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

2 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 (2 nd in the world after China) Positive Features of the Russian Economy: The Innovative Direction 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 Negative Features of the Russian Economy:

3 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 The Innovative Direction of the Russian Economy

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

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

7 $ 290 mln. $ 220 mln 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 $ 257 mln. $ 767 mln. On the way of innovation: Investment program - INITIAL INVESTMENTS: acquisition of the Samara Metallurgical and Belaya Kalitva plants The share of Samara Plant in the mill domestic market is nearly 40% The share of Belaya Kalitva Plant in the mill domestic market is nearly 10% 50% aluminum market of Russia

Investment program: Results On the way of innovation

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

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

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

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

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

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

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

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

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

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 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 The example of Body, Tabs & Ends Cans: Major Challenges

20 On the way of innovation: EHS EHS

21 On the way of innovation: Workforce Potential Employee Training and Development Program 2007: Training and developing budget - $ ($93 for an employee) employees: in-service and out-service trainings More that class hours 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

22 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. Innovative Development of the Russian Industry: Critical Considerations

23 A On the way of innovation Questions?