Alcoa and Russia’s VSMPO-AVISMA to Form Joint Venture, Serve Growing Global Aerospace Industry

October 22, 2013

Joint Venture to Manufacture Value-Add Products for Growing Aerospace Industry

Alcoa (NYSE:AA), the leading supplier of aluminum solutions to the world's aerospace industry, and Russia’s VSMPO-AVISMA Corporation, the world′s largest manufacturer of titanium ingots and forged products, have agreed to join forces to meet growing demand for high-end titanium and aluminum products for aircraft manufacturers worldwide.

Alcoa Chairman and CEO Klaus Kleinfeld and VSMPO-AVISMA Chairman Sergei Chemezov signed a cooperation agreement at a ceremony in Moscow, marking the first step in forming a new joint venture. Once formed, the joint venture will combine Alcoa’s expertise in manufacturing value-add products with VSMPO-AVISMA’s global leadership in titanium production to manufacture high-end aerospace goods, such as landing gear and forged wing components, at Alcoa’s plant in Samara.

"The agreement marks an important step in leveraging Alcoa’s and VSMPO-AVISMA’s strengths in innovation and manufacturing to capture opportunities in the high-growth aerospace market," said Alcoa Chairman and CEO Klaus Kleinfeld. "This alliance will enhance Alcoa’s competitiveness and position our global aerospace business for continued profitable growth.”

“We actively collaborate with global industrial leaders to implement large-scale projects. Our partnership with Alcoa will help increase our productivity, expand our offerings to customers, and help VSMPO-AVISMA move forward on our strategy to increase the share of our value-add products,” said Sergei Chemezov, Chairman of the Board of Directors, PSC VSMPO-AVISMA and Head of Rostec Corporation.

Mikhail Voevodin, General Director, PSC VSMPO-AVISMA Corporation, said, “This agreement will add to our current manufacturing capabilities, as the company gets access to unique forging equipment. This step enables us to increase our output and ensure the consistency of supply, allowing us to meet growing demand for our products from leading global aircraft manufacturers.”

"This manufacturing partnership will expand on our mutual and complementary strengths in making the largest and most advanced aerospace forgings in the world,” said Eric Roegner, Chief Operating Officer of Alcoa Investment Castings, Forgings and Extrusions.

The joint venture, which is expected to be operational in 2016, will capture opportunities in the global aerospace market. Based on Alcoa’s estimates as of October 8, 2013, the aerospace market is expected to grow by 9-10 percent in 2013.

Additional terms of the transaction were not disclosed.

Alcoa’s Aerospace Leadership

Alcoa invests more than $40 million each year to develop new products and cutting-edge aerospace technologies as part of its approximately $4 billion aerospace business. Since the beginning of aviation, Alcoa’s teams have worked side-by-side with aircraft manufacturers to advance air travel. Almost all aluminum aerospace alloys currently in use were developed by Alcoa, and today’s major new aircraft programs incorporate Alcoa’s product innovations from nose to tail and wingtip to wingtip. Alcoa engineered the largest aerospace forgings, extrusions, fuselage panels and wing skins ever produced for the 525-seat Airbus A380 jetliner. The Boeing 787 uses the first application of large aluminum-lithium plate on a commercial aircraft—developed and supplied by Alcoa—while more than one million of its fasteners go into every A380. The company also is the world leader in single-crystal technology for advanced airfoil castings and coatings that withstand the extreme temperatures of clean-burning aero engines.

Editor’s Note: Caption for accompanying photo: Alcoa Chairman and CEO Klaus Kleinfeld (right) and VSMPO Chairman Sergei Chemezov (left), signed a cooperation agreement at a ceremony in Moscow, marking the first step in forming a new joint venture company to meet growing demand for high-end titanium and aluminum products for aircraft manufacturers worldwide.

About Alcoa

Alcoa is the world’s leading producer of primary and fabricated aluminum, as well as the world’s largest miner of bauxite and refiner of alumina. In addition to inventing the modern-day aluminum industry, Alcoa innovation has been behind major milestones in the aerospace, automotive, packaging, building and construction, commercial transportation, consumer electronics and industrial markets over the past 125 years. Among the solutions Alcoa markets are flat-rolled products, hard alloy extrusions, and forgings, as well as Alcoa® wheels, fastening systems, precision and investment castings, and building systems in addition to its expertise in other light metals such as titanium and nickel-based super alloys. Sustainability is an integral part of Alcoa’s operating practices and the product design and engineering it provides to customers. Alcoa has been a member of the Dow Jones Sustainability Index for 12 consecutive years and approximately 75 percent of all of the aluminum ever produced since 1888 is still in active use today. Alcoa employs approximately 60,000 people in 30 countries across the world.

About Alcoa Russia

Alcoa first entered Russia in 1993. In 2005 the company acquired two fabricating facilities in Samara and Belaya Kalitva. Since 2005 Alcoa has invested nearly $800 million to upgrade its Russian facilities.

About VSMPO-AVISMA Corporation

PSC VSMPO-AVISMA Corporation is the largest worldwide titanium producer, providing the full production cycle: from stock processing to production of finished parts of added value. Number of employees is approximately 20,000. The control stock of shares (50%+1) of VSMPO-AVISMA belongs to the management, the blocking shareholding (25%+1) belongs to Rostec Corporation.

About State Corporation Russian Technologies (Rostec)

Rostec is a Russian corporation established in 2007 to promote development, production and export of high-tech industrial products for civil and military purposes. It includes 663 organizations, which currently form 8 holding companies in the defense-industrial sector and 5 holding companies in civilian industries. The organizations of Rostec are located in 60 constituent entities of the Russian Federation and deliver products to the markets of more than 70 countries. In 2012, the revenues of Rostec amounted to $31 billion, with net profit amounting to $1.2 billion. Tax payments to budgets of all levels exceeded $3.6 billion. Its net income in 2011 amounted to $1.5 billion dollars, while tax payments to the budgets of all levels reached $3.3 billion.

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