Alcoa 2013 Annual Report Download - page 126

As of December 31, 2013 and 2012, the net carrying value of temporarily idled smelting assets was $404 and $310,
representing 655 kmt and 547 kmt of idle capacity, respectively. Additionally, the net carrying value of permanently
idled smelting assets, representing 44 kmt, was written off in 2013 (see Note D). Also, the net carrying value of
temporarily idled refining assets was $60 and $68 as of December 31, 2013 and 2012, representing 1,216 kmt and
1,277 kmt of idle capacity, respectively.
I. Investments
December 31, 2013 2012
Equity investments $1,777 $1,782
Other investments 130 78
$1,907 $1,860
Equity Investments. As of December 31, 2013 and 2012, Equity investments included an interest in a project to
develop a fully-integrated aluminum complex in Saudi Arabia (see below), hydroelectric power projects in Brazil (see
Note N), a smelter operation in Canada (50% of Pechiney Reynolds Quebec, Inc.), bauxite mining interests in Guinea
(45% of Halco Mining, Inc.) and Brazil (18.2% of Mineração Rio do Norte S.A.), and a natural gas pipeline in
Australia (see Note N). Pechiney Reynolds Quebec, Inc. owns a 50.1% interest in the Bécancour smelter in Quebec,
Canada thereby entitling Alcoa to a 25.05% interest in the smelter. Through two wholly-owned Canadian subsidiaries,
Alcoa also owns 49.9% of the Bécancour smelter. Halco Mining, Inc. owns 100% of Boké Investment Company,
which owns 51% of Compagnie des Bauxites de Guinée. The investments in the bauxite mining interests in Guinea and
Brazil and the natural gas pipeline in Australia are held by wholly-owned subsidiaries of Alcoa World Alumina and
Chemicals (AWAC), which is owned 60% by Alcoa and 40% by Alumina Limited. In 2013, 2012, and 2011, Alcoa
received $89, $101, and $100, respectively, in dividends from its equity investments.
Alcoa and Saudi Arabian Mining Company (known as “Ma’aden”) have a 30-year joint venture shareholders’
agreement (automatic extension for an additional 20 years, unless the parties agree otherwise or unless earlier
terminated) setting forth the terms for the development, construction, ownership, and operation of an integrated bauxite
mine, alumina refinery, aluminum smelter, and rolling mill, in Saudi Arabia. Specifically, the project to be developed
by the joint venture will consist of: (i) a bauxite mine for the extraction of approximately 4,000 kmt of bauxite from the
Al Ba’itha bauxite deposit near Quiba in the northern part of Saudi Arabia; (ii) an alumina refinery with an initial
capacity of 1,800 kmt; (iii) a primary aluminum smelter with an initial capacity of 740 kmt; and (iv) a rolling mill with
an initial capacity of 380 kmt. The refinery, smelter, and rolling mill are being constructed in an industrial area at Ras
Al Khair on the east coast of Saudi Arabia. The facilities will use critical infrastructure, including power generation
derived from reserves of natural gas, as well as port and rail facilities, developed by the government of Saudi Arabia.
First production from the rolling mill and the smelter occurred in December 2013 and 2012, respectively. For the mine
and refinery, first production is expected in 2014.
In 2012, Alcoa and Ma’aden agreed to expand the capabilities of the rolling mill to include a capacity of 100 kmt
dedicated to supplying aluminum automotive, building and construction, and foil stock sheet. First production related
to the expanded capacity is expected in 2014. This expansion is not expected to result in additional equity investment
(see below) due to significant savings anticipated from a change in the project execution strategy of the initial 380 kmt
capacity of the rolling mill.
The joint venture is owned 74.9% by Ma’aden and 25.1% by Alcoa and consists of three separate companies as
follows: one each for the mine and refinery, the smelter, and the rolling mill. Following the signing of the joint venture
shareholders’ agreement, Alcoa paid Ma’aden $80 representing the initial investment in the project. In addition, Alcoa
paid $56 to Ma’aden, representing Alcoa’s pro rata share of certain agreed upon pre-incorporation costs incurred by
Ma’aden before formation of the joint venture.
110