Government announces joint feasibility study with Alcoa regarding development 
of the Lower Churchill hydro project

The Government of Newfoundland and Labrador, Newfoundland and Labrador Hydro, and Alcoa Inc. have signed a Letter of Intent to undertake a joint review of the feasibility of the construction of hydroelectric facilities on the lower Churchill River, including Gull Island and Muskrat Falls, and the economic viability of establishing an aluminum production facility or facilities in Newfoundland and Labrador. 

The announcement was made today by Deputy Premier Beaton Tulk, Minister of Industry, Trade and Rural Development, Lloyd Matthews, Minister of Mines and Energy, and Alan C. Renken, vice president of Alcoa and president, Primary Metals. Also present at the announcement was Bill Wells, president and CEO of Newfoundland and Labrador Hydro.

Alcoa, a world leader in the production of aluminum, will study the economic viability of building an aluminum smelter or smelters in the province, purchasing energy from the Lower Churchill hydro project, and possibly investing in new hydroelectric infrastructure in Labrador.

Minister Tulk stated that, in addition to facilitating the development of our untapped hydro resource in Labrador, a development that includes a multi-national corporation such as Alcoa represents an economic development opportunity for the province. "If this proposal proves to be a viable option, the province will be presented with a great economic development opportunity with additional long-term employment resulting from smelting operations in the province."

Minister Matthews stated that the responsible development of the province's natural resources is a priority of government. "Government is currently reviewing all development options for the Lower Churchill hydro project. This feasibility review will provide the necessary information to make an informed decision regarding this proposal." 

The minister added that he is hopeful the feasibility study will have a positive outcome but emphasized that this is just the first step. "We are not beginning commercial negotiations at this time. However, if the results of the feasibility review warrant it, then we will take the next steps towards negotiating a commercial arrangement with Alcoa. It is premature to make any predictions on the outcome now, we expect the results of the review by October 2001."

According to Mr. Renken, "This feasibility study could mark a milestone partnership for both Newfoundland and Labrador and Alcoa."

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum, and alumina. The company serves customers worldwide in the packaging, consumer, automotive, aerospace, construction and distribution markets. Alcoa's stated values begin with integrity, respect, safety and health, and the protection of the environment. It has 142,000 employees in 37 countries.

Media contact:

Josephine Cheeseman, Industry, Trade and Rural Development, (709) 729-4570
Tara Laing, Mines and Energy, (709) 729-4890
Sylvie Gendreau, Alcoa North East Region - Canada, (514) 287-9407
Joyce A. Saltzman, Alcoa, (412) 553-4467
Charles D. McLane Jr., Investor Relations, (212) 836-2674

SYNOPSIS 

Synopsis of the Letter of Intent between the Government of Newfoundland and Labrador, 
Newfoundland and Labrador Hydro (NLH) and Alcoa Inc.

The Letter of Intent is an agreement between the parties noted above to review the feasibility of the construction of (1) hydroelectric generating facilities on the lower Churchill River in Labrador and related transmission infrastructure and (2) an aluminum production / processing facility or facilities in Newfoundland and Labrador by Alcoa Inc.

The Government of Newfoundland and Labrador, NLH and Alcoa will share technical and financial information in order to review the feasibility of developing the hydro projects in Labrador and using the hydroelectricity from these projects to meet the energy requirements of Alcoa at the aluminum smelter or smelters to be located in Labrador or on the island of Newfoundland. 

The parties will share the results of their analysis and cooperate in the feasibility review process.

Alcoa will incorporate in its analysis state of the art environmental technologies.

The feasibility reviews are to be completed by October 1, 2001. If at that time the parties agree the results warrant it, then they will undertake commercial negotiations on the possibility of co-investment in the hydro project, the sale of power from the project to Alcoa for use in the aluminum smelter(s) in Newfoundland and Labrador, and possibly meeting Alcoa's future energy needs outside the province. 

During the term of the Letter of Intent and any commercial negotiations which may result, the Government of Newfoundland and Labrador and NLH agree not to hold similar discussions with a metal industry competitor of Alcoa. 

All commercially sensitive information generated in the review and provided to the other parties shall be kept confidential for two years.

2001 07 26                                                             11:05 a.m.