Alcoa

Alcoa, Inc.

Type	Public (NYSE: AA)
Founded	Pittsburgh, Pennsylvania, U.S. (1888)
Founder(s)	Charles Martin Hall
Headquarters	New York, New York Pittsburgh, Pennsylvania
Area served	Worldwide
Key people	Alain J. P. Belda (Chairman) Klaus Kleinfeld (CEO), (President) & (Director)
Industry	Aluminum
Market cap	US$ 21.90 billion (2008)
Revenue	▲ US$ 30.748 billion (2007)
Operating income	▲ US$ 4.491 billion (2007)
Net income	▲ US$ 2.564 billion (2007)
Total assets	▲ US$ 38.803 billion (2007)
Total equity	▲ US$ 16.016 billion (2007)
Employees	107,000 (2008)
Subsidiaries	Reynolds Metals Halco Mining Kawneer Howmet Castings
Website	Alcoa.com
[1][2]

Alcoa, Inc. (NYSE: AA) is the world's third largest producer of aluminum, behind Rio Tinto Alcan and Rusal. ^[3] Alcoa leads the world in alumina production and capacity. From its operational headquarters in Pittsburgh, Pennsylvania, Alcoa conducts operations in 44 countries. In May 2007 Alcoa made a $27 billion hostile takeover bid for Alcan, a former subsidiary, aiming to unite the two companies and form the world's largest aluminum producer. The takeover bid was withdrawn after Alcan announced a friendly takeover by Rio Tinto in July 2007.

Among Alcoa's other businesses are fastening systems, building products (Kawneer), Howmet Castings, and electrical distribution systems for cars.^[4] The sale of the packaging unit was announced on December 21, 2007^[5] and closed in the first quarter of 2008.

Contents 1 History 2 Environmental record 3 Alcoa in Ghana 4 Alcoa in Iceland 5 Alcoa In The United Kingdom 6 Alcoa in Australia 7 Alcoa in the United States 8 Alcoa World Alumina and Chemicals 9 Alcoa Primary Aluminum smelters 10 See also 11 References 12 External links

History

In 1886, Charles Martin Hall, a graduate of Ohio's Oberlin College, discovered the process of smelting aluminum, almost simultaneously with Paul Héroult in France. He realized that by passing an electrical current through a bath of cryolite and aluminum oxide, the then semi-rare metal aluminum remained as a byproduct. This discovery, now called the Hall-Héroult process, is still the only process used to make aluminum worldwide.

Probably fewer than ten sites in the United States and Europe produced any aluminum at the time. In 1887, Hall made an agreement to try his process at the Electric Smelting and Aluminum Company plant in Lockport, New York but it was not used and Hall left after one year. On Thanksgiving day 1888, with the help of Alfred E. Hunt, he started the Pittsburgh Reduction Company with an experimental smelting plant on Smallman Street in Pittsburgh, Pennsylvania. In 1891, the company went into production in New Kensington, Pennsylvania. In 1895 a third site opened at Niagara Falls. By about 1903, after a settlement with Hall's former employer, and while its patents were in force, the company was the only legal supplier of aluminum in the US.^[6][7]

"The Aluminum Company of America" -- became the firm's new name in 1907. The acronym "Alcoa" was coined in 1910, given as a name to two of the locales where major corporate facilities were located (although one of these has since been changed), and in 1999 was adopted as the official corporate name.

Under President Franklin D. Roosevelt, the Justice Department charged Alcoa with illegal monopolization, and demanded that the company be dissolved. Trial began on June 1, 1938.

Four years later, the trial judge dismissed the case. The government appealed.

Two more years passed, and in 1944, the Supreme Court announced that it couldn’t assemble a quorum to hear the case so it referred the matter to the U.S. Court of Appeals for the Second Circuit.

The following year this litigation came to its end. Learned Hand wrote the opinion for the Second Circuit.

Hand wrote that he could consider only the percentage of the market in "virgin aluminum" for which Alcoa accounted. Alcoa had argued that it was in the position of having to compete with scrap. Even if the scrap was aluminum that Alcoa had manufactured in the first instance, it no longer controlled its marketing. But no, Hand defined the relevant market narrowly in accord with the prosecution's theory.

Alcoa said that if it was in fact deemed a monopoly, it acquired that position honestly, through outcompeting other companies through greater efficiencies. Hand applied a rule concerning practices that are illegal per se here, saying that it doesn’t matter how Alcoa became a monopoly, since its offense was simply to become one. Indeed, Hand seemed to be saying that in some circumstances inefficiency may be a requirement of the law.

Hand acknowledged the possibility that a monopoly might just happen, without anyone's having planned for it. If it did, then there would be no wrong, no liability, and no need to remedy the result. But that acknowledgement has generally been seen as an empty one in the context of the rest of the opinion, because of course rivals in a market routinely plan to outdo one another, at the least by increasing efficiency and appealing more effectively to actual and potential customers. If one competitor succeeds through such plans to the extent of 90% of the market, that planning can be described given Hand's reasoning as the successful and illegal monopolization of the market.

This leaves the question, what is the proper remedy once a wrongful monopolization is found? Here Hand remanded the matter to the trial court, and the whole narrative comes to an unsatisfactory conclusion – more of a dissipation, really, than a conclusion. In 1947, Alcoa made the argument to the court that there were two effective new entrants into the aluminum market – Reynolds and Kaiser – as a result of demobilization after the war and the government's divestiture of defense plants. In other words, the problem had solved itself and no judicial action would be required. On this basis, the district court judge ruled against divestiture in 1950, but the court retained jurisdiction over the case for five years, so that it could look over Alcoa's shoulder and ensure that there was no re-monopolization.

Until 1950, Alcoa was concerned with its domestic market, while its Canadian subsidiary Aluminum Limited (Alcan) took care of the international markets. Alcoa, Reynolds, and Kaiser were soon joined in the growing market by Anaconda Aluminum Company, a subsidiary of the copper-industry giant. In 1958 Harvey Machine Tools Company began primary aluminum production, marking the end of Alcoa's monopoly over the process which had led to its domination of the American market.

Noted economist and former Federal Reserve chairman Alan Greenspan criticized the judgment of monopoly against Alcoa (Capitalism: The Unknown Ideal; see^[8]) quotes Learned Hand, the judge in U.S. v Alcoa, who remarked, "It was not inevitable that it should always anticipate increases in the demand for ingot and be prepared to supply them. Nothing compelled it to keep doubling and redoubling its capacity before others entered the field. It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel." Greenspan believes that the characterization of Alcoa as a threat to competition is erroneous, as "ALCOA is being condemned for being too successful, too efficient, and too good a competitor. Whatever damage the antitrust laws may have done to our economy, whatever distortions of the structure of the nation's capital they may have created, these are less disastrous than the fact that the effective purpose, the hidden intent, and the actual practice of the antitrust laws in the United States have led to the condemnation of the productive and efficient members of our society because they are productive and efficient." Greenspan grants that Alcoa was a monopoly, but maintains that it was not a coercive monopoly and, hence, should not have been subject to anti-trust action.

Alcoa established an 8% stake in China's state-run aluminum industry and has formed a strategic alliance with Aluminium Corporation of China (Chalco), China's largest aluminum producer, at its Pingguo facility. Alcoa sold this stake on September 12, 2007.^[9]

Alcoa has also acquired two facilities in Russia, at Samara and Belaya Kalitva. Alcoa recently launched an offer to purchase the remaining 18% of the Belaya Kalitva plant from minority shareholders, giving it complete ownership in the facility.

In 2004, Alcoa's specialty chemicals division was sold, taking on the name Almatis, Inc..

In 2005, under heavy criticism by local and international NGOs related to a controversial dam project exclusively dedicated to supplying electricity to this smelter, Alcoa began construction in Iceland on Alcoa Fjardaal, a state-of-the-art aluminum smelter and the company's first greenfield smelter in more than 20 years. Alcoa also signed a memorandum of understanding with the government of the Republic of Trinidad and Tobago to build a low-emissions aluminum smelter and related facilities there. However, there has been strong objection of this by the residents of the area of the proposed smelter sparking protests and marches frequently.Also, Alcoa is working with the government of Ghana on the development of the aluminum industry in that country. Furthermore, Alcoa has completed or is undergoing primary aluminum expansion projects in Brazil, Jamaica, and Pinjarra, Western Australia.

In 2006, Alcoa relocated its top executives from its headquarters in Pittsburgh to New York City. Although the company's principal office is located in New York City, the company's operational headquarters are still located at its Corporate Center in Pittsburgh. Alcoa employs approximately 2,000 people at its Corporate Center in Pittsburgh and 60 at its principal office in New York.^[10]

Alcoa was named one of the top three most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland.

On 8 May 2008, Klaus Kleinfeld was appointed new CEO of ALCOA substituting Alain Belda.

Environmental record

Alcoa is ranked 15th in the Political Economy Research Institute's (PERI) Toxic 100 of 2008. The company released 13.11 million pounds of toxic air in 2008.^[11] In April 2003, Alcoa Inc. agreed to spend an estimated $330 million to install a new coal-fired power plant with state-of-the-art pollution controls to eliminate the vast majority of sulfur dioxide and nitrogen dioxide emissions from the power plant at Alcoa's aluminum production facility in Rockdale, Texas. The settlement was the ninth case the Bush Administration pursued to bring the coal-fired power plant industry into full compliance with the Clean Air Act. Alcoa was unlawfully operated at the Rockdale facility since it overhauled the Rockdale power plant without installing necessary pollution controls and without first obtaining proper permits required by "New Source Review" program of the Clean Air Act.^[12] In February 1999, Alcoa cleaned soils and sediment contaminated with polychlorinated biphenyls (PCB) and lead at the York Oil federal Superfund site in Moira, New York in accordance with the Environmental Protection Agency. The site, a former waste oil recycling storage facility, accepted waste oil from a number of companies, including Alcoa. The facility was improperly managed and operated and, as a result, soils on the York Oil Property and nearby wetlands sediments and groundwater were contaminated. The United States Environmental Protection Agency‎ (EPA) issued a Superfund Unilateral Order on December 31, 1998 requiring Alcoa to excavate, treat and dispose of the contaminated wetlands sediments.^[13]

On the other hand, In 2005, BusinessWeek magazine, in conjunction with the Climate Group, ranked Alcoa as No.5 of "The Top Green Companies." in cutting their carbon gas emissions^[14][15].

Alcoa in Ghana

Alcoa's affiliate in Ghana, the Volta Aluminum Company, was completely closed between May 2003 and early 2006, due to problems with its electricity supply.^[16][17]

Alcoa in Iceland

By the middle of September, over 50% of the Alcoa Fjardaál smelter construction in Iceland has been finished. The total workforce on site is 1,750 people, of which 80% are of Polish origin. It is expected to be on line by 2007. Alcoa and the government of Iceland have signed an agreement on instigating a thorough feasibility study for a new 250,000 tpy (Tons Per Year) smelter in Bakki by Húsavík in Northern Iceland. In order to power Alcoa's new smelters in Iceland, tracts of wilderness are being flooded to provide hydroelectric energy. Alcoa does not own the kárahnjúkar powerplant.

Fjardaral, which is owned by Alcoa, created jobs in the nearby town of Reyðarfjörður for people that lost their jobs when the Icelandic government decided to lower their fishing quota.

Alcoa In The United Kingdom

Kitts Green, Birmingham, England

Established shortly before World War II, the facility at Kitts Green, Birmingham has produced many aluminium products. Throughout the 1960's, 70's and 80's the plant became focused on flat-rolled products for the aerospace industry ^[18]. As of 2007 the plant employed approx 530 employees, mostly on a 4-on, 4-off shift pattern and the plant manager is Jim Wallace.

Swansea, South Wales

On November 21, 2006, Alcoa announced that it planned to close the Waunarlwydd works in Swansea, with the loss of 298 jobs. Production ceased at the Swansea plant on January 27, 2007 and it has since been sold by Alcoa ^[19].

Alcoa in Australia

Alcoa operates bauxite mines, alumina refineries and aluminum smelters through Alcoa World Alumina and Chemicals, which is a joint venture between Alumina Limited and Alcoa. Alcoa operates two bauxite mines in Western Australia - the Huntly and Willowdale mines. Alcoa World Alumina and Chemicals owns and operates three alumina refineries in Western Australia: Kwinana, Pinjarra and Wagerup. Two aluminum smelters are also operated in the state of Victoria at Portland and Point Henry.

Alcoa in the United States

Alcoa created a plant just outside of Maryville, TN in Blount County, Tennessee, which was the biggest provider of aluminum in the South. The area needed housing for workers, so Alcoa built many houses. The area eventually turned into a city and decided to name its self after the company. Alcoa, Tennessee, was founded 1919.

Alcoa maintains several Research and Development Centers in the United States. The largest one, Alcoa Technical Center, is located East of its Pittsburgh Headquarters at Alcoa Center, PA. The "Tech Center" is as large as some college campuses, has its own Zip Code and maintains an extensive intellectual and physical resource for innovation. Alcoa's extensive safety program continuously improves safety at the Tech Center while enhancing quality of life and efficiency for the hundreds of elite level Researchers who are creating new avenues of business growth and technological development for the Company. Some experimental processes can be dangerous but Alcoa's 6S Culture of Safety and Environmental Responsibility has ensured Researcher safety and minimized environmental impact while enhancing cost effectiveness of development work and accelerating time to market.

The Physical plant of the Tech Center is situated in a rural area and has managed to cultivate a large wooded area which acts as a nature preserve, sheltering deer and other wildlife. It is not uncommon to see Deer and other wildlife freely circulating through the environs of the Tech Center at all hours of the day.

Alcoa World Alumina and Chemicals

Alcoa owns and operates the majority of its alumina refineries through its 60% share of Alcoa World Alumina and Chemicals.

Alcoa Primary Aluminum smelters

Alcoa has interests in 25 primary aluminum smelters in 8 countries.

Alcoa smelters^[20][21]

Country	Location	Equity ownership	Plant Total Nameplate capacity (kt per year)	Alcoa's Capacity (kt per year)
	Point Henry	100%	185	185
	Portland	55%	353	194
	Poços de Caldas	100%	96
	São Luís (Alumar)	60%	438	263
	Baie Comeau	100%	438	438
	Bécancour	75%	409	307
	Deschambault	100%	254	254
	Fusina	100%	44	44
	Portovesme	100%	150	150
	Avilés	100%	90	90
	A Coruña	100%	84	84
	San Cibrao	100%	225	225
	Alcoa Operations, TN	100%	215	215
	Badin, NC	100%	60	60
	Evansville, IN (Warrick)	100%	309	309
	Ferndale, WA (Intalco)	100%	279	279
	Frederick, MD (Eastalco)	100%	195	195
	Massena (East Plant), NY	100%	125	125
	Massena (West Plant), NY	100%	130	130
	Mount Holly, SC	50%	229	115
	Rockdale, TX	100%	267	267
	Wenatchee, WA	100%	184	184
	Tema	10%	200	20
	Lista	50%	94	47
	Mosjøen	50%	188	94

See also

• Alumina
• List of alumina refineries
• Alcoa World Alumina and Chemicals
• Alcoa, Tennessee
• List of aluminum smelters

References

External links

• Official website
• Alcoa Video and Audio on MarketWatch
• Top Companies of the Decade From Business Week magazine
• The Bad Neighbor: Alcoa's Dirty Dealings in Texas From Dollars & Sense magazine.
• Russia dethrones US metals king
• Something in the Air - The Clash Between a Giant Industry that makes an essential product and a small community dogged by illness and struggling for survival
• Protesters plan to lodge Supreme Court writ over Alcoa smelter
• Alcoa expands despite toxins

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