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Aluminium

Alumina Limited

Alumina Limited (“Alumina”) is a leading Australian resource company with a specific focus on alumina, the feedstock for aluminium smelting. Alumina owns 40% of Alcoa World Alumina and Chemicals (“AWAC”), the world’s largest alumina business with a production capacity exceeding 12 million tonnes per annum. The Alumina’s partner in AWAC is Alcoa Corporation (“Alcoa”), who owns the remaining 60% and manages the day-to-day operations.

Listed on the ASX and the OTC market in the U.S., Alumina is one of Australia’s top 100 companies delivering ongoing growth. Its strategy is to invest world-wide in bauxite mining, alumina refining and selected aluminium smelting operations. To achieve this, Alumina commits to maximising long-term shareholder returns by (1) working together with Alcoa on the strategic direction of AWAC, (2) ensuring stewardship and governance oversight of the AWAC investment, and (3) providing transparency into the business performance.

Formed in 1994, AWAC employs over 5,000 people to mine and refine bauxite, which produces alumina and markets the alumina to the aluminium smelters all over the world and processes a percentage of this alumina for aluminium metal production. AWAC has a global network of mines and refineries in Australia, the United States, Guinea, Suriname (closed January 2017),Brazil and Spain. AWAC also has interest in a smelter in Victoria Australia. In addition, AWAC has a 25.1% interest in a bauxite mine and alumina refinery joint venture with Ma'aden in Saudi Arabia. It is a low-cost producer and many of its operations are positioned in the lower-cost quartiles.

(Source: Website of Alumina)

Portland Aluminium Smelter

The Portland Aluminium Smelter ("PAS") is an unincorporated joint venture established in July 1984. The current participants are:

Alcoa of Australia Limited 55.0%
Marubeni Aluminium Australia Pty Limited 22.5%
CITIC Nominees Pty Limited 22.5%

Each participant is represented on the PAS joint venture participant management committee. Each of them is entitled to its proportionate share of aluminium production, and is responsible for its own marketing and sale of aluminium.

PAS is located at Point Danger, 5 km south of Portland in Western Victoria, Australia. It is managed by Alcoa Portland Aluminium Limited, a wholly-owned subsidiary of Alcoa, on behalf of the participants of PAS.

PAS employs over 450 people, generates over A$700 million in sales each year and represents a total investment of A$1,500 million. It is one of the largest and most efficient aluminium smelting operations in the world. Their smelting and emission control technologies developed by Alcoa are the most efficient technologies in the world.. PAS has achieved excellent environment protection track records and harmonious industrial relations.

Production at PAS had commenced in late 1986, with the second potline launched in March 1988 and the total number of pots amounts to 340 to date. In 1990, innovations and improvements had increased its capacity from a designed capacity of 300,000 tonnes p.a. to 320,000 tonnes p.a. Subsequent operational improvements have further increased its annual nameplate production capacity to more than 345,000 tonnes of high-quality primary aluminium ingot per annum. Almost all the productions are exported.

PAS sources all of its required alumina from Alcoa's Kwinana, Pinjarra and Wagerup refineries in Western Australia. Each participant has its own alumina supply agreement with Alcoa. The alumina is shipped from Western Australia to Portland port via contract vessel. The alumina is unloaded at the port using a vacuum unloading system, and transported by a 4.5 km enclosed conveyor to PAS. Petroleum coke, used in the production of consumable carbon anodes which are essential to the smelting process, is imported from the United States and China and is also unloaded by the vacuum system.

PAS has adopted a vigorous programme to protect the environment. As a result, it is one of the cleanest and most efficient smelters in the world. It has also achieved a reduction in solid general waste from more than 1,100 cubic metres per month in 1989 to less than 2 cubic metres per month today.

The Company's share of production from its 22.5% interest in PAS is around 66,000 tonnes of primary aluminium ingot each year, which it exports to key customers in the Asia Pacific region, including China, Japan and South Korea and other countries.

On 1 March 2010, a new base load electricity contract (the “EHA”) was signed with Loy Yang Power to secure the supply of electricity to the Portland Aluminium Smelter from 2016 to 2036. The EHA effectively allows the Portland Aluminium Smelter to secure electricity supply when the electricity supply agreement expires in 2016. The pricing mechanism used in the EHA includes a component that is subject to certain escalation factors which, in turn, are affected by the consumer price index, producer price index and labour costs.

Due to economic reasons, the EHA was subsequently terminated on August 2016 and the Company entered into a new 4-year electricity hedging agreement which is effective from 1 August 2017 and expires on 31 July 2021.


Updated: 20 December 2017

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