Alcoa 2012 Annual Report Download - page 32

For each metric ton of aluminum produced, Alcoa consumes the following amounts of the identified raw material
inputs (approximate range across relevant facilities):
Raw Material Units Consumption per MT of Aluminum
Alumina mt 1.92 ±0.02
Aluminum fluoride kg 16.5 ±6.5
Calcined petroleum coke mt 0.36 ±0.02
Cathode blocks mt 0.006 ±0.002
Electricity kWh 12.9 – 17.0
Liquid pitch mt 0.10 ±0.03
Natural gas mcf 2.0±1.0
Explanatory Note: Certain aluminum produced by Alcoa also includes alloying materials. Because of the number of
different types of elements that can be used to produce alloy aluminum products, providing a range of such elements
would not be meaningful. With the exception of a very small number of internally used products, Alcoa produces its
alloys in adherence to an Aluminum Association standard. The Aluminum Association, of which Alcoa is an active
member, uses a specific designation system to identify alloy types. In general, each alloy type has a major alloying
element other than aluminum but will also have other constituents as well, but of lesser amounts.
Energy
Employing the Bayer process, Alcoa refines alumina from bauxite ore. Alcoa then produces aluminum from the alumina
by an electrolytic process requiring substantial amounts of electric power. Energy accounts for approximately 25% of the
Company’s total alumina refining production costs. Electric power accounts for approximately 26% of the Company’s
primary aluminum production costs. Alcoa generates approximately 20% of the power used at its smelters worldwide and
generally purchases the remainder under long-term arrangements. The paragraphs below summarize the sources of power
and the long-term power arrangements for Alcoa’s smelters and refineries.
North America – Electricity
The Deschambault, Baie Comeau, and Bécancour smelters in Québec purchase electricity under existing contracts that
run through 2015, which will be followed by long-term contracts with Hydro-Québec first executed in December 2008,
revised in 2012 and expiring in 2040, provided that Alcoa completes the modernization of the Baie Comeau smelter by
September 2016. The smelter located in Baie Comeau, Québec has historically purchased approximately 65% of its
power needs under the Hydro-Québec contract, receiving the remainder from a 40% owned hydroelectric generating
company, Manicouagan Power Limited Partnership (MPLP). Beginning on January 1, 2011, these percentages changed
such that approximately 80% is sourced from Hydro-Québec, with the remaining 20% from MPLP.
The Company’s wholly-owned subsidiary, Alcoa Power Generating Inc. (APGI), generates approximately 29% of the
power requirements for Alcoa’s smelters operating in the U.S. The Company generally purchases the remainder under
long-term contracts. APGI owns and operates the Yadkin hydroelectric project, consisting of four dams in North
Carolina. In November 2012, APGI finalized the sale of its Tapoco Hydroelectric Project to Brookfield Renewable
Energy Partners.
The relicensing process continues for Yadkin. In 2007, APGI filed with the Federal Energy Regulatory Commission
(FERC) a Relicensing Settlement Agreement with the majority of the interested stakeholders that broadly resolved
open issues. The National Environmental Policy Act process is complete, with a final environmental impact statement
having been issued in April 2008. The remaining requirement for the relicensing was the issuance by North Carolina of
the required water quality certification under Section 401 of the Clean Water Act. The Section 401 water quality
certification was issued on May 7, 2009, but was appealed, and has been stayed since late May 2009 pending
substantive determination on the appeal. On December 1,
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