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RTI Enters $1.1-Billion Supply Agreement with Airbus

Sept. 18, 2007
Plans to build titanium sponge plant

September 18, 2007 — RTI International Metals is staking its future on booming aerospace markets, and investing capital in primary titanium capacity. RTI, of Niles, OH, has entered into an 11-year agreement to supply metal in various forms to Airbus, a deal RTI values at more than $1.1 billion. And, RTI has begun planning a new titanium-sponge operation, in Hamilton, MS, returning to a production activity it abandoned more than a decade ago.

Both plans are similar to efforts by RTI's rivals in the titanium business, Allegheny Technologies Inc. and Titanium Metals Corp., each of which has entered into material-supply agreements with the leading aircraft and aerospace manufacturers, and have begun to expand titanium-sponge capacity. RTI has been the only domestic producer of titanium metal that does not produce its own sponge.

RTI's deal with Airbus supplements a 2006 agreement to deliver titanium mill products for commercial aircraft construction, including the A380 and the A350 XWB programs. The agreement goes into effect in 2010 and runs through 2020, and anticipates that RTI will supply at least 45 million lb of titanium mill products over the term. Actual annual volumes will be based on production levels, program developments, and titanium content per aircraft.

RTI has been a longtime Airbus supplier of forging billets and blooms, and flat-rolled products. In the new agreement, RTI will be designated as Airbus' titanium service provider for activities that include supplying non-mill quantities, cutting to size, and other value-added processes to Airbus plants and suppliers.

In support of these growth plans, RTI will build a new titanium-sponge manufacturing operation in Hamilton, MS, at a projected cost of $300 million. This figure is in addition to a $100-million facilities expansion announced earlier.

Titanium sponge is a concentrated metallic product recovered from mined material; it is later converted to primary metal in a vacuum remelting process. RTI's new spnge plant will have an annual capacity of 20 million lb, and the company projects it will begin operations in 2010 — which will make it available to support Airbus' recently announced $2-billion contract extension with Lockheed Martin Aeronautics for the F-35 Joint Strike Fighter program.

RTI said the new sponge plant will be built in conjunction with its previously announced expansion of melting, forging, and rolling facilities.

Vice chairman and CEO Dawne Hickton stated: "This sponge plant investment, as well as our previously announced expansions worldwide, reflect our belief that the long-term demand for aerospace grade titanium remains strong and requires ongoing investment to capitalize on these opportunities."