HAW shareholders reject bid

(Oct. 20, 2005) The shareholders of Hamburger Aluminium-Werk GmbH, HAW, have today informed the remaining bidder for the company, Georgsmarienhütte Holding GmbH (GMH), that they do not see it possible to complete a transaction to sell HAW based on a proposal submitted by GMH.

Alcoa, Austria Metall Aktiengesellschaft and Hydro, through subsidiaries, each hold 33.33 percent of the shares of HAW.

The smelter and carbon production at HAW employs about 450 employees, and has an annual production of approximately 135.000 tonnes of primary aluminium. On June 20, 2005, the shareholders, having been unable to negotiate an acceptable power contract for the HAW smelter beyond the end of the year, agreed to a resolution to close the facility by the end of the year. The shareholders subsequently were open to consider the possibility of a sale of the plant to a viable buyer through an auction process.

The three shareholders Alcoa, AMAG and Hydro agreed that the GMH proposal was unacceptable during a shareholders meeting in Hamburg on October 14 based on a number of concerns surrounding the bid. The shareholders have serious doubts about the sustainability of positive cash flow under the business plan presented, given the continuing power price problem in Germany. Nevertheless, the shareholders participated in further clarifying discussions with GMH in a meeting arranged and chaired by Senator Gunnar Uldall to try to resolve the key issues of risk, verification of the business plan, and dealing with employee pensions.

After further interaction, the parties were not able to reach an acceptable agreement on the key outstanding issues, including an adequate protection of the shareholders and the employees from the risk of a future insolvency. These and other unresolved issues have resulted in the decision to reject the offer for the shares of HAW.

In discussion with the employee representatives of HAW today, the shareholders have explained the situation and that the process to prepare the agreed shutdown will continue.

A plan of orderly shutdown will be followed, resulting in complete termination of operations of the potroom and the carbon plant by the end of the year. The shareholders will honour their obligations relating to the shutdown.