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Asset Retirement Obligations
 12 Months Ended
Dec. 31, 2012
Asset Retirement Obligations

C. Asset Retirement Obligations

Alcoa has recorded AROs related to legal obligations associated with the normal operations of bauxite mining, alumina refining, and aluminum smelting facilities. These AROs consist primarily of costs associated with spent pot lining disposal, closure of bauxite residue areas, mine reclamation, and landfill closure. Alcoa also recognizes AROs for any significant lease restoration obligation, if required by a lease agreement, and for the disposal of regulated waste materials related to the demolition of certain power facilities.

In addition to AROs, certain CAROs related to alumina refineries, aluminum smelters, and fabrication facilities have not been recorded in the Consolidated Financial Statements due to uncertainties surrounding the ultimate settlement date. Such uncertainties exist as a result of the perpetual nature of the structures, maintenance and upgrade programs, and other factors. At the date a reasonable estimate of the ultimate settlement date can be made (e.g., planned demolition), Alcoa would record an ARO for the removal, treatment, transportation, storage, and (or) disposal of various regulated assets and hazardous materials such as asbestos, underground and aboveground storage tanks, PCBs, various process residuals, solid wastes, electronic equipment waste, and various other materials. If Alcoa was required to demolish all such structures immediately, the estimated CARO as of December 31, 2012 ranges from less than $1 to $52 per structure (132 structures) in today’s dollars.

The following table details the carrying value of recorded AROs by major category (of which $75 and $76 was classified as a current liability as of December 31, 2012 and 2011, respectively):

 

December 31,    2012      2011  

Spent pot lining disposal

    $ 182       $ 187   

Closure of bauxite residue areas

      190         173   

Mine reclamation

      189         164   

Demolition*

      28         34   

Landfill closure

      17         17   

Other

      4         4   
     $ 610       $ 579   
* In 2011, AROs were recorded as a result of management’s decision to permanently shut down and demolish certain structures, each of which was previously temporarily idled for different reasons (see Note D).

 

The following table details the changes in the total carrying value of recorded AROs:

 

December 31,    2012     2011  

Balance at beginning of year

    $ 579      $ 534   

Accretion expense

      25        22   

Payments

      (81 )      (86 ) 

Liabilities incurred

      80        115   

Foreign currency translation and other

      7        (6 ) 

Balance at end of year

    $ 610      $ 579