NORTH AMERICA – POLICY & POLITICS

MARCH 16, 2016

Heidi Brock President & CEO

The Aluminum Association

AFSA International Aluminium Conference and Exhibition

U.S. POSITIVE OUTLOOK

2

-0.9%

4.6% 4.3%

2.1%

0.6%

3.9%

2.0%

1.0% 1.5%

2.5% 2.5% 2.0%

-2%

-1%

0%

1%

2%

3%

4%

5%

2014:I II III IV 2015:I II III IV 2016:I II III IV

Real Gross Domestic Product

Real GDP Forecast: ↑ 2.4% (2014) ↑ 2.4% (2015)

Source: National Association of Manufacturers

MANUFACTURING GROWTH

3

100

101

102

103

104

105

106

107

108

109

110

Actual and Predicted Production Growth (NAICS, 2012=100)

Actual Manufacturing Production Predicted Manufacturing Production

2014 2015 2016 2017

Source: National Association of Manufacturers

STRONG DEMAND

4

• Apparent Consumption up 4.7% YTD

• YTD 2015 - Demand up 1.0%

• Demand up 3.6% Y/Y in 2014 Approaching Mid-2000s record levels

27.1 25.8

23.1

18.7

21.3

23.0 24.2 24.6

25.5

16.0

18.0

20.0

22.0

24.0

26.0

28.0

2006 2007 2008 2009 2010 2011 2012 2013 2014

North American Demand for Aluminum (Billions of Pounds)

Aluminum Association

HEALTHIER MARKETS TODAY

5

• Containers & Packaging up 0.4% Y/Y ↓4.7% since 2009

• Building & Construction up 7% Y/Y ↑19% since 2009

• Transportation market up 11% Y/Y ↑95% since 2009

• Exports down 6% Y/Y

6

SUPPLYING THE METAL

10.2

9.0

5.1 1.3 25.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Primary* Secondary Imports Inventories Total

North American Aluminum Metal Supply 2014

(Billions of LBs)

*Includes additives and melt loss Aluminum Association, U.S. Census Bureau, USGS, LME

7

PRIMARY & SECONDARY

Secondary

Primary

200

300

400

500

600

700

800

U.S. Primary & Secondary Production (Millions of pounds)

Aluminum Association; U.S. Geological Survey Not Seasonally Adjusted

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

North America Primary Production (Annual Rate in Thousands of Metric Tons)

Aluminum Assoc. & Aluminum Assoc. of Canada Not Seasonally Adjusted

Total

Canada

U.S.

GROWTH IN CHINESE IMPORTS

8

0

200

400

600

800

1,000

1,200

1,400

2009 2010 2011 2012 2013 2014 2015

U.S. Imports of Chinese Semifabricated Products (Million Lbs)

Extrusions Sheet & Plate Foil All Other

U.S. Census Bureau

TRANSSHIPMENTS

9

10

HIGHEST EMISSIONS IN THE WORLD

3%

Australasia 4%

North America

1%

Africa

CIS* 3%

4%

Europe

China 68%

6%

Middle East 7%

5%

Asia

Central and South America

Share of total CO2 emissions from smelting, 2014 Average CO2 emission by region, 2014

Source: CRU, CIS refers to Russia and former Soviet Republics

3.5

4.8

6.46.5

8.0

9.4

13.414.0

15.5

Central and South

America

Europe CIS* North America

Middle East Africa Australasia Asia China

Metric tons of CO2 per metric ton of aluminum produced

U.S.-China Bilateral Negotiations

Data and Analysis Trading Systems and Enforcement

13

Chinese Overcapacity

0

10,000

20,000

30,000

40,000

50,000

60,000

China

Rest of World 2000 2015

1,600

1,700

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

2013 2015

APPEALING TO U.S. GOVERNMENT

June: Strategic and Economic Dialogue in Beijing

September: G20 Summit in China

November: JCCT in U.S.

12

Responsible Integration

China will remain significant player • Cost-effective smelting technology • Growing demand for aluminum Support China to meet its objectives • EH&S, trade principles • Opportunity in value-added

production

Curb Chinese Oversupply

1) Align supply with demand

2) Increase data transparency

3) Enforce EH&S standards

4) Cut emissions

5) Maintain 15% export duty, remove VAT

SHORT & LONG TERM APPROACHES

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14

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THE AUTO OPPORTUNITY: NORTH AMERICAN MARKET TRENDS AFSA International Aluminium Conference and Exhibition

MARCH 17, 2016

Heidi Brock President & CEO

The Aluminum Association

50 YEARS OF GROWTH

2

0

100

200

300

400

500

600

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

WHEELS HOODS

BUMPERS

HEADS

BLOCKS

Poun

ds P

er V

ehic

le (P

PV)

HEAT EXCHANGERS Sheet

Extrusions

Source: 2015, Ducker Worldwide

DOORS & BODY-IN- WHITE

394 lbs.

500 lbs.

KEY TAKEAWAYS: DUCKER SURVEY

3

2015: Highest growth year • First high-volume automotive body and structure (F-150

pickup) • Sheet and extrusions – body, closures

Source: 2015, Ducker Worldwide

By 2020: Every OEM will have more than one aluminum-intensive body and multiple aluminum-intensive closure programs.

ALUMINUM-INTENSIVE VEHICLES TODAY

4

© Ford

© Land Rover © Jaguar © Tesla

Body-in-White & Closures

© Jaguar © Audi

F-150

Range Rover

XF

F-Pace Model S

A8

MULTI-MATERIAL VEHICLES

5

The New Normal

© Cadillac

CT6

© Chevrolet

© BMW

Malibu

7-Series

S-Class

© Mercedes-Benz

i3

© BMW Pacifica

© Chrysler

© BMW

THE FORD F-150 EXPERIENCE

6

• Weight Reduction: 700 pounds, 12% decrease in curb weight

• Fuel Economy: Already meeting 2024 EPA standards; best fuel economy for full-size, gas pickup

• Safety: 5-star safety rating; improvement in every category over 2014 steel model

Sources: Ford Motor Company; EPA; NHTSA; Motley Fool; Detroit Free Press

7

MEETING THE DEMAND $2.7 billion in capital announced or invested in U.S. since Fall 2013

• Oct. 2015 – Tri-Arrows/Logan – $240M Expansion in Russellville, KY

• Oct. 2014 – Constellium – $750M Expansion in Muscle Shoals, AL

• Sept. 2014 – Aleris – $350M Expansion in Lewisport, KY • Jul. 2014 – Constellium/Tri-Arrows – $150M New JV Plant

in Bowling Green, KY • 2013 –> 2015 – Alcoa – $890M in Expansions in Davenport,

IA; Alcoa, TN & La Porte, IN (incl. aerospace) • 2013 –> 2016 – Novelis $300M in Expansions in Oswego,

NY

MEETING CUSTOMER NEEDS

8

Source: Alcoa, Inc.

Continuous Improvement

o High Strength

o Energy Absorption

o Advanced Formability

o Manufacturing

o Sustainability

CONTINUING TO INNOVATE

9

Source: The Aluminum Association

•1xxx Series

Commercially Pure Aluminum

•2xxx Series •6xxx Series •7xxx Series

Heat-Treatable Alloys

•3xxx Series •4xxx Series •5xxx Series

Non Heat-Treatable Alloys

HIGH VOLUME JOINING SOLUTIONS

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Chapters • Introduction to Joining • Fusion welding • Arc welding • Beam welding • Resistance welding • Brazing • Solid state welding • Mechanical joining • Adhesive joining • Hybrid joining techniques • Joining of dissimilar materials

Source: Aluminum Transportation Group

www.drivealuminum.org

FUEL ECONOMY MIDCOURSE REVIEW

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• 2011: Federal government agreement with 13 major U.S. automakers to increase fleetwide vehicle fuel economy to 54.5 mpg by 2025

• Part of agreement was midterm evaluation of rule in 2017 • Process begins in 2016 • Regulators could reduce, maintain or increase agreed-to standard • Standard essential to continued penetration of auto aluminum

Source: EPA

ALUMINUM TOP PICK TO MEET STANDARDS

12

2015 Dupont/WardsAuto Survey • 900 automotive company

engineers • Aluminum favored among

designers and engineers to help meet 2025 fuel economy and emissions targets

Source: 2015, Dupont/Wards Auto

ENVIRONMENTAL SUPERIORITY

13

US DOE Oak Ridge National Lab Study • Aluminum-intensive vehicles offer lowest life cycle

energy (¯ 20%) and CO2 impact (¯ 17%) vs. modern steel vehicles

• Use phase contributes over 90% of life cycle impacts

• Steel vehicle’s higher use phase energy and CO2 cancels out production phase

Source: 2014, Oak Ridge National Laboratory

TELLING THE STORY

14 Source: The Aluminum Association

15

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www.aluminum.org

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