Alcoa 2010 Annual Report Download - page 44

ability to fix the deadline depending on the development of negotiations. Alcoa and Ligestra agreed to a settlement in
December 2008 with respect to the Feltre site. Ligestra paid the sum of 1.08 million Euros and Alcoa committed to
clean up the site. Further postponements have been granted by the Court of Rome, and the next hearing is fixed for
November 2011. In the meantime, in December 2009, Alcoa Trasformazioni S.r.l. and Ligestra reached an initial
agreement for settlement of the liabilities related to Fusina (negotiations related to Portovesme continue). The
settlement would also allow Alcoa to settle the 2006 civil suit by the MOE and MOPW for the environmental damages
pending before the Civil Court of Venice. 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. On February 7, 2011, a
further and more detailed settlement relating to Fusina was reached. This settlement provides a more detailed cost
allocation between the parties, allocating 80% and 20% of the remediation costs to Ligestra and Alcoa, respectively.
The agreements are contingent upon final acceptance of the remediation project by the MOE. To provide time for
settlement with Ligestra, the Minister of Environment and Alcoa jointly requested a postponement of the hearing in the
Venice trial, assuming that the case will be closed. The Civil Court of Venice accepted the postponement and fixed the
new hearing date for April 11, 2011. Alcoa believes that it has made adequate reserves for these matters.
As previously reported, on November 30, 2010, Alcoa Alumínio S.A. (Alumínio) received service of a lawsuit that had
been filed by the public prosecutors of the State of Para in Brazil in November 2009. The suit names the company and
the State of Para, which, through its Environmental Agency, had issued the operating license for the company’s new
bauxite mine in Juruti. The suit concerns the impact of the project on the region’s water system and alleges that certain
conditions of the original installation license were not met by the company. In the lawsuit, plaintiffs requested a
preliminary injunction suspending the operating license (originally issued in September 2009 and renewed for two
years in September 2010) and ordering payment of compensation. On April 14, 2010, the court denied plaintiffs’
request. The company believes that the suit is meritless and intends to defend it vigorously. The State of Para also
intends to defend the licensing of the project. This proceeding is in its preliminary stage and the company is unable to
reasonably predict an outcome or to estimate a range of reasonably possible loss.
Other Matters
As previously reported, along with various asbestos manufacturers and distributors, Alcoa and its subsidiaries as
premises owners are defendants in several hundred active lawsuits filed on behalf of persons alleging injury
predominantly as a result of occupational exposure to asbestos at various company facilities. In addition, an Alcoa
subsidiary company has been named, along with a large common group of industrial companies, in a pattern complaint
where the company’s involvement is not evident. Since 1999, several thousand such complaints have been filed. To
date, the subsidiary has been dismissed from almost every case that was actually placed in line for trial. Alcoa, its
subsidiaries and acquired companies, all have had numerous insurance policies over the years that provide coverage for
asbestos based claims. Many of these policies provide layers of coverage for varying periods of time and for varying
locations. Alcoa has significant insurance coverage and believes that its reserves are adequate for its known asbestos
exposure related liabilities. The costs of defense and settlement have not been and are not expected to be material to the
operations, cash flows, and financial condition of the company.
As previously reported, in July 2006, the European Commission (EC) announced that it had opened an investigation to
establish whether an extension of the regulated electricity tariff granted by Italy to some energy-intensive industries
complies with European Union (EU) state aid rules. The Italian power tariff extended the tariff that was in force until
December 31, 2005 through November 19, 2009 (Alcoa has been incurring higher power costs at its smelters in Italy
subsequent to the tariff end date). The extension was originally through 2010, but the date was changed by legislation
adopted by the Italian Parliament effective on August 15, 2009. Prior to expiration of the tariff in 2005, Alcoa had been
operating in Italy for more than 10 years under a power supply structure approved by the EC in 1996. That measure
provided a competitive power supply to the primary aluminum industry and was not considered state aid from the
Italian Government. The EC’s announcement expressed concerns about whether Italy’s extension of the tariff beyond
2005 was compatible with EU legislation and potentially distorted competition in the European market of primary
aluminum, where energy is an important part of the production costs.
On November 19, 2009, the EC announced a decision in this matter stating that the extension of the tariff by Italy
constituted unlawful state aid, in part, and, therefore, the Italian Government is to recover a portion of the benefit
36