In smelting, the company is in the start-up phase of the greenfield smelter in Iceland and full production has been restricted due to the delay in the completion of the power project. Alcoa is cooperating with the power company to address these issues and now projects full power to be available in the fourth quarter and estimate production for 2008 to be 300,000 tons for the full year.

The company has MOUs signed in Greenland and North Iceland, both based on renewable energy and is pursuing smelter positions in China as well as in the Middle East, most likely through additions to joint ventures.

Alcoa has also clarified its strategic downstream focus.

The company is in businesses that are based on proprietary technologies and alloys, unique equipment and complex processes that serve rapidly expanding common end markets. Flat roll products, hard alloy extrusions, forging, fasteners and air foil businesses.

In both segments, upstream and downstream, Alcoa continues to pursue profitable organic growth, geographic expansion, market specialization and segmentation, as well as profitable acquisition growth.

The sale of the Chalco investment allows us to monetize the gain and redeploy the proceeds in other areas to enhance shareholder value.

Although these actions gave the board the confidence to significantly increase the company’s share repurchase program from 10% to 25% over the next three years, in addition to the dividend increase announced in the first quarter of this year.

At the end of 2006, the company established six financial targets for 2007.

For the target cash from operation will exceed capital expenditures; volume, mix, productivity will exceed cost inflation; and capital expenditures will not exceed $3.2 billion. Alcoa is on target, excluding the impact of currency, and is on track to beat its target for ROC, EBITDA margin improvement and debt-to-capital targets.

The third quarter was challenging with seasonality increases in energy costs, a weakening U.S. dollar, lower metal prices.

In addition, increased costs of getting the Rockdale, Tennessee smelter back to full operation and bringing the company’s greenfield smelter in Iceland online. These are increasing cost pressures in raw materials and energy, but Alcoa continues to work at offsetting these increases with its ABS approach to management.

The aluminum market is growing at a healthy rate.

The end market uses continue to expand as a consequence of globalization and urbanization. Aluminum price discount to copper and zinc has created application expansion and the environmental pressure on CO2 reduction will create excellent opportunities going forward.

As a consequence of closures and more disciplined operations, European rolling mills are, for the first time in 30 years, operating at full capacity. In the U.S. due again to a more disciplined operation, but also due to plant specialization, plants are making cost of capital even while operating at lower volumes than rated capacity.

2007 has been a destocking year in the industrialized economies.

Finance costs have forced non-visible inventories to be visible. This has changed the pricing fundamentals which are based on days of inventories and supply and the shape of the cash cost curve. Alcoa has new, low-cost plants starting next year and the year after that. The company has contracts with metal price caps that are expiring over the next two years, and cost reductions in areas like healthcare are materializing. Alcoa has start stops in China and a turnaround process in Russia. The company also has new products, new markets and new technologies. All have a positive impact on EBITDA and cash flow.

Income from continuing operations was $558 million or 64 cents per share.

These numbers include both the gain on the Chalco sale as well as the restructuring cost. Quarterly revenue of $7.4 billion was down 8% sequentially, due primarily to the lower metal price, the negative impact of the normal third quarter seasonality, and the elimination of revenue associated with the completion of the soft alloy extrusion joint venture.

Each of the four downstream segments continues to have improved EBITDA margins compared to ''06.

Year-to-date:
- flat rolled products stand at 6.8%;
- engineered solutions at 11.9%;
- extruded and end products at 5.2%;
- packaging and consumer at 9.2%.