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Moving to Sustainable Development

Pennsylvania Industries of the Future

March 25, 2003

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Alcoa Lost Workday Incident RateInjuries per 200,000 work hours

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

LWD rate 1.856 1.482 1.246 1.109 0.989 0.81 0.771 0.752 0.458 0.488 0.451 0.36 0.233 0.28 0.27 0.15

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

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What is Sustainable Development?

• “Sustainable development seeks to meet the needs and aspirations of the present without compromising the ability to meet those of the future.” WCED (1987)

• Triple bottom line– Financial

– Social

– Environment

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Financial

• “Far from requiring the cessation of economic growth, it recognizes that the problems of poverty and underdevelopment cannot be solved unless we have a new era of growth in which developing countries play a large role and reap large benefits.” WCED (1987)

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Social

• Corporate Social Responsibility• Connecting to stakeholders, not just

shareholders• Improving the wellness in your communities

– Literacy– Hunger– Drought– Health Care– Education

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Environment

• Reducing our environmental footprint– Zero discharge– Zero waste– Zero emissions

• Greening of our products– Packaging– Efficiency– Recycleability

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The Business Case

• In the 2000 Sydney Olympics, the Olympic Committee came close to banning aluminum from the Olympics. It was viewed as a “dirty metal”

• Under pressure from Greenpeace, Coke agreed to switch to “clean” refrigeration units by the 2004 Olympic games in Athens

• Stakeholders can impact your “license to operate”• Since 1997 The DJSI has out performed the DJGI

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Environmental Costs of Operation

• Existing accounting systems do not allow easy identification of all environmental costs

• Most data suggests that your true environmental costs are 3X the direct costs that you can identify easily i.e. waste disposal, salary of environmental engineer, etc.

…you can't buy credibility… you have to be credible through actions and transparent, open communications, conveyed through media by independent advocates…

Edelman

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Aluminum

A Sustainable Material

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Specific Electricity Requirements Down

0

5

10

15

20

25

1950 2000

kWh

/kg

20.513

Improved process controlBetter cell design

Increase electrical conversion efficiency

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Aluminum - Emissions

• 60% reduction in Greenhouse gases between 1990 and 2000

• Since 1980, fluoride emissions have been reduced nearly 80%

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0%

20%

40%

60%

80%

100%

1990 1992 1994 1996 1998 2000

Year

Sp

eci

fic

PF

C E

mis

sio

ns

(Pe

rce

nt

of

1990

t-e

q C

O2

/t A

L)

100 year GWPs

CF4 = 6,500

C2F6 = 9,200

• IAI member companies reduced specific PFC emissions by 60% from 4.0 to 1.6 t CO2-eq/t Al from 1990 to 2000

• Worldwide specific PFC emissions reduction estimated at 50% for same period

Incremental Improvements Specific Emissions of PFCs

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Cathode Block

Molten Aluminium

Feeder

GasesAnode

Electrolyte

GHG from Primary Aluminium Production

Two PFC (perfluorocarbon compounds - CF4 and C2F6) contribute about 48% of primary aluminium GHG emissions

Anode Carbon

1.7 tonnes of

CO2eq/t AlElectricity Input

14.4-15.6 MWh/t Al

PFC Emissions

1.6 tonnes of CO2eq/t Al

Greenhouse Gas Emissions “Inert Anode” - Primary Aluminium Production

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Aluminum - Waste

• Significant technology breakthroughs in treating spent potlinings and using as aggregate materials

• Working hard to address re-use of bauxite residue

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Aluminum - Packaging

• Aluminum foil and other packaging contributes to the conservation of food supply

• Packaging saves 10X more waste than it creates

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Lightweighting Al Containers = Lower Life Cycle Can Burdens

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Aluminum - Efficiency

• Aluminum has unique characteristic of being both lightweight and strong

• Every 1kg of aluminum replacing 2kg of steel in an automobile saves 20 kg of greenhouse gases over the life of the car

• If we save 1000 kg of greenhouse gases by using less gasoline, we also save

– 15800 MJ of crude oil resources

– 933 kg of water

– 1.8 kg ethylene equivalents of ozone forming hydrocarbons

– 2.1 kg SO2 equivalents

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North American Light Vehicles

Aluminum Content History and Forecast

81 83 84 87

100 11

4

118

120 13

0

133

135

137

139

141

145

150

157

165 17

4 183 19

2 202 21

2 224 23

3

242

251 25

8

265 27

4

0

100

200

300

400

Pou

nds

Per

Veh

icle

73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 '00 '01 '02

Calendar Year

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Aluminum - Recycling

Important to Capture the Value of Aluminium

Recycling

• Recycling only needs 5% of the energy as primary production

• Recycling of aluminium saves 84 million tonnes of greenhouse gases every year

100%

5%

0%

20%

40%

60%

80%

100%

New Aluminium Recycled Aluminium

Iron

Magnet

Fines Screen

Eddy Current

Nonferrousconcentrate

Residue

( Fluff )

Air Suction

Shredder

Energy

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Aluminum - Recycling

• Approximately 2/3 of all aluminum produced since 1886, 440 million tons of 689 million tons, is still in active us

• Between 1992 and 2001, primary aluminum production rose 30%, but recycling grew more than 400%

• Alcoa has committed to making 50% of its products from recycled aluminum by 2020

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Alcoa’s Approach

– 60% reduction in SO2

– 50% reduction in VOC’s

– 30% reduction in NOx

– 80% reduction in Mercury emissions

– 50% reduction in landfilled waste

– 60% reduction in process water use

– 25% reduction in greenhouse gases*

– Zero non-compliance incident

– ISO 14001 type EMS at all locations

Alcoa has set a number of strategic metrics related to environmental performance:

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Challenges

• Water use and supply• Energy efficiency• Green power• Zero landfilled waste• Zero emissions• Improved health of employees and communities• Every employee is safe

SUSTAINABLE BUSINESS