Alcoa receives $259 million U.S. loan to expand aluminum output

The U.S. Department of Energy has agreed to lend Alcoa Inc. $259 million to expand automotive aluminum sheet production capacity at the supplier’s Tennessee factory, reviving a long-dormant loan program to support the development of energy-efficient vehicles.

The funds will finance most of the costs of a $275 million expansion project already under way at the plant, where Alcoa is converting capacity previously used for making aluminum cans to produce high-strength aluminum for automakers. The project began in 2013 and is expected to add 200 permanent jobs after its mid-2015 completion, plus an additional 400 jobs during peak construction, the company and the DOE said.

Automotive News first reported the DOE’s interest in Alcoa last May.

“Alcoa’s innovative, high-strength aluminum solutions are leading the light-weighting revolution now happening in the automotive industry,” Alcoa CEO Klaus Kleinfeld said in a statement. “Alcoa is pleased to be part of the government’s program to encourage a greater shift to aluminum-intensive vehicles that are safer, lighter and more fuel-efficient.”

The Alcoa deal marks the first loan agreement made under the Energy Department’s Advanced Technology Vehicles Manufacturing program since 2011.

“We’re very excited to get this money out to aid the industry,” said Peter Davidson, executive director of the DOE’s Loan Programs Office, which oversees the ATVM program. “It is low-cost government financing to encourage domestic manufacturing of fuel-efficient vehicles and the components going into those vehicles.”