Alcoa Small Cap Engineering, Procurement and Construction Management Alliance

Client: Alcoa

Location: U.S. and Global

Business Segment: Urban Solutions

Industry: Mining & Metals

Services: Maintenance

Map showing the location of Alcoa Small Cap Engineering, Procurement and Construction Management Alliance

Executive Summary

Fluor began providing capital management services to Alcoa at multiple sites in the U.S. in 1996. The alliance was expanded in 2004 to five sites in Europe and an alumina refinery in Pt. Comfort, Texas in 2009. We manage over 200 projects on average annually for Alcoa in the U.S.

We are able to flex the size of the alliance staff to meet Alcoa's capital spending requirements. Direct costs savings to the projects are achieved through Fluor's Value Awareness Program. We have also provided baseload engineering and project management services at three different Alcoa sites in Western Australia (Pinjarra Refinery, Kwinana Refinery and Huntly Mining). The five-year program, which started in 2010, consisted of site-based engineers and project management teams responsible for overall project execution (safety, cost and schedule performance).

Photo: Located in Newburgh, Indiana, Warrick Operations is one of the largest aluminum smelting and fabricating facilities in the world.

Client's Challenge

Alcoa is the world's leading producer of primary aluminum 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 since 1888.

Photo: Alcoa Mt. Holly has an annual capacity of 245,000 tons of aluminum

Source: www.alcoa.com; photos courtesy Alcoa.

Fluor's Solution

The Alcoa-Fluor alliance within the U.S. consists of site-based engineering and construction management teams supported by centralized safety, procurement, project controls and accounting resources dedicated solely to Alcoa. Our primary scope is the management of small capital projects required to sustain and improve the operation of plants to maintain competitiveness in an ever-challenging global business. At select sites, we also provide maintenance project management, reliability subject matter expertise support and plant-wide contractor safety management.

We have delivered more than 300 projects in Europe at five sites since the alliance began in 2004. The scopes of work have included engineering, procurement, construction management and project management at various facilities within the Alcoa complex.

In support of Alcoa's stage-gated capital process, we begin each project at a conceptual stage committed to optimize value and ensure the project meets the client's strategic business goals. We then develop the scope, schedule, cost estimate and execution plan required for project funding.

After approval, we continue with engineering, risk management, project controls, procurement and site management services. Craft services are typically provided by local contractors, acquired by Fluor Alliance Procurement, and managed by the site Fluor Construction Manager. Fluor is fully integrated with Alcoa's procurement systems and leverages spend utilizing supplier agreements of both companies to Alcoa's benefit. Major objectives of our project execution include safety, quality, efficiency and minimal disruption to production.

We have also provided baseload engineering and project management services at three different Alcoa sites in Western Australia (Pinjarra Refinery, Kwinana Refinery and Huntly Mining). This five-year program, which started in 2010, consisted of site-based engineers and project management teams responsible for overall project execution (safety, cost and schedule performance).

Photo: In the Massena West Casthouse, molten metal from the smelter is being poured into molds called “sow” or “pigs” from a transportation vessel called a cruce or crucible. The molds will harden and that metal is sold to downstream customers for use in a variety of products.

Conclusion

Alcoa Warrick Operations is realizing significant environmental improvements because of the installation of wet flue gas desulfurization equipment at its coal-fired power plant. When the project completed in December of 2008, it was Alcoa's largest capital investment in North America, costing more than $500 million. The scrubbers remove sulfur dioxide from the flue-gas emissions, allowing for the expanded use of Illinois Basin Coal. The facility realized a more than 90% reduction in its emissions of sulfur dioxide when the scrubbers went online. The power plant supplies all of the electricity for Warrick Operations, the nation's largest fully integrated aluminum facility with coal mining, electric generation, aluminum smelting, casting, rolling and fabricating.

We have been providing capital management services to Alcoa under an alliance agreement since 1996. Services have been expanded to Europe and Australia.

Fluor values the relationship with Alcoa and looks forward to expanding the alliance in the future.

Photo: Located in Newburgh, Indiana, Warrick Operations is one of the largest aluminum smelting and fabricating facilities in the world.