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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
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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
19
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)
21
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.html8/10/2019 L1 - Introduction to Alcoa
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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)
$/MT ALUMINUM
Build Maaden JV smelter on low end ofcost curve
Secure Canada energy contract
Announcedclosures orcurtailments of
551kMTsince May 2013
Quebec Premier Marois with Canada team
Source: CRU Cost Model, Alcoa Analysis.
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Operations in Australia
25
Principal operations within Western AustraliaHuntly MineWillowdale MineKwinana Refinery/PortPinjarra RefineryWagerup Refinery
Bunbury PortMarrinup NurseryDampier Bunbury Pipeline (20% ownership)
Principal operations within VictoriaPortland SmelterAnglesea Power StationMelbourneAlcoa Wheel ProductsOakleighAlcoa Fastening Systems
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26
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
4,500.00
Feb-97
Jul-97
Dec-97
May-98
Oct-98
Mar-99
Aug-99
Jan-00
Jun-00
Nov-00
Apr-01
Sep-01
Feb-02
Jul-02
Dec-02
May-03
Oct-03
Mar-04
Aug-04
Jan-05
Jun-05
Nov-05
Apr-06
Sep-06
Feb-07
Jul-07
Dec-07
May-08
Oct-08
Mar-09
Aug-09
Jan-10
Jun-10
Nov-10
Apr-11
Sep-11
Feb-12
Jul-12
Dec-12
May-13
Oct-13
Mar-14
Aug-14
LME Aluminium Price (in 2012 AUS$ 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.
28
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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.
29
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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
31
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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
39
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
50Source: May 2, 2014 annual shareholders meeting presentation
Alcoas content runs from bumper to bumper
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Alcoa s content runs from bumper to bumper
51Source: May 2, 2014 annual shareholders meeting presentation
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
53Source: May 2, 2014 annual shareholders meeting presentation
Aluminium: the sustainable package
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Aluminium: thesustainable package
54Source: May 2, 2014 annual shareholders meeting presentation
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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