Alcoa 2010 Annual Report Download - page 33

the China and Russia growth projects. Management believes that these projects will be beneficial to Alcoa, however,
there is no assurance that these benefits will be realized, whether due to unfavorable global economic conditions,
currency fluctuations, or other factors, or that the remaining construction, start-up activities and testing on the Estreito
project will be completed as planned by the targeted completion date.
Alcoa has made and may continue to plan and execute acquisitions and divestitures and take other actions to streamline
its portfolio. There can be no assurance that such actions will be undertaken or completed in their entirety as planned or
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. Alcoa may face barriers to exit from unprofitable businesses,
including high exit costs or objections from various stakeholders.
Alcoa may not be able to successfully realize goals established in each of its four business segments or by the
dates targeted for such goals.
Alcoa has announced targets for each of its four major business segments, including the following:
• over the next five years, driving the alumina business down into the first quartile of the industry cost curve
and realizing profit levels (per mt) that are beyond its recent historic norms;
• by 2015, driving the smelting business down into the second quartile of the industry cost curve and
increasing profitability (per mt) beyond the company’s past ten year average;
• by 2013, increasing the revenues of the Flat-Rolled Products segment by $2.5 billion by growing 50% faster
than the market and achieving performance levels above its historic norms; and
• by 2013, increasing the revenues of the Engineered Products and Solutions segment by $1.6 billion, through
market growth, new product introductions, and share gains.
There can be no assurance that all of these initiatives will be completed as anticipated or that Alcoa will be able to
successfully realize these goals at the targeted levels or by the projected dates.
Joint ventures and other strategic alliances may not be successful.
Alcoa participates in joint ventures and has formed strategic alliances and may enter into other similar 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 complex (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 fully implement its financing plans or to achieve financial close for the phases of the project and the consequences of
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