Alcoa 2009 Annual Report Download - page 32

beneficial to Alcoa or that targeted completion dates will be met. In addition, acquisitions present significant
challenges and risks relating to the integration of the business into the company, and there can be no assurances that the
company will manage acquisitions successfully.
Joint ventures and other strategic alliances may not be successful.
Alcoa participates in joint ventures and has formed strategic alliances and may enter into additional such arrangements
in the future. For example, in December 2009, Alcoa announced that it formed a joint venture with Ma’aden, the Saudi
Arabian Mining Company, to develop a fully integrated aluminum industry (including a bauxite mine, alumina
refinery, aluminum smelter and rolling mill) in the Kingdom of Saudi Arabia. Although the company has, in relation to
that joint venture and its other existing joint ventures and strategic alliances, sought to protect its interests, joint
ventures and strategic alliances necessarily involve special risks. Whether or not Alcoa holds majority interests or
maintains operational control in such arrangements, its partners may:
• have economic or business interests or goals that are inconsistent with or opposed to those of the company;
• exercise veto rights so as to block actions that Alcoa believes to be in its or the joint venture’s or strategic
alliance’s best interests;
• take action contrary to Alcoa’s policies or objectives with respect to its investments; or
• as a result of financial or other difficulties, be unable or unwilling to fulfill their obligations under the joint
venture, strategic alliance or other agreements, such as contributing capital to expansion or maintenance
projects.
In addition, the joint venture with Ma’aden is subject to risks associated with large infrastructure construction projects,
including the risk of potential adverse changes in the financial markets that could affect the ability of the joint venture
to implement its financing plans or to achieve financial close for the phases of the project and the consequences of
non-compliance with the timeline and other requirements under the gas supply arrangements for the joint venture.
There can be no assurance that the project will be funded, completed within budget or by the targeted completion date
or that it or Alcoa’s other joint ventures or strategic alliances will be beneficial to Alcoa, whether due to the above-
described risks, unfavorable global economic conditions, lack of financing, increases in construction costs, currency
fluctuations, political risks, or other factors.
Alcoa faces significant competition.
As discussed in Part I, Item 1. (Business – Competitive Conditions) of this report, the markets for most aluminum
products are highly competitive. Alcoa’s competitors include a variety of both U.S. and non-U.S. companies in all
major markets. In addition, aluminum competes with other materials, such as steel, plastics, composites, and glass,
among others, for various applications in Alcoa’s key markets. The willingness of customers to accept substitutions for
the products sold by Alcoa, the ability of large customers to exert leverage in the marketplace to affect the pricing for
fabricated aluminum products, or other developments by or affecting Alcoa’s competitors or customers could affect
Alcoa’s results of operations. In addition, Alcoa’s competitive position depends, in part, on the company’s access to an
economical power supply to sustain its operations in various countries.
Further metals industry consolidation could impact Alcoa’s business.
The metals industry has experienced consolidation over the past several years, and there may be further industry
consolidation in the future. Although current industry consolidation has not negatively impacted Alcoa’s business,
further consolidation in the aluminum industry could possibly have negative impacts that we cannot reliably predict.
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