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Alcoa HEC Sustainability Challenge

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HEC Montereal Case competition slides!!

HEC Montereal Case competition slides!!

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  • Agressively sealing confesers, pipelines and wellheadsStrong cement around the fracking wells to ensure there are no leaks, impermeable sealPut it on a timeline (Coal, Natural Gas, Nuclear, Hydro Electric)Make public what the fracking fluid is made up of
  • Agressively sealing confesers, pipelines and wellheadsStrong cement around the fracking wells to ensure there are no leaks, impermeable sealPut it on a timeline (Coal, Natural Gas, Nuclear, Hydro Electric)Make public what the fracking fluid is made up of
  • Transcript

    • 1. AlcoaThe Sustainability Challenge Spruce ‘just READ consulting’
    • 2. Agenda • Introduction • Key Issues • Analysis • Alternatives • Implementation Plan • Contingency • SummaryIntro Keys Issues Analysis Alternatives Implementation Contingency Summary
    • 3. Alcoa Goes to Saudi Arabia In the public’s eye the move to ISSUE Saudi Arabia is not based on the grounds of sustainability but on the grounds of profitabilityCOURSE OF After an extensive analysis, we at, just READ consulting, areACTION proposing a course of action that will help you regain your sustainability statusIntro Keys Issues Analysis Alternatives Implementation Contingency Summary
    • 4. Key Issues IMPORTANCE R.O.I Effect on Environment URGENCY Social Responsibility Alcoa Image Keys IssuesIntro Analysis Alternatives Implementation Contingency Summary
    • 5. Market Analysis Politica Alcoa to Saudi Arabia l • All of these factors play a crucial role in Alcoa’s move to Saudi Arabia Technologic Aluminum for Environment al Production al • Need to assess where weaknesses are in this move and mitigate the consequences Economic Socia l AnalysisOutlook Keys Issues Alternatives Implementation Contingency Summary
    • 6. Political Political Econo• Saudi Arabia will provide a regulated mical natural gas price at US$0.75/MMBtu Environm So• The Ma’aden-Alcoa project has ental cial obtained an allocation from the Saudi Arabian government• Ali al-Naimi (Saudi Oil Minister) has stated that he would consider raising these prices but not to international There is no political levels (~US$2.50/MMBtu +) risk associated with• Iran has been threatening to close the the implementation Straight of Hormuz which would be of an aluminum Alocoa’s link to the rest of the world plant in Saudi Arabia AnalysisOutlook Keys Issues Alternatives Implementation Contingency Summary
    • 7. Environmental Environmental Technolo Form of Energy gical COAL So cial CO2 Emissions(Tonnes)/Tonne of 13.96 OIL 10.49 Aluminum NATURAL GAS 6.07 NUCLEAR HYDRO 0 Natural Gas is the transition fuel from more dangerous fossil fuels to cleaner and greener energy sources AnalysisOutlook Keys Issues Alternatives Implementation Contingency Summary
    • 8. EnvironmentalNatural Gas Extraction Process (Hydraulic Fracturing) Environmental Technolo1. Water, Sand, and additives are pumped down well bore at high gical pressure2. High pressure solution fractures the rock and injects sand So cial propellants to hold formations open3. Process is repeated in stages4. High pressure solution is removed for disposal or reuse5. Gas can flow more efficiently through more cracks Analysis Outlook Keys Issues Alternatives Implementation Contingency Summary
    • 9. Economic Politi Econo cal Technolo Production of 740,000 tonnes of Aluminum gical mical Economic So cial Saudi Arabia Canada Cost of Energy $14.25/MWh $20.00/MWh $25.00/MWh $43.00/MWh Total Aluminum $255,485,000 $310,800,000 $358,900,000 $484,380,000 Production Cost Cost/Tonne $345.25 $420.00 $485.00 $672.75 Savings: •Total – $125,480,000  34.9% •Cost/Tonne – $187.75 AnalysisOutlook Keys Issues Alternatives Implementation Contingency Summary
    • 10. Economic Politi Econo cal Technolo mical gical Cost of Energy for Aluminum Production in Saudi Economic So $600.00 Arabia cial Total Cost ($US Millions) $500.00 Smelting Cost $400.00 Carbon Cost $300.00 $200.00 $100.00 Moving to Saudi Arabia for aluminum $0.00 $14.25 $20.00 $25.00 $43.00 (Canada) production makes economical sense Cost of Energy ($US/MWh) AnalysisOutlook Keys Issues Alternatives Implementation Contingency Summary
    • 11. Social PolitiThere are many Human Rights Issues Associated with Saudi Econo cal Technolo mical gicalArabia:“…goods were boycotted based on human rights concerns – just Sociallike oil from Saudi Arabia should be.” (Kheiriddin, 2011)“Women are treated like second class citizens.” (Eaton, 2010)“It is a hot house for Islamic fundamentalism, where 15 out of the 19 hijackers on 9/11 camefrom.” (Eaton, 2009)“Oil from Saudi Arabia that supports terrorism.” (Eaton, 2009) Alcoa has to be proactive in regards to human rights to avoid company’s in support of a potential “Ethical Aluminum” AnalysisOutlook Keys Issues Alternatives Implementation Contingency Summary
    • 12. Technological Politi Econo cal Technologic al mical • Technology for aluminum production is not a differentiator Economica So in the industry l cial • But, ability to use aluminum production technology is highly dependent on energy Not a main area that Alcoa needs to be concerned with at the moment AnalysisOutlook Keys Issues Alternatives Implementation Contingency Summary
    • 13. ALCOA STRENGTHS • Global presence – operating in 31 countries • Integrated structure for Aluminium products • Rise in demand of Aluminium consistently • Committed management for core values such as health and safety • 100% recyclable product WEAKNESSES • Product requires CO2 emissions • Heavy dependence on Energy/electricity sector • Less focus on Technological development AnalysisOutlook Keys Issues Alternatives Implementation Contingency Summary
    • 14. ALCOA OPPORTUNITIES • Rapid growth of developing countries, leading to increase in demand of Aluminium THREATS • Economic collapse can lead to severe decrease in demand for product • Moving to areas with cheaper energy may come with a human rights cost AnalysisOutlook Keys Issues Alternatives Implementation Contingency Summary
    • 15. Alternatives ‘Big 5’ Global Contact Tier 1 Aluminum Competitors and propose a global Committee committee Switch to a Renewable Stop Natural Gas usage in Saudi Arabia and switch to Solar Energy Community Focus on community development within Saudi Arabia Development Deflect Using Do not address the social and environmental problems and the Media deflect the blame AlternativesOutlook Keys Issues Analysis Implementation Contingency Summary
    • 16. ‘Big 5’ Global Committee Pros Cons • Top 5 Aluminum company’s • Might not convince competitors acting together to achieve to join forces greater goals • Might have different community • Have greater access to money and environmental values • Be able to leverage power and influence in the industry to make change Renewable Energy Source Pros Cons • Reduce CO2 emissions • Expensive • Recognized as ‘Green’ in the • May not be enough renewable media energy in SA to begin production in 2013 AlternativesOutlook Keys Issues Analysis Implementation Contingency Summary
    • 17. Community Development Pros Cons • Will address the human rights issues • Potentially expensive • Give Alcoa a positive image in the • May be scrutinized for acting like media a government rather then a • Make living conditions in Saudi Arabia company better for employees and families Deflect Using the Media Pros Cons • Profits will substantially increase • Alcoa would face human rights • Put the blame on other and environmental scrutiny from companies activists and media • Will not need to allocate money • Might be affected by ‘Ethical for funding Aluminum’ issue AlternativesOutlook Keys Issues Analysis Implementation Contingency Summary
    • 18. Decision Matrix Renewable Global Community Deflect Using Weight Energy Committee Development Media Source R.O.I. 0.1 3 1 2 4 Effect on Environment 0.25 3 4 2 1 Social Responsibility 0.25 3 2 4 1 Alcoa Image 0.4 4 2 2 1 1 3.4 2.4 2.5 1.3 TOTALS AlternativesOutlook Keys Issues Analysis Implementation Contingency Summary
    • 19. Timeline – The Strength of Aluminum April- September September-February February Months Months Years1 2 3 4 5 6 1 2 3 4 5 6 1 2 3 4 PHASE 1 PHASE 2 PHASE 3 Build TSOA Proposal Plan Conference TSOA Global Goal Alignment Fracking R&D Green Energy Exploration Subsidized Housing Women Program ImplementationOutlook Keys Issues Analysis Alternatives Contingency Summary
    • 20. Timeline – The Strength of Aluminum April- September September-February February Months Months Years1 2 3 4 5 6 1 2 3 4 5 6 1 2 3 4 PHASE 1 PHASE 2 PHASE 3 Build TSOA Proposal Plan Conference ImplementationOutlook Keys Issues Analysis Alternatives Contingency Summary
    • 21. PHASE 1 - PLANNING Build Proposal The Strength of Aluminum (TSOA): • Form a Global Committee with hopeful support from our tier 1 Competitors: • BHP Billiton Ltd., Kaiser Aluminum, Aluminum Corp of China, Rio Tinto • Vision: To transform the aluminum industry into a leader of sustainability • Mission: Align the goals of the aluminum industry with that of a healthy planet Plan Conference Friday, September 7, 2012. Tennessee, United States: • Send invites to the top 4 aluminum companies • RSVP – with a template for suggested topics for discussion • Determine whether or not they are interested in partaking in the TSOA alignment phase ImplementationOutlook Keys Issues Analysis Alternatives Contingency Summary
    • 22. Timeline – The Strength of Aluminum April- September September-February February Months Months Years1 2 3 4 5 6 1 2 3 4 5 6 1 2 3 4 PHASE 1 PHASE 2 PHASE 3 Build TSOA Propsoal Plan Conference TSOA Global Goal Alignment ImplementationOutlook Keys Issues Analysis Alternatives Contingency Summary
    • 23. PHASE 2 - ALIGNMENTTSOA Global Goal Alignment • Spend 6 months working with top 4 companies on what over lapping issues affect the aluminum industry • Create an urgency and importance list to help determine which issues need to be dealt with immediately and in the long term • Vote on a advisory board consisting of leading environmental and human rights activists • Review and evaluate the proposals for implementation • Green technology sharing throughout the aluminum industry • Devoted commitment to the committee and full support of the initiatives • Committee meeting held 3 times a year ImplementationOutlook Keys Issues Analysis Alternatives Contingency Summary
    • 24. Timeline – The Strength of Aluminum April- September September-February February Months Months Years1 2 3 4 5 6 1 2 3 4 5 6 1 2 3 4 PHASE 1 PHASE 2 PHASE 3 Build TSOA Propsoal Plan Conference TSOA Global Goal Alignment Fracking R&D Green Energy Exploration ImplementationOutlook Keys Issues Analysis Alternatives Contingency Summary
    • 25. PHASE 3 – ENVIRONMENTAL ACTIONHydraulic Fracturing R&D •Perfect natural gas extraction •Natural gas, a stepping stone in energy consumption •Alcoa and partners will allocate funding for 2 years of R&D with the option for an extension (10,000,000/company) •Fund well known research institutes interested in exploring and enhancing the natural gas extraction process Green Energy Exploration •2-3 years begin investing in R&D how we can fund solar energy programs (Grey Area) •Incorporate solar energy into infrastructure of plants •Saudi Arabia has a lot of potential for solar panel farms (open deserts and vast amounts of sun) ImplementationOutlook Keys Issues Analysis Alternatives Contingency Summary
    • 26. Timeline – The Strength of Aluminum April- September September-February February Months Months Years1 2 3 4 5 6 1 2 3 4 5 6 1 2 3 4 PHASE 1 PHASE 2 PHASE 3 Build TSOA Propsoal Plan Conference TSOA Global Goal Alignment Fracking R&D Green Energy Exploration Subsidized Housing Women Program ImplementationOutlook Keys Issues Analysis Alternatives Contingency Summary
    • 27. PHASE 3 – SOCIAL ACTION Community Employee Non Profit HousingDevelopment Program •Design and build a green housing development •Blue collared worker •Assume 60% (800) employees will need homes •Duplex cost of $100,000 USD (Green) •Total Cost of Construction 40,000,000 USDHousing Services•Support rent-geared-towards-income program and help manage payment plans •Employee Avg. Salary $25,000 USD/Yr •Housing Allowance incl. Utilities (15%) $3750 •Education allowance for migrant workers•Transportation services •Barrier for women, 24/7•Location •Close proximity to workplace•Security •Create a liberal environment •Women Zones for single, no male guardian, work driven ImplementationOutlook Keys Issues Analysis Alternatives Contingency Summary
    • 28. PHASE 3 – SOCIAL ACTION Gender Equality Equal Opportunity Program •Women have a safe, non-discriminatory job opportunity and wage •Provide women, both white and blue collar, an opportunity to workWhite Collar •Target the universities •Educate on global equality standards •Reach those who are willing to work •Passed the gender barrierBlue Collar•Provide families with the opportunity to earn dual income•Barrier of not being able to afford childcare, preventing equal opportunity •Alcoa funded Childcare (24 hrs/day)•Flexible work hours/part-time options•Flexible employee movement between Saudi and US for short term to familiarize employeeswith Western Management and the global strength of women ImplementationOutlook Keys Issues Analysis Alternatives Contingency Summary
    • 29. Contingency Plan September - 2012 2 Years Did we get support from our Tier 1 competitors? ContingencyOutlook Keys Issues Analysis Alternatives Implementation Summary
    • 30. Set New Goals as an Industry: • 30% reduction in CO2 emissions for entire Aluminum Industry • >20% of women in executive positions • Play an Active Positive Role in all the communities you operate in YES ContingencyOutlook Keys Issues Analysis Alternatives Implementation Summary
    • 31. Contingency Plan September - 2012 2 Years Did we get support from our Tier 1 competitors? ContingencyOutlook Keys Issues Analysis Alternatives Implementation Summary
    • 32. Contact Tier 2 competitors in the Aluminum Industry: • Norsk Hydro • Century Aluminum Company • Alumina Ltd. No ContingencyOutlook Keys Issues Analysis Alternatives Implementation Summary
    • 33. SummaryOutlook Keys Issues Analysis Alternatives Implementation Contingency
    • 34. QUESTIONS?

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