Alcoa 2010 Annual Report Download - page 122

the site under a consent order with the Washington Department of Ecology (WDE). In February 2008, Evergreen
notified Alcoa that it had identified numerous areas containing contamination that predated 1987.
Separately, in September 2008, Alcoa completed a Remedial Investigation/Feasibility Study (RI/FS) under the
Washington State Model Toxics Control Act and negotiated a consent decree with the WDE, which requires Alcoa to
complete cleanup of PCB contaminated sediments in the Columbia River as well as remediate soil contamination in
upland portions of the Vancouver property.
In late 2008, Alcoa started cleanup work on the Columbia River and discovered additional contamination and waste
materials along the shoreline area and in upland areas. In addition, Evergreen presented additional cost estimates for
contaminated areas that were discovered since March 2008.
As a result of all of the above items related to the former Vancouver site, Alcoa increased the environmental reserve by
$16 in 2008.
While continuing the cleanup work on the Columbia River in early 2009, Alcoa discovered more contamination and
waste materials, resulting in a $2 increase to the environmental reserve. Later in 2009, cleanup work was completed
related to the Evergreen property, the Columbia River, and the upland portions of the Vancouver property. Alcoa
submitted a final report on this cleanup work to the WDE near the end of 2009 satisfying the remediation requirements
of the consent decree.
On March 17, 2010, Alcoa received a letter from the WDE stating that the work performed by Alcoa related to the
Columbia River and the upland portions of the Vancouver property met all of the requirements of the consent decree,
as well as the industrial cleanup standards under the Washington State Model Toxics Control Act. No additional
reserve adjustment was necessary.
Fusina and Portovesme, Italy—In 1996, Alcoa acquired the Fusina smelter and rolling operations and the Portovesme
smelter, both of which are owned by Alcoa’s subsidiary Alcoa Trasformazioni S.r.l., from Alumix, an entity owned by
the Italian Government. At the time of the acquisition, Alumix indemnified Alcoa for pre-existing environmental
contamination at the sites. In 2004, the Italian Ministry of Environment (MOE) issued orders to Alcoa Trasformazioni
S.r.l. and Alumix for the development of a clean-up plan related to soil contamination in excess of allowable limits
under legislative decree and to institute emergency actions and pay natural resource damages. Alcoa Trasformazioni
S.r.l. appealed the orders and filed suit against Alumix, among others, seeking indemnification for these liabilities
under the provisions of the acquisition agreement. In 2009, Ligestra S.r.l., Alumix’s successor, and Alcoa
Trasformazioni S.r.l. agreed to a stay on the court proceedings while investigations were conducted and negotiations
advanced towards a possible settlement. In December 2009, Alcoa Trasformazioni S.r.l. and Ligestra S.r.l. reached an
agreement for settlement of the liabilities related to Fusina while negotiations continue related to Portovesme. The
agreement outlines an allocation of payments to the MOE for emergency action and natural resource damages and the
scope and costs for a proposed soil remediation project, which was formally presented to the MOE in mid-2010. The
agreement is contingent upon final acceptance of the remediation project by the MOE. As a result of entering into this
agreement, Alcoa increased the reserve by $12 for Fusina. Additionally, due to new information derived from the site
investigations conducted at Portovesme in 2009, Alcoa increased the reserve by $3.
Investments. Alumínio, a wholly-owned subsidiary of Alcoa, is a participant in several hydroelectric power
construction projects in Brazil for purposes of increasing its energy self-sufficiency and providing a long-term,
low-cost source of power for its facilities. Two of these projects, Machadinho and Barra Grande, were completed in
2002 and 2006, respectively.
Alumínio committed to taking a share of the output of the Machadinho and Barra Grande projects each for 30 years at
cost (including cost of financing the project). In the event that other participants in either one of these projects fail to
fulfill their financial responsibilities, Alumínio may be required to fund a portion of the deficiency. In accordance with
the respective agreements, if Alumínio funds any such deficiency, its participation and share of the output from the
respective project will increase proportionately.
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