PITTSBURGH, PA - Alcoa Inc. (NYSE:AA) today announced it has finalized agreements with the Government of Iceland and Landsvirkjun, Iceland's National Power Company, to build the 322,000 metric tons per year Fjardaal aluminum facility in Eastern Iceland. Agreements were signed over the weekend in Iceland.

Alcoa's Fjardaal aluminum facility is part of the most extensive single investment in the history of Iceland, and is scheduled to begin production in 2007. The facility is being designed to be the most environmentally friendly aluminum production facility in the world. The cost of the Fjardaal aluminum facility will be approximately $1.1 billion over the next four years.

Alcoa's Fjardaal aluminum will provide approximately 450 jobs and generate approximately 300 additional full-time equivalent positions in service-related industries, for a total of 750 new jobs. Construction of the aluminum plant in East Iceland is part of an overall economic plan by the government of Iceland to improve living standards from health care to infrastructure to communications -- not just for the region, but also for all of Iceland. Those new jobs will help strengthen and diversify the economy of East Iceland, which has seen declining employment and out-migration as traditional jobs in fisheries and farming have declined. The project will create hundreds of construction jobs in the region, helping fuel economic growth. Smelter construction is scheduled to begin in early 2005.

The new Alcoa plant will have significantly less environmental impact than an earlier design for the location for four basic reasons:

- Alcoa will not dispose of spent pot lining, a by-product of the aluminum production process, on the site in Iceland.
- Carbon anodes will not be manufactured at the Iceland plant, eliminating a source of sulfur dioxide (SO2), nitrogen oxide (NOX) and hydrocarbon (PAH) emissions.
- Alcoa is designing the plant to achieve strict, self-imposed sustainable development objectives, including zero process water discharge.
- The annual production level of the plant will be approximately 25% below that planned for the original plant.

While the Alcoa plant will bolster the local economy in East Iceland, it will not require as many resources as the original design. The smaller size of the Alcoa facility, in addition to the state-of-the art technology planned for Fjardaal, ensures that it will consume less electricity (22% less), fuel (33% less) and water (58% less) than the original proposal. Alcoa's study also projects that carbon dioxide (CO2) emissions will be 25% less, PFC emissions will be 40% less, and nitrogen oxide (NOX) will be 80% less than under the original proposal. The company's operating permit establishes stringent gaseous fluoride limits in ambient air and Fjardaal expects to achieve performance targets that are among the lowest in the world.

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina, 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 as a single solution to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) aluminum foil, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, precision castings, and electrical distribution systems for cars and trucks. The company has 127,000 employees in 39 countries. For more information go to www.alcoa.com

Forward Looking Statement
Certain statements in this release relate to future events and expectations and as such constitute forward-looking statements involving known and unknown risks and uncertainties that may cause actual results, performance or achievements of Alcoa to be different from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are summarized in Alcoa's SEC reports.

Alcoa Inc.

Alcoa Inc.

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, Alcoa also markets consumer brands including Reynolds Wrap® foils and plastic wraps, Alcoa® wheels, and Baco® household wraps. Among its other businesses are closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 129,000 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

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