Evgeny Luzov, Country Manager ALCOA RUSSIA April, 2008 Moscow

1. Innovative Development of the Russian Industry: Major Achievements & Challenges of Alcoa in Russia The 9th Annual AmCham Investment Conference Evgeny Luzov, Country Manager ALCOA RUSSIA April, 2008 Moscow

2. The Innovative Direction of the Russian Economy Positive Features of the Russian Economy: Negative Features of the Russian Economy: • Inflation: 11,9% in 2007;on a rise in 2008 • Dependence on the raw materials export: 67,7% of Russian export is natural resources • Low investment in the R&D: 10% of all investment (Europe: 50% of all investment) • Decreasing population and workforce • Low productive efficiency • GDP Growth: av. 7% over the last 5 yrs. • Gold & Currency Reserves: in excess of 511 billion USD (3rd in the world) • FDI: 47 billion USD in 2007 (2nd in the world after China)

3. The Innovative Direction of the Russian Economy • New Course in Diversifying the Russian Economy: • Presidential and Government Initiatives: • «Four Is: Infrastructure, Innovations, Investment, Institutes» • Creation of the National Industrial Champions: UAC, Rostechnologia, etc. • Investment in infrastructure & public-private partnerships

4. Alcoa today… • Each day there are 116,000 Alcoans, working in 450 communities, in 44 countries that will …

5. Alcoa today… • Mine 85,800 tons of bauxite and 27,300 tons of coal • Refine 34,300 tons of alumina • Produce 9,550 tons of aluminum • Recycle 2,300 tons of aluminum • Manufacture 8,810 tons of aluminum products • Assemble harnesses for 20,400 vehicles • Generate 96,000 MWH of electricity • Purchase $27 million worth in goods and services

6. On the way of innovation: ALCOA IN RUSSIA • Investments • High level industrial expertise • Advanced technologies • Best practice • New markets • Corporate values

7. On the way of innovation: Investment program $ 767 mln. $ 257mln. - INITIAL INVESTMENTS:acquisition of the Samara Metallurgical and Belaya Kalitva plants $290 mln. - 2005-2007 $ 220 mln. - 2008 • Reconstruction& modernization • New equipment and technologies • Alcoa Business System (ABS: TPM, Kaizen) • Improvement of product quality and production efficiency to global standards • Environment, Health and Safety System (EHS) • Employee training and development of workforce potential The share of Belaya Kalitva Plantin the mill domestic market is nearly 10% The share of Samara Plantin the mill domestic market is nearly 40% 50% aluminum market of Russia

8. On the way of innovation Investment program: Results 2005 2007

9. On the way of innovation The Largest Forging Press in the World

10. On the way of innovation The Largest Extrusion Press in the World

11. On the way of innovation Large 5-Stand Rolling Mill

12. On the way of innovation Belaya Kalitva - Aerospace Plate Furnace

13. On the way of innovation BK - Ebner Plate Furnace Entrance (first furnace survey 2007)

14. On the way of innovation: Production Efficiency (tons per head) +100% +54% +28%

15. On the way of innovation: The example of SSJ Regional airliner Sukhoi Superjet 100; SSJ100 will be produced byRussian aerospace firm Sukhoi’s Civil Division in cooperation with 30 world leading subcontractors, including Alcoa • Reducing hundreds of kilograms’ weight • Reducing the costs of assembly and assembly tools • Increasing strength and reliability of aircrafts Advanced alloys Advanced technologies, incl. Signature Stress Relief (technology of residual stress reduction) Applications with no analogies in the world – forgings with 10 square meters surface Upgraded equipment: unique technical features of the 75.000 hydraulic forgings press

16. The example of SSJ: Major Challenges • Technical & administrative barriers • Need to unify the technological standards • New alloys certification procedures

17. On the way of innovation: New technologies 75.000 Press Renovation Certification audits Next steps:Boeing and Aerobus certifications

18. On the way of innovation: The example of Body, Tabs and Ends Can • Reconstruction of Furnace No.21 in Samara: high-quality ingot production for can stock(energy efficiency with the regenerative burners saves about 40% of the energy needs) • New Coil Coating Line: drastically expand the range of rolled coil products, including coils for can tabs and ends

19. The example of Body, Tabs & Ends Cans: Major Challenges • Tolling schemes • Administrative barriers in the regions of operations • Expansion of the customer base is a positive development: new can makers entering Russia • More favorable trade and customs regime is necessary

20. On the way of innovation: EHS EHS

21. On the way of innovation: Workforce Potential Employee Training and Development Program Development of Workforce Potential • Alcoa Foundation Technical Education Support Program: • Three leading universities – Samara State Aerospace University (SGAU), Donskoy State Technical University (DGTU) in Rostov-on-Don and Moscow Steel and Alloy Institute (MISiS) • 119 scholarships for students at engineering faculties, 13 development stipends for young faculty members • Donations of laboratory and lecture equipment to SGAU and DGTU • 2007: • Training and developing budget - $900.000 ($93 for an employee) • 9 587  employees: in-service and out-service trainings • More that 400.000 class hours

22. Innovative Development of the Russian Industry: Critical Considerations • Innovations are more than just investment into the equipment & facilities. Human capital investment drives innovation. • The Russian Government’s agenda matches the business interests. • National regime to foreign investors should be more than a WTO requirement.

23. On the way of innovation A Questions?