AlcoaBrian Doy, Director HR & Corporate Affairs

1

19 September 2014.


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Economics moduleAlcoa of Australia

IntroductionBrian DoySales & MarketingIan Nokes

Business and the EngineerDean Iiievski

QualityGreg Petersen

Risk ManagementDave Griffin

Project ManagementKen Lockerbie

ProcurementAiden Platt

Operating Accounting (Management Accounting)Justin Gorey

TreasuryTrevor Tilley

Wrap upEugenio Azevedo

2


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Discovery of aluminium

3

Year

1808 1821 1853 1854 1855 1886 1889

Sir Humphrey Davy(Britain) establishesthe existence ofaluminium and namesit.

P. Berthier (France)discovers bauxitenear the village ofLes Baux insouthern France.

Friedrich Whler(Germany) describes aprocess for producingaluminium as a powder.

Henri Sainte-Claire Deville(France) improves Whler'smethod to create the first

commercial process.

A bar of aluminium, thenew precious metal, isshown at the ParisExhibition.

Paul Louis Toussaint Hroult(France) and Charles MartinHall (USA) simultaneouslyinvent a new electrolyticprocess, which is the basisfor all aluminium productiontoday.

Karl Josef Bayer

(Austria), inventsthe Bayer Processfor large-scaleproduction ofalumina frombauxite.


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Discovery of the smelting process

4

Julia B. Hall Charles M. Hall Paul Heroult


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Birth of a company

A meeting of five investors.Agreed to build a pilot plant.

October 1, 1888, the PittsburghReduction Company

incorporated.Became the AluminumCompany of America in 1907.

Shortened to Alcoa Inc. in 1999.

5


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Innovation is our heritage

6

Year

Truck bodies &Wheels

AutomotiveStructures

Audi A8

ElectricalConductor

Model T Castings

Buildings

Marine

HeatExchangers

1886 1900 1920 1940-1950 1960 1980 19901890

AirplanesHousehold Foil

2000

Cookware

Ferrari Modena

Space Shuttle

Airbus A380

AluminumBeginnings

Today

Defense

Oil & GasConsumerElectronics

Environmentally-Friendly Bus

AluminumBottles

Easy OpenCans


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Global leader in lightweight metals engineering and manufacturing

Delivers value-add products made of titanium, nickel and aluminiumProduces best-in-class bauxite, alumina and primary aluminium

Involved in every stage of aluminum production

8

Upstream - GPPBauxite mining

Alumina refiningAluminum smeltingPower

Downstream - EPSFastening Systems

Power & PropulsionWheel & TransportationBuilding & ConstructionForgings & Extrusions

Midstream - GRPGlobal packaging

Aero, transportation andindustrialChina and consumerelectronics


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2013 was our safest year ever

2013 marked Alcoas best safety performance - EVER

and we are seeing strong engagement

9.05

0.98

2.72

0.350

12

3

4

5

6

7

8

910 Alcoa Incident Rates

Total RecordableIncident Rate

DART Rate

We are walking the talkOur highest GVS Score:91% of Alcoans saidIf I see a situation that is unsafe,

I can stop work.

Wellness

HumanPerformance

Alcoans got moving: 2 of 3participated in GCC to make

Alcoa Worlds Most Active

Company

Providing Alcoans with tools tounderstand their health

76% of operating locations at Level3 or Level 4 Human PerformanceDeployment

10

No fatalities:18 months


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Alcoa is a stronger, more competitive company because we makeinclusion through diversity a priority.

11

We encourage our employees to bring their own cultural and intellectual perspectives to the table, andhave built meaningful goals into our operations, compensation, and human resource systems to driveprogress toward this goal.

Our three-pronged strategy follows our people component of our performance management system:

Diverse TalentAttract, develop, and retain talented and committedpeople with diverse backgrounds and perspectives.

Inclusive WorkplaceAchieve a high-performing culture by ensuring that all

employees worldwide are respected, included, and

encouraged to realize their greatest potential.

InnovationFoster innovation by leveraging the diverse perspectives

and skills of employees across the organization

2014 score of 100 for 5thconsecutive year from theHuman Rights Campaign

Foundation

2013 winner for exceptionalinitiatives that expand

opportunities for women inbusiness

2012 winner for programs,policies, structure that excel inthe 8 Elements of Employee

Engagement


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Strategic priorities underpin shareholder value

12

Alcoa Advantagecreating value for

all businesses

ProfitableGrowthinevery business

Talent Technology

Customer Intimacy Purchasing

Operating System

Business Programs thatdefine:

3-year aspirations Priority leversAccountability

Disciplined Executionacross all activities

Degrees of Implementation methodology forrigorous management from idea to cash


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Three global business units

Engineered Products and Solutions (EPS)

13

Global Rolled Products (GPS)

Global Primary Products (GPP)


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Revenue by market segment, region

14

2013 SALES: $23.0 BILLION

By Segmentbillions

By Geographic AreaPer cent

$7.1

$6.6

$5.7

$3.3 $0.3

Global Rolled ProductsPrimary MetalsEngineered Products and Solutions

Alumina

51%

26%

17%

6%

United StatesEuropePacific

Other Americas


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Engineered Products and Solutions (EPS)

15

(More than 23,000 emp loyees)

102 Facilities in 19 Countries


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Product innovation drives accelerated share gains

16

Oil and GasAADP Drill Pipes

Riser Systems and Casings

Targeting $900M ofincreased revenue by

2016 vs. 2013through share gains

and innovation

Industrial Gas TurbinesAdvanced Cooling SystemsSingle CrystalAirfoils

Commercial Transportation ProprietaryMagnaForceTMForged AL WheelAlloy

LvL ONE Truck Wheels

Truck, Trailer Specialty Fasteners

Medium Duty Truck Driveshafts and Wheels

Commercial Aerospace 3rd Generation Aluminum LithiumAlloys

New Programs Fastening Systems

Next Generation Jet Engine Airfoils

Building and Construction Ultra Thermal Curtain Walls &

Windows

Blast& HurricaneResistant

Active FaadeSystems

Defense Combat Vehicles Single Piece Forged Aluminum Hull

Joint Strike Fighter Forged Bulkheads

16
http://www.airliners.net/photo/Airbus-Industrie/Airbus-A380-800/1356895&tbl=photo_info&photo_nr=5&prev_id=1357559&next_id=1356681


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GRPGlobal business spread across 4 continents

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Employees: ~14,300 | Locations: 19 facilities | 2013Revenue: $7.1 Billion

Alcoa Global Packaging (AGP)

Aero, Transportation & Industrial (ATI)

NorthAmerica

Europe Russia

MiddleEast

Australia

LatinAmerica

Market-facing Global Busin ess Units with a Global footprint

China

Product Lines: Can (Beverage & Food) Specialty Foil Industrial

Product Lines: Commercial Aerospace Auto Body & Brazing Industrial Commercial Transportation

2013 Rev:

$3.5b

2013 Rev:

$3.6b


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Capitalizing on historic Auto industry shift to lightweight vehicles

18

Consumers/OEMs preferences, projected aluminum content per vehicle and Alcoa capacity expansion

Increasing aluminum intensity

North America aluminum body sheetcontent per vehicle (in lbs)

136

55

14

2015 20252012

ActualProjected

~10x

~4x

Al auto sheetdemand expectedto grow to 1MMT

by 2025

Consumers want fuel economy

OEMs need fuel economy

54.5

35.527.2

20252011 2016

US CAFE regulations (MPG)

+100%

And 88% sayfueleconomy will be

an importantfactor in their nextvehic le purchase

% supporting higher fuel economy regulations

Sources: Consumer Federation of America (CFA) survey April 2013; Ducker Worldwide

CAF: Corporate Average Fuel Economy

8566

20132010

18

Alco a, TN

Davenport , IA

Completedon t ime andon budget

Triple play: Positioned to capture growth

Saudi Arabia JV KSA

$300Minvestmentcompleted in 4Q 2013

Under-going customerqualifications

$318M investment;completion in mid-2015

Enables flexibleproduction

$380M total investment;Firstauto coilDec2014


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Aluminiumsauto evolution: material of choice for the 2015 Ford F-150

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With my background in aerospace and

commercial airplanes, aluminumisthe material of choice.

Alan Mulally, President and CEOFord Motor Company

CBS News

When we put it all together, to have the

truck do what we wanted, there was

only one answer: aluminum.Raj Nair, VP Global Product DevelopmentFord Motor CompanyWall Street Journal

A stamped aluminum bodycanequalor outperform steel in

overall strength, dent resistance andcrash protection

The New York Times

The F-150establishes aluminumasa primary choice for mainstream

auto use.Automotive News

Mil i tary-grade, alumin um alloy sin body and bed

As much as 700 lbs. l ighter than its predecessor Acc elerates, brakes, tows and resists corrosion

like never beforeSOURCE: Ford Motor Company website


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GPP is leader in all segments of aluminum production

20

Employees: ~18,500 | Locations: 42 operations in 11 countries | 2013 Revenue: $12.5 Billion

SmeltingGlobal Leader insmelting

Most efficient producer ofaluminum

MiningBauxite mines in sixcountries

Largest global bauxiteproducer

Refining#1 in Alumina

World's leadingproducer of alumina

Energy2/3 renewable basedenergy

Securing energy assets forour facilities


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Global Primary Products (GPP)

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Lost Workday Incident Rate

10th Consecutive Year79% of Alcoalocations had

no LWD in 2010

Recognized as a model of

sustainabi l i ty by ExameMagazine

Europe1 Refinery8 Smelters

Canada3 Smelters1 Hydro dam

Latin America4 Refineries5 Mines2 Smelters5 Hydro dams

Australia2 Mines3 Refineries1 Smelter1 Coal Power Plant

SmeltersRefineries

Saudi Arabia

Integrated mine,refinery, smelter,rolling mill, gasfield and powerstation

PowerMines

Africa1 Mine

US1 Refinery7 Smelters8 Hydro dams2 Coal Power Plants

20,100 EmployeesCapacities:

51 MMT Bauxite18 MMT Alumina4.2 MMT Aluminum3.4 GW power
http://www.sustainability-index.com/default.htmlhttp://www.sustainability-index.com/default.htmlhttp://www.sustainability-index.com/default.htmlhttp://www.sustainability-index.com/default.htmlhttp://www.sustainability-index.com/default.htmlhttp://www.sustainability-index.com/default.html


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Moving GPP down the global cost curves

22

Additional 6 point movement down the

alumina cost curve

500

450

400

350

300

250

200

150

100

50

0

1009080706050403020100

2013:27thPercentile

-9% pointsby 2016

2010:30thPercentile

2016:21rdPercentile

$/MT

Production (MMT)

ALUMINA

Build Maaden JV refinery on low end of costcurve

Increase production at Juruti and WesternAustralia

Implement energy solutions for San Ciprian &

Jamaica

Wagerup Refinery

Source: CRU Cost Model, Alcoa Analysis.


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Smelting portfolio becoming leaner and stronger

23

Additional 5 point movement down thealuminum cost curve

30151050

3,000

2,500

2,000

1,500

1,000

500

0

55504540352520

2013:43rdPercentile

-13% pointsby 2016

2016:38thPercentile

2010:51stPercentile

Production (MMT)

$/MT ALUMINUM

Build Maaden JV smelter on low end ofcost curve

Secure Canada energy contract

Announcedclosures orcurtailments of

551kMTsince May 2013

Quebec Premier Marois with Canada team

Source: CRU Cost Model, Alcoa Analysis.


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Operations in Australia

25

Principal operations within Western AustraliaHuntly MineWillowdale MineKwinana Refinery/PortPinjarra RefineryWagerup Refinery

Bunbury PortMarrinup NurseryDampier Bunbury Pipeline (20% ownership)

Principal operations within VictoriaPortland SmelterAnglesea Power StationMelbourneAlcoa Wheel ProductsOakleighAlcoa Fastening Systems


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1,500.00

2,000.00

2,500.00

3,000.00

3,500.00

4,000.00

4,500.00

Feb-97

Jul-97

Dec-97

May-98

Oct-98

Mar-99

Aug-99

Jan-00

Jun-00

Nov-00

Apr-01

Sep-01

Feb-02

Jul-02

Dec-02

May-03

Oct-03

Mar-04

Aug-04

Jan-05

Jun-05

Nov-05

Apr-06

Sep-06

Feb-07

Jul-07

Dec-07

May-08

Oct-08

Mar-09

Aug-09

Jan-10

Jun-10

Nov-10

Apr-11

Sep-11

Feb-12

Jul-12

Dec-12

May-13

Oct-13

Mar-14

Aug-14

LME Aluminium Price (in 2012 AUS$ Real)

Source: www.indexmundi.com , IMF, ABS

1997-2008Average: $3325

2009-2011Average: $2350Dec 2011: $2000

Dec 2012: $1960

Dec 2013: $1859Aug 2014: $2068 2012-2014

Average: $1888

Average metal price now 43% less than 1997-2008


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Portland Aluminium

JV with Alcoa as managing partner Alcoa 55%, CITIC 22.5%, Marubeni 22.5%.

First production 1986

Rated capacity358,000 tonnes/year

22.5 kilogram aluminium ingots all exported to Asia

Largest employer in the region540 directemployees and ~ 180 contractors

A$100 million in wages

A$45 million in maintenance and contractorservices

A$7 million in council rates, royalties andcommunity contributions each year.

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Western Australia

Bauxite mines at Huntly andWillowdale34 mtpa

Alumina refineries at Kwinana, Pinjarraand Wagerup9 mtpa

Supplying approx 10% of globaldemand

Dedicated port facilities at Bunbury andKwinana

4000 permanent employees and 800contractors

More than $2.2 billion in local spendand payroll contributions annually.

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Two mines supplying three refineries

30

Mandurah

Boddington

Jarrahdale

Dwellingup

Collie

PinjarraAlumina Refinery

HuntlyBauxite Mine

WillowdaleBauxite Mine

WagerupAlumina Refinery

KwinanaAlumina RefineryShipping

BunburyShipping

Perth

Jarrah forest

AlcoaMineralLease

Mineral Lease of 7,129 square

kilometres

Exclusive rights to mine bauxite19612045, with option to extend

Less than 10% of area planned to bemined

Huntly24.5 million tonnes a year Largest bauxite mine in the world Supplies Pinjarra and Kwinana

Willowdale9.5 million tonnes ayear, supplies Wagerup

At current mining rate, will supply thethree refineries for another 50 years


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Advantages of WA bauxite mining

Easy to access ore body withshallow overburden

Low silica

Economies of scale

Conveying a low cost, efficient

delivery systemExcellent equipment reliability

Mature and efficient mine planapproval processes

Close to refineries, ports and majorinfrastructure

Close to population centres - welltrained, stable workforce

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Mining in a unique environment

32

Only natural Jarrah Forest in the world

The forest is highly valuedrecreation, watercatchment, timber resource, conservation

Access to bauxite contingent on preservingand restoring these land-use values


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Worlds best mine rehabilitation

33

Returning a self-sustaining jarrah forest ecosystem

to enhance or maintain water, timber, recreation, and conservation valuesDel

Park

1980

Del

Park

2001


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A history of continuous growth

34

0

12

3

4

56

7

8

910

64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

Kwinana Pinjarra Wagerup

Pinjarra 5th unit

Wagerup start-up

Wagerup 2nd unit

Pinjarra efficiency

upgrade

Year

MillionTonnes

Kwinana start-up

Pinjarra start-up


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Western Australia is the centre of refining expertise

Western worlds largest alumina refining

R&D group based at KwinanaEmploys 80 scientific, engineering andsupport staff, dedicated to technologydevelopment for Alcoas global system

WAs largest employer of PhDs outside of

CSIRO and the Universities (26)

One of the very few truly global industrialresearch centres based in Australia

A major employer of highly trained research

specialists, including: chemists, engineers, physicists, computer

modellers (including Computational FluidDynamics experts), industrial statisticiansand other highly valued professionals

36


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Alcoa of Australia value adds to Australias economy

2013 Operational Spend (%)

37

Western Australia >70%$1.7 billion

Overseas

Rest of Australia

2013 Revenue($3.67 billion)

Export 92%

2013

Tax expense $119 millionWages and benefits $602 million

Dividends $262 million

Profit after tax $259 million

Employees by region 2014 YTD

Western Australia 3946

Victoria 642


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Structured community relations program

Community assessment and public

strategy plan

Community consultation,involvement and communication

Government relations

Media relations, issuesmanagement, crisiscommunications

Employee communication andengagement

Employee volunteerismCommunity investment andpartnerships

Profitability and value contribution

38


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Community consultation, involvement and communication

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Formal consultation forums (CCNs, CABs, EIP, SRGs)

Communicationswebsites, advertorials, media

Briefings, open days, tours


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E l l i


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Employee volunteerism

41

Month of Service

Greenworks

ACTION

Bravo

Earthwatch

C it i t t d t hi


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Key corporate partnerships

Greening AustraliaCentre for Rural Emergency MedicineSALPSculpture by the SeaFairbridge

Youth FocusCelebrate WA

Alcoa FoundationScitech maths programFrogwatch

Conservation Volunteers AustraliaKaarakin Black CockatooNorthern Futures

Community investment and partnerships

42

51 t hi b t Al Al d G l


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51 year partnership between Alcoa, Alcoans and Geelong

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Today is also the time to pay tribute to Alcoa. For while we hate itsdecision to leave, we also acknowledge the companyscontribution.

And even away from putting meals on workers tables, Alcoa has

given much to Geelong. It has been a very significant donor tomany projects in our community.

It is estimated that in its time here, Alcoa has given up to $2.3million to one charity alone. And as recently as Thursday night itwas doing it again giving out $590,000 in community grants.

For that, Alcoa, we say thank you for the giving and for the jobsover the past decades.

Geelong Advertiser Editorial, 26 July 2014

L t t hi d i d


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Long term partnerships program underpinned success

Alcoa is an icon ofcommunity giving.

Half a century is easy to roll off

the tongue but nothing lasts that

long without genuine commitmentand passion.

Alcoa is one of the companieswhich has helped make Geelongwhat it is and it continues with the

Alcoa Foundation grant.Their support for community has

been unbelievable.

Bil l Mithen, Lo cal NGO leader

44

O h ll ?


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Our challenges?

45


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K l b l t d f l th


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Key global megatrends fuel our growth

47

Population Growth Urbanization Climate Change

Energy consumption rising Increase of 54% by 2025 Driven by developing countries

Personal transportation rising Increase of 40% by 2030

Greenhouse gas regulation

Global population rising

2006: 6.6 billion 2025: 7.9 billion 2050: 9.1 billion

Population in cities

2006: > 50% 2030: > 60%


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Alcoa flies from nose to tail on metallic intensive aircraft


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Alcoa flies from nose to tail on metallic-intensive aircraft

49Source: May 2, 2014 annual shareholders meeting presentation

Alcoa has a strong position on carbon fibre intensive aircraft


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Alcoa has a strong position on carbon fibre intensive aircraft


Alcoas content runs from bumper to bumper


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Alcoa s content runs from bumper to bumper


Aluminium intensive vehicles have the competitive edge


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Aluminium intensive vehicles have the competitive edge

52(1) Oak Ridge National Laboratory January 2014 (2) EDAG April 2013

Alcoa content on truck and trailer


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Alcoa content on truck and trailer


Aluminium: the sustainable package


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Aluminium: thesustainable package


Building and construction systems: green buildings start with Alcoa


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Building and construction systems: green buildings start with Alcoa

55

Windows CladdingCurtain Wall Store Front

Unparalleled growth opportunity with Maaden JV


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Unparalleled growth opportunity with Ma adenJV

Alcoa building lowest-cost, most-efficient aluminumcomplex in the world

Utilizes fully developed infrastructure, including low-cost

natural gas power Establishes strategic footprint in fast-growing region

Smelter and rolling mill on-line in 2013and bauxite mineand refinery in 2014

56

Refinery Smelter Rol l ing Mi l lBaux ite Mine

a

Case study Wagerup liquor burner


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Case studyWagerup liquor burner

Build up of organics in the

liquor streamLiquor burner installed

Noise

Odour

57

Located 130 kilometers (81 miles) south of Perth in Western Australia,

Alcoas Wagerup Alumina Refinery has been scrutinized and criticized

by the media, community, and government for odours, noise and otheremissions released from the facility.

2002 Alcoa Inc EHS report


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L1 - Introduction to Alcoa

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