Alcan proceeds with preparations for its COEGA Aluminium smelter project

Alcan announced today that it has signed a contract worth more than US$100 million with a joint venture consisting of SNC-Lavalin, Hatch, and Murray & Roberts for the front-end engineering design (FEED) and management of the first phase of the proposed COEGA Aluminium smelter (360,000 tonnes/yr). "Alcan is pleased to announce the signing of this contract, moving ahead as planned with the COEGA Aluminium smelter project. The joint venture of SNC-Lavalin, Hatch, and Murray & Roberts brings together a unique combination of technical expertise, South African presence and project experience," said Michel Jacques, President and CEO, Alcan Primary Metal Group. SNC-Lavalin and Hatch already have offices in South Africa, as does Murray & Roberts, a leading South Africa-based engineering and contracting Group. The joint venture provides significant experience working on projects on the African continent. The engineering team will be based in South Africa, after an initial start-up phase of approximately six months in Montreal. "Alcan looks forward to working with the joint venture partners as they each share Alcan's commitment to environment, health, and safety and to maximizing the project's benefits for South Africa," said Brent Hegger, CEO of COEGA Aluminium. "Together the partners have demonstrated this commitment by setting the target of zero Lost Time Accidents during the construction," he added. The FEED is expected to take nine months to complete and will provide firm cost estimates and a critical path for construction, pending the Notice to Proceed (NTP) from the COEGA Aluminium joint venture board. The second phase of the project, which would bring aluminum production to an estimated 720,000 tonne/yr is also currently in development. COEGA Project Status Alcan signed a long-term energy agreement for the proposed smelter with Eskom in November, 2006. The Industrial Development Corporation of South Africa (IDC) will have a 15-percent stake. An additional five percent has been reserved for Broad Based Black Economic Empowerment (BBBEE) partners. Alcan is also in discussions with additional potential partners. The project has an estimated total cost of US$2.7 billion for both phases and project financing is expected to be used. The greenfield project will use the latest version of Alcan's proprietary AP3X series smelting technology, with world-leading environment, health and safety performance. Greenhouse gas (GHG) emissions generated by AP technology and energy consumption are among the lowest in the world (based on the International Aluminium Institute's 2003 Survey results and CRU 2006 data, respectively). Already, 6 million tonnes of global capacity are equipped with AP technology and a further one million tonnes of additional capacity are either under construction or being commissioned. Phase I construction of the smelter is expected to begin in 2008 and is subject to the successful completion of the project's next steps and financial arrangements. Phase I is scheduled to come on line in 2010. Alcan Inc. (NYSE, TSX: AL) is a leading global materials company, delivering high quality products and services worldwide. With world-class technology and operations in bauxite mining, alumina processing, primary metal smelting, power generation, aluminum fabrication, engineered solutions as well as flexible and specialty packaging, today's Alcan is well positioned to meet and exceed its customers' needs. Alcan is represented by 68,000 employees, including its joint ventures, in 61 countries and regions, and posted revenues of US$23.6 billion in 2006. The Company has featured on the Dow Jones Sustainability World Index consecutively since 2003.