Alcoa 2015 Annual Report Download - page 158

Other. In addition to the matters discussed above, various other lawsuits, claims, and proceedings have been or may be
instituted or asserted against Alcoa, including those pertaining to environmental, product liability, safety and health,
and tax matters. While the amounts claimed in these other matters may be substantial, the ultimate liability cannot now
be determined because of the considerable uncertainties that exist. Therefore, it is possible that the Company’s liquidity
or results of operations in a particular period could be materially affected by one or more of these other matters.
However, based on facts currently available, management believes that the disposition of these other matters that are
pending or asserted will not have a material adverse effect, individually or in the aggregate, on the financial position of
the Company.
Commitments
Investments. Alumínio, a wholly-owned subsidiary of Alcoa, is a participant in four consortia that each owns a
hydroelectric power project in Brazil. The purpose of Alumínio’s participation is to increase its energy self-sufficiency
and provide a long-term, low-cost source of power for its two smelters (see below) and one refinery. These projects are
known as Machadinho, Barra Grande, Serra do Facão, and Estreito.
Alumínio committed to taking a share of the output of the Machadinho and Barra Grande projects each for 30 years
and the Serra do Facão and Estreito projects each for 26 years at cost (including cost of financing the project). In the
event that other participants in any 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.
The Machadinho project reached full capacity in 2002. Alumínio’s investment in this project is 30.99%, which entitles
Alumínio to approximately 120 megawatts of assured power. The Machadinho consortium is an unincorporated joint
venture, and, therefore, Alumínio’s share of the assets and liabilities of the consortium are reflected in the respective
lines on the accompanying Consolidated Balance Sheet.
The Barra Grande project reached full capacity in 2006. Alumínio’s investment in this project is 42.18% and is
accounted for under the equity method. This entitles Alumínio to approximately 160 megawatts of assured power.
Alumínio’s total investment in this project was $94 (R$374) and $132 (R$355) at December 31, 2015 and 2014,
respectively.
The Serra do Facão project reached full capacity in 2010. Alumínio’s investment in this project is 34.97% and is
accounted for under the equity method. This entitles Alumínio to approximately 65 megawatts of assured power.
Alumínio’s total investment in this project was $52 (R$208) and $66 (R$178) at December 31, 2015 and 2014,
respectively.
The Estreito project reached full capacity in March 2013. Alumínio’s investment in this project is 25.49%, which
entitles Alumínio to approximately 150 megawatts of assured power. The Estreito consortium is an unincorporated
joint venture, and, therefore, Alumínio’s share of the assets and liabilities of the consortium are reflected in the
respective lines on the accompanying Consolidated Balance Sheet. As of December 31, 2015, construction of the
Estreito project is essentially complete.
Prior to October 2013, Alumínio’s power self-sufficiency satisfied approximately 70% of a total energy demand of
approximately 690 megawatts from two smelters (São Luís (Alumar) and Poços de Caldas) and one refinery (Poços de
Caldas) in Brazil. Since that time, the total energy demand has declined by approximately 675 megawatts due to
capacity curtailments of both smelters in both 2013 and 2014, as well as the eventual permanent closure of the Poços
de Caldas smelter in 2015.
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