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Alcoa (AA) Invests $22 Million in Aerospace Technology

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Aluminum giant, Alcoa Inc. (AA - Free Report) announced that it is investing $22 million in Hot Isostatic Pressing (HIP) technology at its Power and Propulsion facility in Whitehall, MI. The technology is expected to be ready for product qualification in 2016.

Alcoa has been increasingly investing in latest technologies considering growth in the aerospace sector and to meet rising demand. With this investment, the company hopes to capture growing demand for advanced titanium, nickel and 3D-printed parts for the world’s bestselling jet engines.

HIP applies high pressure and temperatures to significantly improve the mechanical properties and quality of cast products, such as blades and structures for jet engines. The process also increases the density of 3D-printed parts made using powdered metals, and improves product consistency, strength and lifespan. All titanium, 3D-printed and some nickel parts used for jet engines must be treated using the HIP process.

Alcoa already owns and operates one of the world’s largest HIP technology complexes for aerospace. This investment will enable the company to process its largest jet engine parts in-house. It will also allow the company to process any cast jet engine product in its current portfolio. Moreover, the investment is in sync with Alcoa’s strategy of building its value added business and bringing about innovations in the aerospace sector.

Alcoa expects solid global aerospace sales growth of 9% to 10% in 2015 led by strong deliveries across the large commercial aircraft, regional jet and business jet segments and envisions a current 9-year production order book at 2014 delivery rates. Alcoa Power and Propulsion is anticipated to generate sales of $2.2 billion by 2016 on the back of its organic growth expansions.

Alcoa released its first-quarter 2015 results in Apr 2015. The company topped earnings estimates in the first quarter on healthy demand from aerospace and automotive markets, backed by its ongoing portfolio transformation initiatives. However, the company’s revenues lagged expectations.

Alcoa currently carries a Zacks Rank #3 (Hold).

Better-ranked companies in the mining space include Orbite Aluminae Inc , Newmont Mining Corporation (NEM - Free Report) and Richmont Mines Inc. . All of them hold a Zacks Rank #2 (Buy).

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