5.23.2007 - 11:45am ET

(CSRwire) NEW YORK & NUUK, GREENLAND- May 23, 2007 - Today, the Greenland Home Rule Cabinet agreed to enter into a Memorandum of Understanding (MOU) with the aluminum company Alcoa Inc. The agreement entails co-operation on a feasibility study for constructing an aluminum smelter with a 340,000 metric-ton-per-year capacity in Greenland.

The MOU also encompasses a hydroelectric power system and related infrastructure improvements, including a port. The exact size and cost for the overall venture will be determined when the project plan is finalized.

Under the MOU, the parties will begin site selection, environmental studies, engineering assessments, and other aspects of the project. If the viability of the project is proved, ground breaking for the hydroelectric power system would be expected in 2010, and for the smelter in 2012. The smelter could then commence operation by the end of 2014.

"Alcoa has a disciplined growth strategy, as aluminum demand is strong and consumption is expected to grow significantly over the next decade. We have nearly 120 years of experience in developing and operating aluminum smelters around the world in a sustainable manner, sensitive to the environment, and valued by the communities in which Alcoa operates," said Alcoa Chairman and CEO Alain Belda. "We will bring our technology and management capabilities to this venture to ensure the development of a highly-competitive, environmentally-friendly smelter that adheres to our stringent Values and delivers sustainable development."

"The aluminum industry offers an excellent opportunity that we may in Greenland exploit our hydropower resources for the benefit of the country’s occupational and business development," stated Minister of Trade, Labor and Vocational Training, Siverth K. Heilmann. "At the same time the project is in full accordance with the Cabinet’s long-term goal of replacing hydrocarbon-based energy production with hydropower, one of the reasons being concern for the global environment."

"I have visited smelters in different parts of the world, and through personal experience learned about Alcoa’s consideration for the environment and commitment to ensure that a future smelter will also in Greenland become an asset to the local community, socially and educationally, as well as economically," said Heilmann.

About the choice of Alcoa as partner in preference to other interested aluminum companies Siverth K. Heilmann explains, "Alcoa has shown their determination to invest considerable resources in the development of this project together with us. Simultaneously, they have been ready to meet Greenland’s requirements as to the pace of the project development, the environmental process, efforts in training and education etc. We still have far to go and important decisions to make before the project becomes reality, but with this agreement, Greenland and Alcoa have taken a very important step on the way."

In order to facilitate a quick initiation of the important field surveys, the parties have agreed that the MOU will be signed in connection with the upcoming meeting of the Joint Committee in Ilulissat, 25-27 May 2007.

Preferred sites for the proposed smelter will be collaboratively identified by Alcoa and the Greenland Home Rule Government. The three municipalities of Nuuk, Sisimiut and Maniitsoq, which have all selected potential locations, support the project, and will take active part in the continued work. Final recommendations will go to the Greenland Home Rule Government for ratification.

Upon completion, this development project would represent one of the largest investments in Greenland’s history, stimulate economic growth and manufacturing diversity, create up to 600 direct, stable jobs, and contribute to increase Greenland’s overall productivity and economic self-support.

About Greenland

Greenland stretches an area of 2,166,086 square kilometers, thus making it the largest island in the world. More than 80 percent of the country is covered by the massive ice cap. Although situated between Canada and Iceland, Greenland is historically, politically and economically closely related to Denmark. Today, Greenland’s popularly elected Home Rule Government possesses a high degree of autonomy.

With its present-day population of 57,000, mainly of Inuit origin, Greenland has in less than a century developed from a traditional hunting economy into a modern society, and presently holds one of the world’s most modern sea-going fishing fleets and emerging tourism and mining industries. Also, extensive oil exploration activities off Greenland’s West Coast will soon be underway. Greenland’s Arctic environment is particularly fragile, and the Greenland authorities scrutinize industrial ventures closely, cooperating with project developers to take appropriate measures to prevent and alleviate possible adverse effects to the environment.

About Alcoa

Alcoa (NYSE:AA) 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® wheels, fastening systems, precision and investment castings, structures and building systems. The company has 122,000 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