12.21.2007 - 12:41pm ET

(CSRwire) NEW YORK - December 21, 2007 - Alcoa (NYSE:AA) today announced it has reached an agreement with the State of New York and the New York Power Authority (NYPA) on a new, renewable energy contract to supply the Company’s Massena, NY operations that paves the way for an upgrade of the operations there. Alcoa's Massena Operation is the largest private employer north of Syracuse, contributing nearly $350 million annually to the local economy.

Alcoa operates two smelters in Massena with a combined output of 255,000 metric tons per year (mtpy). Alcoa's Massena Operations have a rich and long history and have been operating as a part of the North Country since 1902. Modernization is key to the long-term viability of operations there given the nature of its technology.

Under terms of the agreement, NYPA will provide power to the operations in Massena for a term of 30 years following the expiration of Alcoa's current power contract in 2013. The agreement has an option to extend an additional 10 years contingent on aluminum prices and power availability.

In turn, following completion of feasibility and engineering studies to finalize exact costs, Alcoa would invest approximately $600 million to modernize its operations and secure a minimum of approximately 900 jobs over the next 30 to 40 years, and dramatically more during the early years of the agreement. This would be in addition to the 600-900 construction jobs that would be created during the two to three years it is expected to complete the project. The modernization project would increase the combined capacity in Massena to 274,000 mtpy and reduce emissions by more than 70 percent at the East plant.

Alcoa also would invest $10 million in an Economic Development Fund that will help the North Country attract even more businesses and jobs to the region. The agreement is subject to the approval of the NYPA board of trustees and the Alcoa Board of Directors.

"This agreement signifies the importance of Alcoa to the North Country economy, reflects my Administration's strategy to capitalize on distinctive regional assets, and demonstrates the significant value of low-cost hydropower for economic development purposes," said New York Governor Eliot Spitzer. "The loss of Alcoa would have crippled the local economy already stung by General Motor’s pullout."

"Thanks to the efforts of Governor Spitzer and his team, NYPA, and elected officials, this truly is a great day for Massena, the North Country and the state of New York," said Bernt Reitan, Alcoa Executive Vice President and Group President – Global Primary Products. "Today we have passed a significant milestone, helping ensure that Alcoa's Massena Operations and its employees will remain a part of the region.

"This is a textbook story of people coming together for a common cause – to secure the future of a manufacturing plant, if not an entire community – and working together to help see that through," said Reitan.

Beginning immediately, Alcoa will begin work on the next step of this process -- a $15-20 million investment in detailed engineering studies to finalize the process and validate the costs for the modernization envisioned at Massena. Those studies will take approximately two years to complete at which time the modernization project will be presented to the Alcoa Board for a final investment decision and approval. It is anticipated that the upgrade would be completed in 2012.

Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components including flat-rolled products, hard alloy extrusions, and forgings, Alcoa also markets Alcoa(R) wheels, fastening systems, precision and investment castings, structures and building systems. The company has 116,000 employees in 44 countries and has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at www.alcoa.com