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CONTENTS
About Alumina Limited
Undiluted exposure to quality
Unique portfolio of quality assets
Chairman and CEO Report
Sustainability
Directors’ Report
Operating and Financial Review
Letter by Chair of Compensation Committee
Remuneration Report
Financial Report
Directors’ Declaration
Independent Auditor’s Report
Financial History
01
02
03
04
10
15
22
48
50
77
111
112
119
ALUMINA LIMITED ANNUAL REPORT 2021 About
Alumina Limited
Chairman and
CEO Report
Sustainability
Directors'
Report
Remuneration
Report
Financial
Report
Financial
History
01
ABOUT
ALUMINA
LIMITED
The Annual Report is presented in US dollars,
unless otherwise specified.
ALUMINA LIMITED HAS A
UNIQUE INVESTMENT IN SOME
OF THE WORLD’S HIGHEST
QUALITY ALUMINA ASSETS
Alumina Limited is a leading Australian company
listed on the Australian Securities Exchange (ASX)
and trades on the OTC Market in the US. Alumina
Limited is the 40 per cent partner in the AWAC
joint venture whose assets comprise globally
leading bauxite mines and alumina refineries in
Australia, Brazil, Spain, Saudi Arabia and Guinea.
AWAC also has a 55 per cent interest in the
Portland aluminium smelter in Victoria, Australia.
AWAC’s joint venture partner and operator is Alcoa Corporation. The
AWAC joint venture was formed in 1994 and our relationship with Alcoa
dates back to the early 1960s when Western Mining Corporation (now
called Alumina Limited) began to explore bauxite deposits and other
resources in the Darling Ranges of Western Australia. Alcoa Inc. was
invited to join the project to provide technology, aluminium expertise
and finance.
Over the following years the venture grew to include refineries and
smelter interests as the partners sought to take opportunities to expand
the business. By 1990, WMC Limited’s interests in Alcoa of Australia
had grown through acquiring the interests of other minority participants,
other than Alcoa.
WMC Limited and Alcoa Inc. combined their respective bauxite, alumina
and alumina-based chemicals businesses and investments and some
selected smelting operations to create Alcoa World Alumina and
Chemicals (AWAC) in January 1995. Alumina Limited was created
on 11 December 2002 when WMC Limited’s alumina assets were
demerged from the nickel, copper and fertilizer businesses.
The demerger has enabled investors to benefit directly from the full
value of the bauxite, alumina and aluminium business.
The Company’s strong balance sheet and joint venture cash distribution
arrangements have been crucial in delivering another year of healthy
dividends to shareholders.
02
UNDILUTED EXPOSURE TO QUALITY
IN 2021 ALUMINA LIMITED POSTED A
PROFIT AFTER TAX OF $187.6 MILLION
COMPARED TO NET PROFIT AFTER TAX
OF $146.6 MILLION IN 2020
Excluding significant items, the net profit after tax would have been
$226.0 million dollars (2020: $146.5 million). The Company declared
a fully franked final dividend of 2.8 US cents per share, bringing the
full year dividend to 6.2 US cents per share, representing an average
dividend yield of 7.3% over the last five years, fully franked.
positive in the second half. As a result, Alumina Limited has been able to
increase dividends to shareholders for 2021 by nine per cent. The average
realised alumina price in 2021 was higher at $321 per tonne (2020: $268).
Despite AWAC’s average cash cost of production increasing to $236 per
tonne in 2021 (2020: $199) due to a stronger Australian dollar, higher
bauxite costs during the Willowdale crusher move and higher energy
costs, AWAC’s margin increased year on year to $85 per tonne (2020:
$69). This demonstrates how AWAC’s low position on the cost curve and
high exposure to alumina index pricing enables AWAC to capitalize on
increased prices. In 2021, AWAC sold about 97 per cent of its smelter-
grade alumina on an alumina index or spot pricing basis.
Looking forward we expect that aluminium demand will increase due to
the demand for electric vehicles and growth in the construction, electrical,
packaging and other sectors. Alumina Limited through its investment in
AWAC’s tier one assets, is well placed to support this growth.
In 2021, AWAC demonstrated resilience in moderate markets in the first
half the year, and took full advantage of opportunities once markets turned
Alumina Limited represents a unique opportunity for a pure investment
in AWAC, one of the world’s largest bauxite and alumina producers.
ALUMINA LIMITED RESULTS
$187.6 M
2021 net profit after tax
2020: $146.6 million
$193.5 M
2021 net cash
distributions from AWAC
2020: $182.7 million
6.2¢ PER SHARE
2021 dividends
2020: 5.7 cents per share
$55.9 M
2021 net debt
2020: $49.6 million
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03
UNIQUE PORTFOLIO OF QUALITY ASSETS
Alumina Limited is the 40 per cent partner in the AWAC joint
venture whose assets comprise globally leading bauxite mines
and alumina refineries in Australia, Brazil and other countries.
AWAC also has a 55 per cent interest in the Portland aluminium
smelter in Victoria Australia. AWAC’s 60 per cent managing partner
is Alcoa Corporation. The AWAC joint venture was formed in 1994
and our relationship with Alcoa dates back to 1961. Alumina Limited
was created on 11 December 2002 when WMC Limited’s alumina
assets were demerged from the nickel, copper and fertilizer businesses.
The demerger has enabled investors to benefit directly from the full
value of the bauxite, alumina and aluminium business.
IN 2021, AWAC RECORDED A NET
PROFIT AFTER TAX OF $443.8 MILLION
COMPARED TO A NET PROFIT AFTER
TAX OF $401.6 MILLION IN 2020
The increase in AWAC’s 2021 net profit was largely as a result of higher
realised alumina prices partially offset by a higher cash cost of production
and higher charges for significant items. AWAC’s EBITDA for 2021 was
$1,146.2 million (2020: $895.9 million) and excluding significant items
would have been $1,205.7 million (2020: $895.2 million).
AWAC RESULTS (USGAAP)
$443.8 M
2021 net profit after tax
2020: $401.6 million
$321.0 PER TONNE
2021 realised Alumina price
2020: $268.0 per tonne
$718.3 M
2021 AWAC cash
from operations
2020: $671.8 million
$1,205.7 M
2021 AWAC EBITDA
excl significant items
2020: $895.2 million
Financial History 04
CHAIRMAN AND
CEO REPORT
ALUMINA LIMITED IS CONFIDENT
AND POSITIVE ON ITS FUTURE. OUR
MARKETS ARE ROBUST AND GROWING.
WE ALSO SEE CONSTRAINTS ON
THE GROWTH OF CHINESE ALUMINA
AND ALUMINIUM PRODUCTION.
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05
We see the future with confidence. The
fundamentals of our business are strengthening
year by year.
This is because decarbonization is driving more demand for metal.
As decarbonization accelerates, the fundamental cost competitiveness
of our AWAC assets is complemented by their parallel carbon position.
There are steps we must take. AWAC has identified new technologies
in alumina refining which may be capable of producing step change
improvements in our emissions.
The Company’s financial performance in 2021 was robust, following
the market shocks and global uncertainty of 2020.
The Company reported a profit of $187.6 million ($226.0 million after
excluding significant items) and declared fully franked dividends to
shareholders of US 6.2 cents. The higher average alumina prices resulted
in an improved performance in 2021. The Company’s low debt levels
and quality of its asset base assisted in maintaining consistent dividends
to shareholders.
Alumina Limited and Decarbonization
Alumina Limited’s investment is focused on the bauxite and alumina
industry, which we believe has attractive market fundamentals. AWAC
has benefited from its strong competitive position in the bauxite and
alumina industry.
However, the global business environment, markets and consumer
expectations are ever changing and the Company and AWAC must
continually adapt.
The aluminium industry has an important role in a net-zero carbon world.
The increase in global efforts to decarbonise, particularly in China,
was a key development for energy and commodity markets in 2021.
China’s commitment to decarbonisation is a longer-term game changer
for the industry. China’s changing carbon and energy policies and
accompanying actions also had a short-term impact. Constraints in
energy supply, alumina and aluminium production and higher energy
prices increased China’s alumina and aluminium prices in 2021.
Mr W Peter Day
Mr Mike Ferraro
06
The transition from predominantly carbon-based energy is expected
to increasingly impact the alumina and aluminium industry. The global
economy experienced coal and gas shortages and higher energy prices in
2021. The rapid pace of change arising from decarbonisation is expected
to continue.
Decarbonisation is expected to drive an increased demand for aluminium.
Renewable energy generation, such as solar and wind power, is a
significant user of aluminium. Electric vehicles use more aluminium than
internal combustion vehicles. Transport, packaging and electrical needs
for aluminium are also positive for the industry in a de-carbonising world.
In the move to decarbonise, the most energy competitive and low
carbon producers are best placed. AWAC’s alumina refinery portfolio
has the lowest CO2 emissions intensity amongst major refiners and is
in the lowest cash cost and emissions quartile. AWAC is currently well
positioned but also recognises the need to further reduce emissions.
AWAC operations
AWAC’s alumina production of 12.6 million tonnes in 2021 represented
a decline of 0.2 million tonnes compared to the previous year. Damage
to a ship unloader at the Alumar refinery and industrial action at the
San Ciprian refinery affected production at those refineries. AWAC’s
Kwinana refinery had an annual production record during 2021.
AWAC’s cash costs of alumina production increased by $37 per tonne to
$236 per tonne, mainly due to rises in energy and raw material prices and
a higher Australian dollar. Caustic had a mild cost increase in 2021 and will
continue to provide pressure on production costs in 2022. Nevertheless,
AWAC’s lower relative caustic usage and integrated bauxite supply chain
continued to provide a competitive cost advantage, especially in light of
the high caustic prices. During 2021 AWAC maintained its position in the
first quartile of the global alumina cost curve.
The alumina market changed in the second half of the year when
production disruptions across the world contributed to a spike in
alumina prices. Alumina price indices averaged $416 per tonne in
the fourth quarter of 2021. This resulted in the average alumina price
for 2021 increasing by 21% to $329 per tonne compared to 2020.
With higher alumina prices AWAC maintained positive alumina margins
of $85 per tonne. This was an increase from the alumina margin of $69
per tonne in 2020.
AWAC successfully completed several substantial sustaining capital
projects in 2021 in line with forecasted costs. The projects included
the Willowdale mine move in Western Australia to Larego from Orion
and construction of residue storage areas and tailings ponds at the
Brazil operations.
The Company’s results and AWAC’s operating performance are discussed
in more detail in the Operating and Financial Review.
COVID-19 impacts in the year
AWAC operates in locations throughout the world that have experienced
significant health, economic, and logistical impacts as a result of the
COVID-19 pandemic. AWAC acted early to focus on the health and
safety of its workforce, and to protect the stability of operations.
A comprehensive pandemic preparedness and response plan was
implemented by AWAC Health and Safety; business continuity and
human resources measures were rapidly initiated including contact
tracing, modified health and industrial hygiene protocols, altered
shift and work patterns, face covering and physical distancing.
AWAC’s long-term safety goal is zero fatalities and serious injuries.
Pleasingly in 2021, there were no fatalities at AWAC managed facilities,
maintaining fatality free operations since 2017.
Alumina market
Realised alumina prices were constrained in the first half of 2021 by
significantly higher freight costs, as global shipping was disrupted.
Higher ocean freight rates during the year acted to lower Chinese
import parity prices and global alumina prices.
Despite the overall surplus in 2021, alumina production disruptions in
the second half of 2021 in Brazil, Jamaica and the USA caused regional
shortages. The alumina price spiked to a high of $484 per tonne. The
alumina pricing market operates relatively efficiently with the disruptions
to production being quickly reflected in higher alumina prices.
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AWAC is the largest third-party alumina producer in the Western World
and sells approximately 97% of its smelter grade alumina at index pricing
or on a spot basis. This enabled AWAC to benefit from these positive
market developments.
The outlook for the alumina market in 2022 remains positive. Whilst
alumina prices in early 2022 initially subsided from the peaks in late 2021,
in January and February they averaged $376 per tonne, well above 2021
average prices.
Sustainability
Alumina Limited in 2021 continues to prioritise its sustainability agenda.
During 2021, Alumina Limited issued a revised climate change position
statement in which it states it will, through working with the AWAC joint
venture, strive for AWAC to reduce its direct and indirect emissions (scope
1 and 2) by 45% by 2030 (from a 2010 baseline), and to net zero by 2050.
Similarly, our partner Alcoa also set out its ambition to achieve net-zero
greenhouse gas (GHG) emissions across all of AWAC’s global operations
by 2050.
In our 2020 Sustainability Update we noted AWAC has already reduced
its carbon emissions by 42% from a 2010 baseline. To deliver further
reductions in emissions, AWAC is investing in research and development
to commercialise technology that seeks to electrify its refineries to
facilitate greater use of renewable energy.
Mechanical Vapour Recompression (MVR) and Electric Calcination (EC)
have the potential to reduce a refinery’s carbon footprint by 98 percent,
whilst also reducing freshwater usage by 70 percent.
For the Portland smelter, decarbonisation will rely on further sourcing of
alternate renewable energy sources, together with inert anode technology
such as ELYSIS which our JV partner Alcoa is developing with its partners.
In 2021, Alumina Limited also held an inaugural ESG Presentation for
investors and analysts, where we explained that:
· Aluminium is core to a sustainable future
· AWAC’s assets are highly competitive on key sustainability measures
· AWAC has had a proven history of ESG management over 60 years
· AWAC is focussing on the future and innovation.
Over the coming year, we will continue to focus on an array of
sustainability issues, including seeking to comply in full with the
TCFD framework.
Alumina Limited’s and AWAC’s sustainability targets and outcomes
are discussed in greater detail in the Sustainability section of this
Report and the 2020 Sustainability Update on the Company’s website.
Portland smelter
AWAC secured new 5-year power agreements in 2021 for the Portland
smelter, together with agreements with the Victorian and Australian
federal governments. This has been a positive change for the employees,
community and your Company. Global aluminium demand grew by 7%
in 2021 and has returned to pre-COVID levels. With aluminium prices
achieving decade-highs in 2021, the Portland smelter is now achieving
positive margins.
The smelter has been working to reduce its carbon dioxide emissions
by increasing the proportion of renewable energy that is supplied to the
smelter and by improved energy efficiency. With Victorian government
plans for 50% renewable grid power by 2030, that should enable the
smelter to further reduce its carbon emissions.
Capital management/shareholder returns
Alumina Limited received $193.5 million in net cash distributions from
AWAC in 2021. (2020: $182.7 million). The total declared dividends for
the year were US 6.2 cents per share. This represents a yield of 4.6% to
shareholders for 2021, based on the average share price for the year.
Alumina Limited’s dividend policy is to distribute free cash flow derived
from net AWAC distributions less the Company’s corporate and finance
costs, whilst taking into consideration its capital structure, any capital
requirements for AWAC and market conditions.
The higher alumina prices in late 2021 have provided strong positive cash
flows in early 2022.
The Board took the timing of these receipts into account when declaring
the 2021 final dividend. Some of the distributions received from AWAC
in the first quarter of 2022 were drawn on for the 2021 final dividend.
The 2022 interim dividend will be adjusted accordingly.
08
AWAC’s mine and refinery portfolio is a long term, tier 1 investment. To
maintain the quality of the assets we need to continue to invest in them.
Board and management
AWAC’s growth and sustaining capital expenditures are expected to
increase in the near to medium term, with investment in a number of large
projects. The projects include bauxite mine moves and residue storage
areas. The increased investment demonstrates confidence in the long-
term competitive positioning for AWAC. The investment will also solidify
the long-term environmental and competitive position of AWAC.
The Company’s net debt at 31 December 2021 was $55.9 million which
is a gearing of 3.2 %. The Company has debt facilities of US$350 million
with maturities ranging from 2022 to 2024.
Your Company has a strong balance sheet and a conservative approach
to debt. This makes Alumina Limited well placed for market cycles and
investment opportunities.
As part of normal director succession planning, Ms Emma
Stein retired from the Board as a Non-Executive Director during
2021 at the end of her final term. Ms Stein was an independent
non-executive director of the Company since 2011. Ms Shirley
In’t Veld was appointed to the Board in August 2020, was
elected at the 2021 AGM, and assumed the Chair role of the
Compensation Committee following Ms Stein’s retirement.
Mr Grant Dempsey resigned as Chief Financial Officer in
November 2021, with Mr Dempsey leaving the Company
on 31 January 2022. Ms Galina Kraeva, who was previously
General Manager — Finance, was appointed to act as Interim
Chief Financial Officer.
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Conclusion
The AWAC assets have remained competitive through industry and global
change. AWAC continued to provide solid returns during the challenging
conditions in the first half of 2021 and then ramped up returns as market
conditions moved in its favour in the second half.
The dividends paid in 2021 continue a consistent record of returns to
shareholders. The improvement in the alumina market in late 2021 and
continuing global actions to decarbonise provides a positive backdrop
for the Company for 2022. With low debt levels and low-cost assets,
Alumina Limited is well-positioned for the future.
The Board thanks the employees of Alumina Limited and AWAC for their
contributions in 2021.
W Peter Day
Chairman
Mike Ferraro
Chief Executive Officer
10
SUSTAINABILITY
ALUMINA LIMITED TO STRIVE
FOR NET ZERO BY 2050
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AWAC’s indicative decarbonisation roadmap
Alumina Limited has announced that it will,
through working with the AWAC joint venture,
strive for AWAC to reduce its direct and indirect
emission (scope 1 and 2) by 45% by 2030 from
a 2010 baseline, and to net zero by 2050.
AWAC’s ability to reach net zero is contingent on certain factors, including:
· Advancements in technologies to commercial viability, such as
Mechanical Vapour Recompression (MVR) and Electric Calcination (EC)
which AWAC is evaluating.
· The ability of AWAC’s aluminium smelter to use inert anode technology,
such as ELYSIS which our JV partner Alcoa is developing with its partners;
· The availability of cost competitive renewable energy generation, which
will be required to power new technologies and displace fossil fuels; and
· Government policy settings that support investment in decarbonisation
and options to offset remaining emissions.
AWAC Decarbonisation enablers
Alumina Refining
Aluminium Smelting
Mechanical Vapour
Recompression
for digestion
Electric
calcination
Inert anodes that
only emit oxygen
TECHNOLOGY
CATALYST
ENERGY
REQUIREMENT
Cost competitive renewable energy generation
Government policies supporting investment in abatement and R&D
Inert anode technology is the first industrial process that emits pure oxygen as its by-product from the aluminium smelting process rather than GHG. An example of this is Elysis, which is being
developed in a joint venture between Alcoa and Rio Tinto. The process is being ramped up to industrial-sized scale through additional development work.
12
To facilitate the decarbonisation of AWAC’s refineries, AWAC is
conducting R&D on two particular types of technology, MVR and EC.
These technologies have not been applied to an alumina refinery,
and will require investment to prove their commerciality. If MVR is able
to be retrofitted to our refineries, then it provides AWAC with a number
of advantages. These include improved energy efficiency, reduced water
usage, and the ability for digestion to be emissions free if the electricity
is contracted with a green power purchase agreement.
AWAC’s refineries predominantly use natural gas, whilst the Portland
smelter utilises electricity delivered from the grid. In order to decarbonise,
AWAC will likely be further reliant on green electricity in the jurisdictions
where its assets are located, as MVR and EC will utilise green electricity
to substitute heat generated by fossil fuels. This will require continued
investment from generators and governments in low-cost renewable
generation technology.
AWAC is already the lowest emitter of CO2e emissions amongst major
alumina producers, averaging 0.515 tonnes of CO2e per tonne of alumina.
With its future focus on remaining low on the global emissions curve
through technology such as MVR and EC, AWAC intends to remain
a global leader in low emission alumina.
Aluminium is core to our sustainable future
We believe that aluminium will be core to a
sustainable future. Aluminium is a lightweight,
ductile, malleable, conductive metal with a
corrosive resistant oxide layer.
Its applications are numerous from construction and transport, through
to electricity transmission and it is also infinitely recyclable. These
characteristics have always held aluminium in high regard with consumers,
and will invariably lead to increased demand if we are to transition to a
decarbonised world.
The International Aluminium Institute (IAI) has also explored realistic and
credible technological pathways that can significantly reduce the global
aluminium carbon footprint from approximately 1,095 million tonnes
in 2018, to 53 million tonnes in 2050 under a 1.5 degrees scenario.
The three pathways identified by the IAI are:
Pathway 1
Electrical decarbonisation
Pathway 2
Direct emissions reduction
Pathways 3
Recycling and resource efficiency
Approximately 60% of the aluminium industry’s emissions are from
electricity for aluminium electrolysis. Decarbonisation of electrical
generation requires additional production of aluminium, as aluminium
is a critical component for solar panels and wind turbines. With increased
wind generation, smelters may also be called upon to act as a “virtual
battery”, adjusting production to cater for reduced or excess generation.
Alumina refineries and aluminium smelters have significant direct
non-electricity emissions, such as fuel combustion on site, or anode
consumption. Facilities will require investment in technology innovation to
abate emissions. These solutions may be inert anodes, fuel switches, green
hydrogen, mechanical vapour recompression, or electrical calcination.
Infinite recyclability without loss of properties is one of aluminium’s unique
benefits. Recycled aluminium has a significantly lower energy requirement
and so has a lower emissions profile than primary aluminium. In order to
decarbonise the aluminium industry, improvements will be required in
recycling rates and scrap sorting technology.
Each organisation’s pathway to decarbonisation will be bespoke and
likely dependent on local access to energy and other resources, but it is
certain that aluminium will be important for the transition to a low carbon
economy, and imperative to support continued economic growth.
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Social
AWAC continues to make progress on a number of social issues. During
June 2021, Alcoa of Australia issued its first Modern Slavery Statement
(Statement). The Statement sets out actions that Alcoa of Australia has
taken to identify and mitigate modern slavery risks in the business and
supply chains in 2020, as well as key areas of focus for the future. The
Statement concludes that no incidents of modern slavery were identified
in Australian operations or supply chains for the 2020 reporting period.
Alcoa of Australia has a vast supply chain, which procures A$2.5b in
goods and services with over 2,100 suppliers.
Modern slavery risks in the supply chain are overseen through Alcoa’s
Human Rights Policy, established global Supplier Standards (which
are referenced in tender documents and contracts), as well as utilising
Supplier Sustainability Program to provide assessment, due diligence and
monitoring of supply chains addressing ESG risks. Supporting this program
are three global third-party program partners, Descartes MK Denied Party
Screening, Trace International, and EcoVadis to provide specialised
supplier screening, audit and compliance assessment functions.
In order to manage social risk, Alcoa has a strategic long-term goal to
implement a social management system (SMS) at all locations during
2022. The SMS incorporates governance resources including corporate
policies and standards, governing body oversight matched with defined
procedures and assessments. The SMS will include the definition of
performance metrics and long-term goals to be accomplished by 2025
and 2030. The work being undertaken by Alcoa to implement a SMS will
define metrics and then measure progress in a range of socio-economic
indicators relevant to interactions with host communities, and will drive
consistency in approach across operations, strengthening practices. For
example, the SMS contains global standards for engaging with Indigenous
and Land-Connected Peoples and managing cultural heritage, which are
aligned with the International Council on Mining and Metals (ICMM)
Indigenous Peoples and Mining Statement.
AWAC’s assets operate in several jurisdictions throughout the world.
Alcoa, as the manager of AWAC complies with all local law and
regulations relating to hiring children. Additionally, Alcoa conducted
a living wage study of all direct employees of Alcoa across all jurisdictions
in which they operate, which includes AWAC’s locations, and concluded
that Alcoa pays a living wage.
Proven ESG management over 60 years
AWAC has had a history of proven ESG management over
60 years and has been a steward of the Jarrah Forest in
Western Australia over that period, where our mines have
been recognised by the United Nations and received its
Environmental Excellence Award. AWAC was the first mining
company in the world to receive this award.
More recently, AWAC has developed the Juruti Mine in the
Amazon, which occurred hand-in-hand with the local communities
and AWAC has substantially completed the rehabilitation of
the Point Henry Smelter and the Anglesea Coal Mine sites. At
Anglesea, seven million tonnes of material have been moved in
order to reprofile the southern and western slopes of the mine,
as well as grass seeding to create a heathy woodland.
AWAC has a goal of progressively rehabilitating mined land
to an agreed post-mining land use. Where AWAC activity
has impacted land areas of significant biodiversity value such
as the Amazon Forest, the goal is to re-establish the original
biodiversity values of the forest. AWAC has also made a
commitment not to explore or mine in World Heritage Sites,
and each AWAC site has a Biodiversity Action Plan.
14
Governance
The manager of AWAC, Alcoa, is also a member of the International
Council for Mining and Metals (ICMM), which is an organisation focused
on enhancing the industry’s contribution to society with safe, fair and
sustainable practices. As a member of ICMM, Alcoa must meet the
commitments of the ICMM, including their ten principles, eight position
statements, and all associated performance expectations.
As a non-operator of the joint venture, our role is to provide informed
guidance to AWAC while protecting the interests of our shareholders
and stakeholders. Fulfilling this role well depends on strong and ethical
governance practices, supported by an experienced leadership team
that is aligned to our values and principles.
In 2020 Alumina Limited’s sustainability governance and strategy was
strengthened by the formation of a Sustainability Committee of the
Board. In 2021, in response to the growing importance of sustainability
topics, Alumina Limited has increased the internal resources devoted to
this area. In January 2021, we established an expanded multidisciplinary
sustainability team of four, led by our General Counsel. This includes
specialists in markets and strategy (with a focus on energy and climate
transition pathways), governance, human rights, indigenous peoples,
metrics, disclosure and external affairs.
For more information on sustainability, refer to the Alumina Limited’s 2020
Sustainability Update. www.aluminalimited.com/sustainability-report
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DIRECTORS’ REPORT
The Directors present their report on the
consolidated entity consisting of Alumina Limited
(the Company) and the entities it controlled at the
end of, or during, the year ended 31 December
2021 (the Group).
Directors
Unless otherwise indicated, the following persons were Directors of the
Company during the financial year and up to the date of this report:
W P Day (Chairman)
E R Stein (retired 25 May 2021)
C Zeng
D O’Toole
J Bevan
S E In’t Veld
M P Ferraro (Managing Director and Chief Executive Officer)
Board of Directors
The Company’s Directors in office as at 31 December 2021 were:
MR W PETER DAY
LLB (HONS), MBA, FCA, FCPA, FAICD
Chairman and Independent
Non-Executive Director
Mr Day was appointed as a Director of the Company on 1 January
2014 and was appointed Chairman of the Board on 1 April 2018.
He is a member of the Nomination, Compensation and Audit & Risk
Management Committees and Chair of the Sustainability Committee.
Mr Day is currently Non-Executive Chairman of Australian Unity Investment
Real Estate (appointed September 2015), and a former Director of:
Ansell (August 2007–August 2021, Boart Longyear (February 2014–
September 2017), Federation Centres (October 2009–February 2014),
Orbital Corporation (August 2007–February 2014) and SAI Global
(August 2008–December 2016).
Mr Day brings extensive experience in the resource, finance and
manufacturing sectors, having held a number of senior positions with
Bonlac Foods, Rio Tinto, CRA, Comalco and the Australian Securities
and Investments Commission. He is a former Chief Financial Officer
(CFO) of Amcor. He also supports initiatives in health and disability
services, and mentoring.
16
MR CHEN ZENG
MIF
Non-Executive Director
MS DEBORAH O’TOOLE
LLB, MAICD
Independent Non Executive Director
Mr Zeng was appointed as a director of the Company on 15 March 2013.
He is a member of the Nomination, Compensation, Sustainability and
Audit and Risk Management (appointed 7 August 2014) Committees.
Mr Zeng is also currently the Chairman and President of CITIC Pacific
Limited, the Chairman and Chief Executive Officer of CITIC Pacific
Mining Management Pty Ltd (“CITIC Pacific Mining”) and CITIC Mining
International Ltd, the holding company of CITIC Pacific Mining. He is
also the Chairman of Dah Chong Hong Holdings Limited (focused on
distribution of automobile, healthcare and consumer goods). He is a
former Executive Director of CITIC Limited (listed on the Hong Kong
Exchange) and Non-Executive Director of CITIC Dameng Holdings
Limited (listed on the Hong Kong Exchange), Macarthur Coal Limited
(July 2007–October 2011) and Marathon Resources Limited (resigned
in January 2014). Mr Zeng also served as a Director on the Board of
CITIC Group between January 2010 and December 2011. Before joining
CITIC Pacific Mining, Mr Zeng was an Executive Director, Vice Chairman
and Chief Executive Officer (CEO) of CITIC Resources Holdings Limited
(“CITIC Resources”), a CITIC Group controlled Hong Kong listed
company focused on crude oil production, metal mining and refining,
and commodity trading. Mr Zeng was redesignated as Non-Executive
Director of CITIC Resources in March 2014. Mr Zeng is also the Chairman
of CITIC Australia. Mr Zeng has over 30 years of experience in project
development, management, and a proven record in leading cross-cultural
professionals in the resources sector. He has been working in Australia
since 1994 and has extensive experience in various industries including
aluminium smelting, iron ore mining and processing and coal mining.
Ms O’Toole was appointed as a director on 1 December 2017. She is a
member of the Nomination, Sustainability, and Compensation Committees
and Chair of the Audit and Risk Management Committee (from 1 April
2018). Ms O’Toole is a Non-Executive Director of Sims Limited (appointed
November 2014). She also serves as Chair of Transurban Queensland, and
as an independent director of Credit Union of Australia Ltd (appointed
March 2014) and Pacific National Rail Group. Ms O’Toole is a former
Non-Executive Director of Boral Limited (September 2020–October 2021),
Boart Longyear Limited (appointed October 2015–September 2017),
Wesley Research Institute (appointed March 2013–November 2019),
CSIRO, Norfolk Group, various companies in the MIM and Aurizon Groups
and Government and private sector advisory boards.
Ms O’Toole has extensive executive experience across a number of
sectors including over 20 years in the mining industry and, in transport
and logistics which included managerial, operational and financial roles.
She has been CFO of three ASX listed companies: MIM Holdings Limited,
Queensland Cotton Holdings Limited and Aurizon Holdings Limited.
MR JOHN A BEVAN
BCom
Independent Non-Executive Director
Mr Bevan was appointed Non-Executive Director on 1 January 2018. He has
been appointed a member of the Audit and Risk Management Committee,
the Compensation Committee, the Sustainability Committee and the
Nomination Committee and Chair of the Nomination Committee from
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1 April 2018. Mr Bevan is currently a Non-Executive Director and Chairman
of BlueScope Steel Limited (appointed March 2014), a Non-Executive
Director and Chairman of Ansell (appointed August 2012), Non-Executive
Director of Humpty Dumpty Foundation (since 2017) and a former director
of Nuplex Industries Limited (September 2015–September 2016).
In 2014, she was Chairman of the Queensland Government Expert
Electricity Panel and a member of the Renewable Energy Target Review
Panel for the Department of Prime Minister and Cabinet. Ms In’t Veld’s
experience with the Renewable Energy Target Panel and CSIRO will also
bring to Alumina expertise in renewables, research and innovation.
Mr Bevan was formerly the Chief Executive Officer and Executive Director
of Alumina Limited (June 2008–December 2013). Prior to his 2008
appointment to Alumina Limited, he spent 29 years in the BOC Group Plc
where he was a member of the Board of Directors and held a variety of
senior management positions in Australia, Korea, Thailand, Singapore and
the United Kingdom. Mr Bevan brings to the Board extensive commercial
and operational experience gained through operating joint ventures in
many parts of the world, particularly Asia.
Ms In’t Veld is a member of the Audit and Risk Management Committee,
Nomination Committee and Sustainability Committee and Chair of the
Compensation Committee (appointed 26 May 2021).
As a former Chief Executive Officer of Verve Energy and senior executive
in the resources industry, Ms In’t Veld will bring to the Board extensive
experience in the aluminium industry, energy markets and management
of long-life assets.
MS SHIRLEY E IN’T VELD
BCom LLB (HONS)
Independent Non-Executive Director
MR MICHAEL P FERRARO
LLB (HONS)
Managing Director and Chief Executive Officer
Ms In’t Veld was elected as an independent, Non-Executive Director of the
Company on 3 August 2020.
She is currently a Non-Executive Director with APA Group Limited (appointed
19 March 2018), Develop Global Ltd (appointed July 2021) and Canadian
listed company, Karora Resources Inc. (appointed December 2021). She is
formerly Deputy Chair of CSIRO (term ceased 30 June 2020), a Non-Executive
Director of Northern Star Resources Limited (appointed September 2016–
June 2021), NBN Limited (December 2015–December 2021), Perth Airport,
DUET Group, Asciano Limited, Alcoa of Australia Limited and a Council
Member of the Chamber of Commerce and Industry of Western Australia.
Ms In’t Veld was also the Managing Director of Verve Energy (2007–2012)
and, before that, she worked for 10 years in senior roles at Alcoa of
Australia, WMC Resources Ltd, Bond Corporation and BankWest.
Prior to his appointment as CEO and Managing Director Mr Ferraro
was a Non-Executive Director of Alumina Ltd from 5 February 2014 to
31 May 2017 and Partner, Client Development-Asia Pacific at Herbert
Smith Freehills, a global law firm. He was also formerly global head of
the firm’s Corporate Group and a member of its executive management
team. Mr Ferraro is also a former Non-Executive Director of Helloworld
Travel Limited (January 2017–October 2021).
Between 2008 and 2010 Mr Ferraro was Chief Legal Counsel at BHP
Billiton Ltd. Mr Ferraro has considerable experience in the resources
sector and has over 30 years of experience in joint ventures, mergers
and acquisitions, fund raising and regulatory issues across a wide range
of sectors and countries. He also has considerable experience in the
commercial and financing aspects of large transactions gained from
a number of years in investment banking as a corporate adviser.
18
Company Secretary
MR STEPHEN FOSTER
BCOM LLB (HONS) GDIPAPPFIN (SEC INST)
GRADDIP CSP, ACIS
General Counsel/Company Secretary
Mr Foster is responsible for legal, company secretarial, shareholder
services, insurance and human resources. He has a wide range of legal
and commercial experience gained over 30 years, at Village Roadshow
and WMC Limited, after working with the legal firm of Arthur Robinson &
Hedderwicks (now Allens). The appointment of the Company Secretary/
General Counsel is ratified by the Board. As defined in the Board Charter,
the Company Secretary is accountable directly to the Board, through the
Chair, on all matters to do with the proper functioning of the Board.
The role of Company Secretary/General Counsel for Alumina Limited
includes:
· providing legal advice to the Board and management as required;
· advising the Board on corporate governance principles;
· generally attending all Board meetings and preparing the minutes;
· monitoring that the Board and Committee policies and procedures
are followed;
· facilitating the induction of Directors; and
· managing compliance with regulatory requirements.
Meetings of Directors
Particulars of the number of meetings of the Company’s Directors
(including meetings of committees of Directors) during the financial
year, and the number of those meetings attended by each Director
(as applicable), are detailed in the table on page 19.
Interests of Directors
Particulars of relevant interests in shares in the Company, or in any related
body corporate held by the Directors as at the date of this report are set
out in the Remuneration Report on page 70 of this report. Particulars
of rights or options over shares in the Company, or in any related body
corporate, held by the Directors as at the date of this report are set out
in the Remuneration Report on page 70 of this report.
Insurance of officers
During or since the end of the financial year, the Group has paid the
premiums in respect of a contract to insure Directors and other officers
of the Group against liabilities incurred in the performance of their
duties on behalf of the Group. The officers of the Group covered by the
insurance policy include any natural person acting in the course of duties
for the Group who is or was a Director, secretary or executive officer as
well as senior and executive staff. The Company is prohibited, under the
terms of the insurance contract, from disclosing details of the nature of
liability insured against and the amount of the premium.
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Alumina Limited Directors’ Attendance at Meetings January to December 2021
Board
meeting
Board Committee
meetings
Audit and Risk
Committee meetings
Compensation
Committee meetings
Nominations
Committee meetings
Sustainability
Committee meetings
Eligible
to attend
Attended
Eligible
to attend
Attended
Eligible
to attend
Attended
Eligible
to attend
Attended
Eligible
to attend
Attended
Eligible
to attend
Attended
3
10
10
10
10
10
10
3
8
10
10
10
10
10
0
0
0
0
0
0
0
0
0
0
0
0
0
0
3
7
7
3
5
7
0
2
2
0
2
2
1
2
2
1
2
2
1
4
4
1
4
4
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
7
7
7
7
7
7
2
2
2
2
2
2
2
2
2
2
2
2
4
4
4
4
4
4
Directors
E R Stein1
C Zeng
P Day
M Ferraro2
D O’Toole
J Bevan
S In't Veld
1. Ms Stein retired on 25 May 2021. 2. Mr Ferraro is Managing Director and CEO and is not a member of the Committees of the Board however may attend Committee meetings
in his capacity as CEO.
Indemnity of officers
Rule 75 of the Company’s Constitution requires the Company to indemnify
each officer of the Company (and, if the Board of the Company considers
it appropriate, any officer of a wholly owned subsidiary of the Company)
out of the assets of the Company against any liability incurred by the
officer in or arising out of the conduct of the business of the Company or
the relevant wholly-owned subsidiary or in or arising out of the discharge
of the duties of the officer, where that liability is owed to a person other
than the Company or a related body corporate of the Company. This
requirement does not apply to the extent that the liability arises out of
conduct on the part of the officer which involved a lack of good faith, or to
the extent that the Company is otherwise precluded by law from providing
an indemnity. It also does not apply to the extent and for the amount that
the officer is not otherwise entitled to be indemnified and is not actually
indemnified by another person (such as an insurer under any insurance
policy). ‘Officer’ in this context means: a director, secretary, senior
manager or employee; or a person appointed as a trustee by, or acting
as a trustee at the request of, the Company or a wholly owned subsidiary
of the Company, and includes a former officer. The Constitution also
permits the Company, where the Board considers it appropriate, to enter
into documentary indemnities in favour of such officers. The Company
has entered into such Deeds of Indemnity with each of the Directors,
which indemnify them consistently with rule 75 of the Constitution.
Dividends
Details of the dividends paid to members of the Company during the
financial year are referred to in Note 6(b) of the Consolidated Financial
Statements found on page 94.
20
Principal activities
Environmental regulation
The principal activities of the Group relate to its 40 per cent interest in the
series of operating entities forming Alcoa World Alumina and Chemicals
(AWAC). AWAC has interests in bauxite mining, alumina refining and
aluminium smelting. There have been no significant changes in the
nature of the principal activities of the Group during the financial year.
Review of operations and results
The financial results for the Group include the 12-month results of
AWAC and associated corporate activities. The Group’s net profit after
tax for the 2021 financial year attributable to members of the Company
was US$187.6 million profit (2020: US$146.6 million profit). Excluding
significant items, there would have been a net profit after tax of US$226.0
million (2020: US$146.5 million). For further information on the operations
of the Group during the financial year and the results of these operations
refer to the Operating and Financial Review on pages 22 to 47 of this report.
Matters subsequent to the end of the financial year
Other than as reported in Note 15 of the Consolidated Financial
Statements (refer to page 106), there are no significant matters,
circumstances or events that have arisen since the end of the financial
year that have significantly affected, or may significantly affect, the
Group’s operations, the results of those operations, or the Group’s state
of affairs, in the financial years subsequent to the financial year ended
31 December 2021.
Likely developments
In the opinion of the Directors, it would prejudice the interests of the
Group to provide additional information, except as reported in this
Directors’ Report (including the Operating and Financial Review on pages
22 and 47 of this report), relating to likely developments in the operations
of the Group and the expected results of those operations in the financial
years subsequent to the financial year ended 31 December 2021.
AWAC’s Australian operations are subject to various Commonwealth and
state laws governing the protection of the environment in areas such as
air and water quality, waste emission and disposal, environmental impact
assessments, mine rehabilitation, and access to and use of ground water.
In particular, most operations are required to be licensed to conduct
certain activities under the environmental protection legislation of the
state in which they operate, and such licences include requirements
specific to the subject site. Alumina Limited is a non-operating joint
venture partner that holds a 40 per cent interest in Alcoa World Alumina
and Chemicals (AWAC), a global enterprise. Alumina Limited annually
reports its equity interest in the greenhouse gas emissions and energy
consumption to the CDP and on an AWAC basis in the Company’s
Sustainability Update (Report). More information on environmental
performance is included in the Company’s latest Sustainability Update
available online at www.aluminalimited.com.
Rounding of amounts
The Company is of a kind referred to in the Australian Securities and
Investments Commission Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191. Amounts shown in the Financial Report
and this Directors’ Report have been rounded off to the nearest hundred
thousand dollars, except where otherwise required, in accordance with
that legislative instrument.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the
Group during the financial year.
Auditor
PricewaterhouseCoopers continues in office, in accordance with the
Corporations Act 2001 (Cth) (Corporations Act). A copy of the Auditor’s
Independence Declaration as required under section 307C of the
Corporations Act is set out on page 21 of this report.
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Non-audit services
The Group may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the Group
are important. Details of the amounts paid or payable to the
auditor (PricewaterhouseCoopers) for audit and non-audit
services provided by (or on behalf of) the auditor and its
related practices are disclosed in Note 13 of the Notes to the
Consolidated Statements in the Financial Report on page 105.
The Board of Directors has considered the position and, in
accordance with advice received from the Audit and Risk
Management Committee, is satisfied that the provision of
non-audit services during the financial year by (or on behalf
of) the auditor and its related practices, is compatible with the
general standard of independence for auditors imposed by the
Corporations Act. The Directors are satisfied that the provision
of those non-audit services did not compromise the auditor
independence requirements of the Corporations Act for the
following reasons:
· All non-audit services have been reviewed by the Audit and
Risk Management Committee to ensure they do not impact
the impartiality and objectivity of the auditor
· None of the services undermine the general principles
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants. The fees paid
or payable during the financial year for services provided by
(or on behalf of) the auditor of the parent entity are disclosed
in Note 13 of the Notes to the Consolidated Statements in the
Financial Report on page 105.
Corporate Governance Statement
The Company has, for the 2021 reporting year, elected to
disclose the Corporate Governance Statement only on the
Company’s website. The Corporate Governance Statement
can be found at www.aluminalimited.com/about-governance.
Auditor’s independence declaration
As lead auditor for the audit of Alumina Limited for the year ended
31 December 2021, I declare that to the best of my knowledge and
belief, there have been:
(a) no contraventions of the auditor independence requirements
of the Corporations Act 2001 in relation to the audit; and
(b) no contraventions of any applicable code of professional conduct
in relation to the audit.
This declaration is in respect of Alumina Limited and the entities
it controlled during the period.
John O’Donoghue
Partner
PricewaterhouseCoopers
Melbourne,
22 March 2022
PricewaterhouseCoopers ABN 52 780 433 757
2 Riverside Quay, Southbank VIC 3006 | GPO Box 1331 Melbourne VIC 3001 |
T: 613 8603 1000 F: 61 3 8603 1999 | www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
22
OPERATING AND
FINANCIAL REVIEW
1. Strategy and business model
2. Principal risks
3. Review of AWAC operations
4. AWAC Financial Review
5. Alumina Limited Financial Review
6. Market, Outlook and Guidance
22
25
33
38
41
44
Note regarding non-IFRS financial information
The Operating and Financial Review contains certain non-IFRS
financial information. This information is presented to assist in
making appropriate comparisons with prior year periods and
to assess the operating performance of the business.
Alcoa World Alumina and Chemicals (AWAC) financial
information is extracted from audited financial statements
prepared in conformity with accounting principles generally
accepted in the United States of America (US GAAP).
1. Strategy and business model
Business model
Alumina Limited represents a unique investment in globally leading
bauxite mines and alumina refineries through its 40% investment in
Alcoa World Alumina and Chemicals (AWAC). AWAC also has a 55%
interest in the Portland smelter in Victoria, Australia.
The Company provides a clean look-through to AWAC’s underlying
performance. This is possible because the financial policies of both
Alumina Limited and AWAC ensure there is modest leverage in both
the Company and AWAC, the Company’s own costs are minimal and
the distribution policies of Alumina Limited and AWAC require free
cash flows to be paid to their respective shareholders.
Alumina Limited’s net profit/(loss) is principally comprised of a return on
its equity investment, and otherwise revenues are limited to small amounts
of interest income and occasional one-off revenues.
AWAC was formed on 1 January 1995 by Alumina Limited and Alcoa Inc.
combining their respective global bauxite, alumina and alumina-based
chemicals business and investments and their respective aluminium
smelting operations in Australia. Following the separation of Alcoa Inc.
into Alcoa Corporation and Arconic Inc. on 1 November 2016, Alcoa
Corporation (Alcoa) replaced Alcoa Inc as Alumina Limited’s partner
in the AWAC joint venture. Alcoa owns the 60% interest in the joint
venture and manages the day-to-day operations.
The Strategic Council is the principal forum for Alcoa and Alumina Limited
to provide direction and counsel to the AWAC entities in respect of
strategic and policy matters. The Strategic Council has five members,
three appointed by Alcoa (of which one is Chairman) and two by Alumina
Limited (of which one is the Deputy Chairman). Decisions are made
by majority vote except for matters which require a “super-majority”
vote, which is a vote of at least 80% of the members appointed to
the Strategic Council.
The following matters require a super-majority vote:
· change of the scope of AWAC
· change in the dividend policy
· equity calls on behalf of AWAC totaling, in any one year, in excess
of $1 billion
· acquisitions, divestitures, expansions and curtailments exceeding
2 million tonnes per annum of bauxite or 0.5 million tonnes per annum
of alumina or which have a sale price, acquisition price, or project total
capital cost of $50 million or greater implementation of related party
transactions in excess of $50 million
· implementation of financial derivatives, hedges and other commodity
price or interest rate protection mechanisms
· decision to file for insolvency in respect of any AWAC company.
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2021 AWAC OPERATIONS
ATLANTIC
3.0 M TONNES
alumina production
4.6 M BDT
3rd party bauxite shipments
GLOBAL
12.6 M TONNES
alumina production1
5.7 M BDT
3rd party bauxite shipments
San Ciprian
Al Ba’itha
Ras Al-Khair
CBG
Juruti
MRN
Alumar
Western Australia
Kwinana
Huntly
Pinjarra
Willowdale
Wagerup
PACIFIC
9.6 M TONNES
alumina production
1.1 M BDT
3rd party bauxite shipments
Portland
AWAC operated
Non-AWAC operated
Bauxite Mine
Smelter
Refinery
Location
Bauxite Mine
Refinery
1. Excludes alumina production from the Ras Al-Khair refinery.
24
Under the general direction of the Strategic Council, Alcoa is the
“industrial leader” and provides the operating management of AWAC
and of all affiliated operating entities within AWAC.
− up to 1 million tonnes per annum alumina off-take, at market prices,
which it may market and sell as it sees fit;
− in all cases subject to AWAC third party customer contracts
Alumina Limited is entitled to representation in proportion to its
ownership interest on the board of each entity in the AWAC structure and
is currently represented on the boards of Alcoa of Australia Ltd (AofA),
AWA Saudi Ltda. and Alcoa World Alumina LLC (AWA LLC). In addition to
the Strategic Council meetings, Alumina Limited’s Management and Board
visit and review AWAC’s operations, and participate in segment and
location meetings.
Subject to the exclusivity provisions of the AWAC agreements, AWAC is
the exclusive vehicle for the pursuit of Alumina Limited’s and Alcoa’s (and
their related corporations as defined) interests in the bauxite, alumina and
inorganic industrial chemicals businesses, and neither party can compete
with AWAC so long as they maintain an ownership interest in AWAC. In
addition, Alumina Limited may not compete with the businesses of the
integrated operations of AWAC (being the primary aluminium smelting and
fabricating facilities and certain ancillary facilities that existed at the formation
of AWAC). The exclusivity provisions would terminate immediately on and
from a change in control of either Alumina Limited or Alcoa.
Also effective immediately on and from a change of control of Alcoa
or Alumina Limited there is an increased opportunity for development
projects and expansions, whereby if either Alumina Limited or Alcoa
Corporation wishes to expand an existing AWAC operation, develop a
new project on AWAC tenements or pursue a project outside of AWAC,
it is entitled to do so on a sole basis after providing 180 days for the
other party to explore joint participation in the proposed project.
A partner that avails itself of such an opportunity would pay for all costs
related to the project, including for AWAC resources and shared facilities
used, and would be entitled to all of the project’s resulting off-take.
If there is a change of control of Alumina Limited then:
· Future alumina off-take rights, from a date nominated by Alumina
Limited, Alumina Limited or its acquirer will be entitled to buy, subject
to its 40% ownership cap:
− its net short position (calculated as total consumption less total
owned production per annum) of alumina at market price for its
internal consumption; plus
being satisfied;
· Future bauxite off-take rights
− from a date nominated by Alumina Limited, Alumina Limited or
its acquirer will be entitled to buy, at market prices, up to its net
short position of bauxite for internal consumption, subject to its
40% ownership cap and pre-existing bauxite sales contracts.
Strategy analysis
Alumina Limited is primarily focused on investing
in long-life, low-cost bauxite and alumina assets.
Alumina Limited does this currently through the
AWAC joint venture with its partner, Alcoa.
Alumina Limited and Alcoa are different companies with different
shareholders, different governance requirements and different objectives.
While AWAC is governed by constitutional documents, in a practical
sense, the reconciliation of the differing interests requires challenge,
debate and negotiation. To do this well, Alumina Limited needs to have
(and has) an independent understanding of the bauxite, alumina and
aluminium market and views on the impact of changes in the market, in
particular around capacity investment, pricing and the development of the
Chinese industry. Through the role of Alumina Limited representatives on
the Strategic Council and AWAC entity boards and working with Alcoa,
Alumina Limited contributes to the strategic and high-level commercial
actions of AWAC.
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2. Principal risks
The risk management processes are summarised in the Corporate
Governance Statement located on the Company website at
www.aluminalimited.com/about-governance/.
Alumina Limited maintains a formal Risk Management Framework (RMF),
which is overseen by the Audit and Risk Management Committee (ARMC).
The RMF contains the following elements:
· Risk management policy, which is approved initially and reviewed
annually by the ARMC, as the delegate of the Board of Directors
· Procedural document
· Risk management strategy, which explains how Alumina identifies,
mitigates, manages, monitors, reports its material risks
· Risk appetite statement, which contains risk appetite & tolerance
statements that are approved and monitored by the ARMC
· Risk profile, which captures the material risks of Alumina, and for each
risk provides a description, an allocated risk owner, appropriate risk
management strategy, controls, a forward action plan, and an inherent/
residual risk rating based on probability and impact of a risk eventuating.
Set out below are some of the key business risks faced by Alumina Limited
that could adversely affect the achievement of financial performance or
financial outcomes. There may be other risks not listed below associated
with an investment in Alumina Limited. In addition, certain risks may be
excluded as they contain confidential information, or they may result in
unreasonable prejudice to Alumina Limited.
26
Summary of key business risks
Risk Title
Description
Market Risks
Strategic
positioning
to market
exposure
Commodity Prices
AWAC’s, and hence Alumina Limited’s, performance is predominantly
affected by the market price of alumina, and to some extent the market
prices of bauxite and aluminium. Market prices are affected by numerous
factors outside of Alumina Limited’s control.
These include the overall performance of world economies, the related
cyclicality of industries that are significant consumers of aluminium and
movement in production disproportionate to demand (whether as a result
of changes to production levels at existing facilities or the development
of new facilities by competitors). An alumina and/or aluminium market in
supply surplus may lead to downward price pressure. Global growth may
slow, reducing aluminium consumption, and hence aluminium and alumina
demand, which may put downward pressure on bauxite/alumina/aluminium
prices. A fall in the market prices of bauxite, alumina and aluminium can
adversely affect Alumina Limited’s financial performance.
In addition, Chinese refineries being built outside of China at a much
lower capital cost than the rest of the industry could increase the supply of
alumina globally, which could lead to a fall in the market price of alumina.
Emerging competitors, that may be subsidised directly or indirectly by
government, entering the alumina market may cause overcapacity in the
industry which may result in AWAC losing sales or in depressed prices.
This can include current Chinese industry participants establishing new
refineries outside of China.
A technology breakthrough could lower Chinese alumina production costs,
creating a structural change in the alumina and aluminium markets. Greater
Chinese aluminium production at lower cost, combined with lower demand
in China, may lead to a greater level of Chinese primary aluminium and
semi-finished product exports, depressing the world prices of aluminium
which may put downward pressure on alumina prices.
A sustained increase in freight costs could disadvantage AWAC’s competitiveness.
Response
AWAC seeks to identify ways in which to lower
costs of production and thus achieve a low
position on the cost curve. A low position on the
cost curve allows AWAC to remain competitive
in the event of unfavourable market movements.
AWAC and Alumina Limited generally do
not undertake hedging to manage this risk.
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Risk Title
Description
Response
Strategic
positioning
to market
exposure
(continued)
Foreign exchange
While a significant proportion of AWAC’s costs are incurred in Australian
dollars, its sales are denominated in US dollars. Accordingly, AWAC and
Alumina’s Limited’s future profitability can be adversely affected by a
strengthening of the Australian dollar against the US dollar and a strengthening
against the US dollar of other currencies in which operating or capital costs
are incurred by AWAC outside Australia, including the Brazilian Real. Also,
given that China is a significant part of the world alumina and aluminium
markets, fluctuations in the Chinese Renminbi against the US dollar could
have some impact on other parts of the industry.
Customers
AWAC’s relationships with key customers for the supply of alumina
(including Alcoa) are important to AWAC’s financial performance.
The loss of key customers (including through backward integration)
or changes to sales agreements could adversely affect AWAC’s and
Alumina Limited’s financial performance.
Energy security
AWAC’s refineries and the Portland smelter are heavy consumers of
energy. There is a risk that there may be a lack of availability of energy
or cost competitive energy to service AWAC’s facilities. This would be
a threat to the viability and operation of assets through constrained
cash flow, and ultimately reduced dividends to Alumina.
Additionally, in the future the requirement for low carbon energy sources
is expected to become more important. There is a risk that the availability
of low carbon energy sources may be scarce, and hence they may command
a high price. It may also be possible that competitors gain access to low carbon
energy (or new technology, e.g. Mechanical Vapour Recompression) before
AWAC, which may disadvantage AWAC from a carbon intensity and cost curve
perspective. There are risks that renewable energy may not be available at
a reasonable price and electricity may be scarce. MVR and EC require large
amounts of renewable electricity. There is a risk that such energy sources
may not be available in sufficient quantity or at a competitive price.
AWAC and Alumina Limited generally do not
undertake hedging activities to manage this risk.
AWAC mitigates customer risk by having a
broad customer base across many countries
and regions, and having low cost refineries.
Additionally, remaining at the low end of the
alumina greenhouse gas (GHG) emissions
curve in the longer-term may make AWAC
attractive to customers seeking relatively
lower GHG alumina.
AWAC’s energy requirements and contracting
is regularly reviewed by Alcoa and Alumina
through the Strategic Council, and Market
and Operation meetings.
In Western Australia in particular, AWAC enters
into long-term energy contracts, but may
consider shorter-term contracts if required.
Additionally, Alumina regularly reviews
relevant energy markets in order to maintain
an independent view.
AWAC is also exploring technology changes
that will allow the electrification of its refineries
(Mechanical Vapour Recompression, Electrical
Calcination), reducing reliance on fossil fuels
such as natural gas.
28
Risk Title
Description
Response
Operational Risks
Operating costs
Production
AWAC’s operations are subject to conditions beyond its control that may
increase its costs (including due to foreign exchange rates) or decrease its
production, including increases in the cost of key inputs (Including energy,
raw materials, labour, caustic and freight), the non-availability of key inputs
(including secure energy), weather and natural disasters, fires or explosions
at facilities, unexpected maintenance or technical problems, key equipment
failures, disruptions to, or other problems with, infrastructure and supply.
In addition, industrial disruptions, work stoppages, refurbishments and
accidents at operations may adversely affect profitability.
AWAC may also be required from time to time to invest in sustaining capital
expenditure projects in order to maintain the production levels of our facilities,
and AWAC’s position on the relevant cost curve. However, significant capital
expenditure may also reduce distributions to Alumina Limited from AWAC
whilst projects are being funded. Examples of such capital expenditure include
mine/crusher moves, impoundments (including press filtration), energy
generation, or projects to abate AWAC’s carbon emissions.
Planned development and capital expenditure projects may not result
in anticipated construction costs or production rates being achieved.
Increases to operating costs reduce the competitiveness of AWAC, which
decreases distributions to Alumina.
Major operational failures may restrict the output of alumina or aluminium.
These may be caused by mechanical or plant failure, an “act of God”, supply
chain disruptions, material decline (or denial of access) in bauxite reserves,
industrial relations disputes, regulatory issues, deferral of expenditures,
or the loss of key personnel.
Such operational failures may reduce AWAC’s current earnings and
distributions to Alumina Limited.
Security &
data breach
Loss of technological advantage and accuracy, operations on site or proprietary
data due to organised espionage or breach of IT systems through cyber-attacks.
Some cost inputs are subject to long-term,
fixed price contracts to increase the certainty
of input pricing.
AWAC and Alumina Limited generally do not
undertake hedging activities to manage this risk.
AWAC’s operating and maintenance systems
and business continuity planning seek to
minimise the impact of non-availability of
key inputs.
AWAC’s portfolio restructuring and
repositioning continues to ensure that
operations as a whole remain competitive.
AWAC also invests in capital expenditure
projects that will reduce cash costs over
the long-term.
AWAC has policies in place to maintain
inventory, multiple suppliers, insurance, and
long-term maintenance and CAPEX programs.
Alcoa, as the manager of AWAC, maintains
a full suite of IT system controls to mitigate
against this risk.
Similarly, Alumina Limited maintains a suite
of controls to mitigate against IT threats.
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Risk Title
Description
Legal, Tax, & Compliance Risk
Response
Legal, tax, &
compliance
Joint venture
AWAC
structure
AWAC and Alumina Limited operate across a broad range of legal, regulatory
and political systems. The profitability of those operations may be adversely
impacted by changes in the regulatory regimes. AWAC and Alumina Limited’s
financial results could be affected by new or increasingly stringent laws,
regulatory requirements or interpretations, or outcomes of significant legal
proceedings or investigations adverse to AWAC or Alumina Limited. This may
include a change in effective tax rates, additional tax liabilities or becoming
subject to unexpected or rising costs associated with business operations or
provision of health or welfare benefits to employees, regulations or policies.
AWAC and Alumina Limited are also subject to a variety of legal compliance
risks. These risks include, among other things, potential claims relating
to product liability, health and safety, environmental matters, intellectual
property rights, government contracts, taxes and compliance with foreign
export laws, anti-bribery laws, competition laws and sales and trading practices.
Failure to comply with the laws regulating AWAC’s businesses may result in
sanctions, such as fines, additional tax liabilities or orders requiring positive
action by AWAC, which may involve capital expenditure or the removal of
licenses and/or the curtailment of operations. This relates particularly to
environmental regulations.
Alumina Limited and AWAC undertake a variety
of compliance training and governance functions
to mitigate these risks.
Alcoa, on behalf of AWAC maintains policy and
procedural documentation designed to comply
with regulations, for example health and safety
regulations, and environmental regulations.
Furthermore, AWAC maintains a spread of
assets and customers across a portfolio of
countries and regions to minimise disruption
and concentration risk.
Additionally, Alumina maintains a tax governance
framework, and external tax advisors.
Compliance matters are reviewed at the Strategic
Council and other forums.
AWAC’s shareholders, Alumina Limited and Alcoa, are different entities. Whilst
Alumina Limited’s sole investment is in AWAC, Alcoa is invested in a broader
range of activities, hence interests may not be aligned.
Alumina Limited does not hold a majority interest in AWAC, and decisions
made by majority vote may not be in the best interests of Alumina Limited.
There is also a risk that Alumina Limited and Alcoa may have differing priorities.
During 2016, the joint venture agreements
were modified to ensure that certain key
decisions require Alumina Limited’s consent
by a super-majority vote.
30
Risk Title
Description
Response
Sustainability
Environmental,
Social,
Governance
(ESG)
AWAC operates facilities in several areas of the globe. AWAC’s facilities may
be resource intensive, subject to regulatory and community standards, located
in environmentally sensitive areas, or close to communities.
AWAC’s operations generate hazardous waste which is contained in tailing
facilities, residue storage areas and other impoundments. Unanticipated
structural failure or over- topping caused by extreme weather events could
result in injury or loss of life, damage to the environment or property.
Failure to meet ESG regulations may result in material civil or criminal fines,
penalties, and curtailment or closure of facilities, or the loss of AWAC’s
“social licence to operate”.
The social licence to operate (SLO) is an understanding/perception of
key stakeholders regarding the company’s activities and its delivery of key
commitments on a range of issues (e.g. engagement with local communities
including mutual benefits, protection of heritage areas, maintenance of
biodiversity, interactions with indigenous peoples). Degradation of a SLO
could eventually lead to the loss of an operational licence (or other penalties),
and damage to reputation which could limit future prospects.
Climate
change risk
Climate change is a systemic and material risk that will pose challenges
in the future management of AWAC operations in regard to energy usage,
GHG emissions, carbon pricing policies and regulations and market demand.
Climate change results in a number of physical and transitional risks, which
affect AWAC in the following manner.
Physical risks include:
· increased risks to personnel, business continuity, production and facilities
· climate factors like extreme weather events are likely to have an impact on
AWAC’s global mining and refining operations (e.g. residue disposal areas)
· water stress and potential impact on production if shortages occurred
· disruption to supply chain efficiencies from storm activity, and the
transportation of raw materials
· climatic changes leading to changes in rainfall and sea levels.
AWAC has extensive policies and systems in
respect of ESG matters. Additionally, Alcoa is a
member of the International Council on Mining
and Metals (ICMM), which is an organisation
focused on enhancing mining’s contribution
to society.
Alcoa is also in the process of establishing
a Social Management System at all locations
by 2022. The Social Management System
incorporates governance resources including
corporate policies and standards, governing
body oversight matched with defined procedures
and assessments. The SMS will include the
definition of performance metrics and long-term
goals to be accomplished by 2025 and 2030.
Alcoa reports instances of environmental
non-compliance to Alumina Limited, and
any appropriate response.
Alumina meets with Alcoa regularly to discuss
issues, and Alumina produces an annual
Sustainability Update which involves the review of
many key performance metrics in respect of ESG.
A key to mitigating AWAC against climate
change’s physical and transitional risks is to
remain as low as possible on the refining cash
cost and emissions intensity curves.
Additionally, Alcoa has stated its ambitions
to achieve “net zero” by 2050 in respect of
CO2e emissions. In order to do so, AWAC
will need to identify alternate energy sources
to displace the fossil fuels that it currently
relies on, in particular for its refineries.
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Risk Title
Description
Response
Climate
change risk
(continued)
Other risks
Closure/
impairment
of assets
Transitional risks include:
· the increased scrutiny by governments on GHG emissions and
the establishment of carbon pricing, or other government
regulation/intervention
· substitution from one product to another
· changes in consumer preferences, including consumer action/protest
against a particular product
· cost of emissions abatement and technology
· rising cost, or availability of energy.
Energy is a significant input in a number of AWAC’s operations, making
AWAC an emitter of greenhouse gases. The introduction of regulatory change
by governments in response to greenhouse gas emissions may represent
an increased cost to AWAC and may affect Alumina Limited’s profitability.
Technology risk exposure is the risk of substituting existing products and
services with lower-emissions options. If AWAC is unable to remain low on
the alumina GHG emissions curve, there is a risk that customers may choose
alternate suppliers. Alternatively demand, and consequently the price of
alumina may decrease.
Market Risk exposure measures the changes in revenue mix and sources as
a result of climate risk. AWAC’s customers may be exposed to industries that
may be impacted by carbon prices.
Additional information in respect of climate change risks, can be located
in Alumina Limited 2020 Sustainability report, and Alumina Limited’s
Climate Change Position Statement. These documents can be found
at www.aluminalimited.com/sustainability/.
In respect of its refineries, AWAC is investing
in R&D to electrify the digestion and calcination
processes. Mechanical Vapour Recompression
(MVR) and Electrical Calcination (EC) have the
ability to be able to use renewable electricity
as opposed to the natural gas, coal and fuel oil
that AWAC currently uses.
Investment in such technology is important
to mitigate against physical and transitional
risks. MVR and EC would help maintain AWAC’s
low position on the emissions intensity curve
meaning that AWAC’s products remain attractive
to end users, reducing the risk of substitution
to other metals, or the imposition of a material
carbon price.
MVR has the advantage of also requiring
less freshwater, which may become scarce
as a result of climate change. Similarly, it is
expected that as less water is used, less area
will be required for residue storage areas.
However, a key risk is if there is not enough
reasonably priced renewable energy at
AWAC’s locations to be able to utilise MVR
or EC. Currently there is insufficient renewable
energy in AWAC locations for what AWAC
would require to use MVR and EC.
Alumina Limited may be required to record impairment charges as a result
of adverse developments in the recoverable values of its assets. To the extent
that the carrying value of an asset is impaired, such impairment may negatively
impact Alumina Limited’s profitability during the relevant period.
Closure of an asset may be necessary to
ensure the ongoing competitiveness of
AWAC operations.
Closure, curtailment or sale of any one of AWAC’s operations may result
in a change in the timing or amount of required remediation activities (and
corresponding cash flow) and/or an impairment being incurred as a result
of the carrying value of an asset exceeding its recoverable value.
32
Risk Title
Description
Response
Financial
management
Alumina is unable to access desired or required amounts of capital (either
debt — including renewal of existing facilities or new financing, or equity
at agreeable terms)
COVID-19
pandemic
As AWAC has a global presence and its locations, staff, markets, logistics and
supply chains may be impacted by a public health crisis such as the COVID-19
pandemic. This may result in decreased production, decreased demand for
alumina and consequently cash flow and liquidity, the financial position of
customers, and failure to meet health and safety obligations, which all may
have a negative financial impact on AWAC.
Alumina Limited maintains capital management
policies, regularly monitors commodity markets,
actively manages its balance sheet, and also
forecasts cash flow.
Alumina Limited has a US$350 million
syndicated bank facility with tranches
maturing in October 2022 (US$100 million),
July 2023 (US$150 million), and July 2024
(US$100 million).
As at 31 December 2021 there was US$65
million drawn against the syndicated facility.
To combat the increased uncertainty of a
pandemic, AWAC may employ cash conservation
initiatives, and heightened the focus on health
and safety of its workforce. Whilst AWAC has
not experienced any significant interruption
to operations, COVID-19 continues to be
monitored closely.
Financial
statements
Misstatement of Alumina statutory or tax accounts through falsification
or error in accounting (by error by Alumina Limited or AWAC).
Alcoa maintains financial controls over the
accounts of AWAC, which are also audited.
Similarly, Alumina Limited maintains controls
over its financial reporting process, which are
also audited.
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3. Review of AWAC operations
Alumina Limited provides investors with a unique opportunity to
share in the ownership of globally leading bauxite mines and alumina
refineries in Australia, Brazil, Spain, Saudi Arabia and Guinea through
its 40% investment in the AWAC joint venture. AWAC also has a 55%
interest in the Portland aluminium smelter in Victoria, Australia.
The current refining portfolio is comprised mostly of tier one assets that
allows AWAC to generate strong returns throughout the commodity cycle.
Having long life bauxite mines located close to the Australian and Brazilian
refineries is a key competitive advantage in terms of driving a low position
on the cost curve.
2021 has continued to be challenging for many people and companies
with respect to the uncertainty and disruptions caused by the global health
pandemic. Both Alumina Limited and AWAC have continued to remain
focused on their employees’ health and safety while being in the fortunate
position of having a relatively low direct impact from the pandemic.
The alumina price rebounded from the lows of 2020 to stabilise in the
first half of 2021 averaging $288/t. The second half saw a considerable
increase in the price to average $369/t with the full year average finishing
more than 20% higher than 2020. The price rally continued into 2022.
Despite alumina price challenges of the first half of 2021 and cost
pressures in the second half, AWAC delivered a strong result and
continued to deliver cash distributions to its joint venture partners.
Bauxite mining
AWAC operated mines
Production (million bone dry tonnes (“BDT”))
Cash cost ($/BDT of bauxite produced)
Non-AWAC operated mines
2021
2020
Change
Change (%)
40.5
11.4
41.0
9.6
(0.5)
1.8
(1.2)
18.8
(2.1)
(12.3)
(14.9)
AWAC equity share of production (million BDT)1
4.6
4.7
(0.1)
Third party sales
Shipments to third parties (million BDT)
Total third-party revenue, inclusive of freight2 ($ million)
5.7
204.9
6.5
240.8
(0.8)
(35.9)
1. Based on the terms of its bauxite supply contracts, AWAC’s bauxite purchases from the Mineração Rio do Norte S.A. (“MRN”) mine in Brazil, and Compagnie des Bauxites de Guinée (CBG)
mine in Guinea, differ from their proportional equity in those mines. 2. Includes freight revenue of $30.1 million for 2021 (2020: $43.6 million).
34
AWAC operated mines
Cash cost per BDT of bauxite produced^
AWAC operated mines decreased production by 1%. This was mainly
due to reduced production at Juruti as a result of lower production at
the Alumar refinery related to damage to a bauxite unloader. Production
at Huntly remained relatively stable, while Willowdale production was
affected by the crusher move at Larego and lower than expected demand
from the Wagerup refinery in the second half of 2022.
Bauxite production: change by mine (million BDT)
41.0
40.5
(0.2)
(0.3)
$0.5
$11.4
$0.6
$0.3
$0.4
$9.6
2020
Labor
Fuel
Services &
maintenance
Other#
2021
# Other includes energy, supplies, PAE, royalties and other
^ AWAC operated mines
Non-AWAC operated mines
2020
Huntly &
Willowdale
Juruti
2021
AWAC’s equity share of production at MRN and CBG decreased
by 0.1 million BDT (2%) in 2021.
The relocation of the Willowdale crusher to a new reserve area has now
been completed and the benefit of bauxite quality improvements flowed
through to the Wagerup refinery in the second half.
AWAC’s cash cost per BDT of bauxite produced increased by 19%
to $11.4 per tonne, mostly due to a stronger AUD dollar as well as
increased indirect costs as a result of the Willowdale crusher move.
Higher fuel prices and an increase in royalty payments also contributed
to increased costs.
CBG’s production decreased by 0.1 million BDT to 3.5 million BDT,
reflecting the lower demand and shipment constraints.
MRN’s production was relatively stable, resulting in AWAC’s equity
share of production of 1.1 million BDT.
AWAC’s equity accounted share of profit after tax from CBG and MRN
was $21.2 million (2020: $23.0 million).
Third party bauxite sales
AWAC’s shipments to third party customers decreased by 0.8 million
BDT to 5.7 million BDT with a decrease in shipments from Huntly and
CBG caused by port congestion, lower demand and shipping delays,
partially offset by an increase in shipments from Juruti.
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Refining
AWAC operated refineries
Shipments (million tonnes)
Production (million tonnes)
Average realised alumina price ($/tonne)
Cash cost per tonne of alumina produced
Margin1 ($/tonne)
Platts FOB Australia — one month lag ($/tonne)
Ma’aden joint venture
2021
2020
Change
Change (%)
13.2
12.6
321
236
85
324
13.2
12.8
268
199
69
270
0.0
(0.2)
53
37
16
54
0.0
(1.6)
19.8
18.6
23.2
20.0
5.1
AWAC’s share of production (million tonnes)
0.477
0.454
0.023
1. Calculated as average realised price less cash cost of production.
AWAC operated refineries
Alumina production: change by refinery (kt)
Production from AWAC operated refineries was 12.6 million tonnes,
a 1.6% decrease from 2020. After a record setting first half of the year,
in the second half, all but one refinery decreased production levels due
to unrelated events.
Industrial actions at the San Ciprian refinery and smelter had a negative
impact on production at San Ciprian refinery. Alumar’s production was
negatively affected by the outage of a bauxite unloader in the third
quarter. In Western Australia, Wagerup and Pinjarra’s production
decreased as a result of unplanned maintenance events. This was
partially offset by a record annual production at the Kwinana refinery.
12,823
(155)
(74)
(17)
12,577
2020
Pinjarra
Wagerup
Kwinana
Alumar
San
Ciprian
2021
36
The first half of 2021 saw an overall increase in alumina prices as
demand and consumer confidence were restored and the aluminium
price continued to rise. At the end of the 1Q 2021 freight costs began to
climb significantly impacting the Chinese import parity price, and in turn
constraining the API. The alumina market changed significantly during
the third quarter when production disruptions at Alumar, Gramercy and
Jamalco reduced the rest of world supply. Alumina prices surged reaching
a peak of $484/t and averaged $369 for the second half.
The vast majority of AWAC’s alumina shipments were priced on a spot
or index basis. AWAC’s average realised price was $321 per tonne, up
$53 per tonne compared to the previous year reflecting the average
alumina price increase of 20%.
The average cash cost per tonne of alumina increased by 19% to $236
per tonne. The main contributing factors were the higher energy prices,
including the transition to the previously announced WA new gas contracts,
higher gas/oil prices and higher European power prices. This was also
compounded by a stronger Australian Dollar as well as higher bauxite
costs during the Willowdale crusher move. Caustic prices were up in the
second half, however the 2021 production cost only increased slightly
in relation to caustic due to the timing of inventory flow.
Cash cost per tonne of alumina produced^
$12
$236
$17
$1
$7
$199
2020
Energy
Caustic
Bauxite
Conversion*
2021
^ Includes the mining business unit at cost
* Conversion includes: employee costs, indirect costs and other raw materials costs
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Ma’aden joint venture
The Ma’aden refinery increased production by 5% in 2021 to 1.9 million tonnes of alumina (AWAC’s share was 0.5 million tonnes), operating at 106%
of nameplate capacity.
The equity accounted profit relating to the Ma’aden joint venture for AWAC was $4.2 million during 2021 (2020: $22.6 million equity loss). The improvement
was predominantly driven by higher realised alumina prices
Portland
AWAC’s 55% equity share
Production (thousand tonnes)
EBITDA ($ million)
Realised price
LME aluminium cash — 15 day lag ($/tonne)
1. Calculated as average realised price less cash cost of production.
2021
2020
Change
Change (%)
151
72.8
2,557
2,443
160
3.7
1,721
1,696
9
69.1
836
747
5.6
1,868
48.6
44.0
Portland’s aluminium 2021 production was slightly lower compared to 2020 mainly due to the re-lining of pots that occurred during the year.
The improvement in earnings was primarily as a result of a higher aluminium prices. It also includes approximately $20 million of final revenue recognition
relating to Government assistance arrangements established in 2017 for the Portland restart. This was partially offset by an increase in the cash cost of
production year on year mainly due to the increase in alumina and power prices.
38
4. AWAC Financial Review
The increase in AWAC’s 2021 net profit was largely as a result of higher realised alumina prices partially offset by a higher cash cost of production and
higher charges for significant items.
The increase in the income tax charge was driven by a higher taxable income, particularly in AWAC’s Australian operations as well as a charge relating
to the valuation allowance on the deferred tax asset of approximately $97 million.
AWAC profit and loss (US GAAP)
US$ million
Year ended 31 Dec 2021
Year ended 31 Dec 2020
Net profit after tax
Add back: Income tax charge
Add back: Depreciation and amortisation
Add back: Net interest expense/(income)
EBITDA
Add back: Significant items (pre-tax)
EBITDA excluding significant items
443.8
374.5
326.7
1.2
1,146.2
59.5
1,205.7
401.6
205.6
288.4
0.3
895.9
(0.7)
895.2
AWAC’s net profit included the following significant items:
Significant items (US GAAP)
US$ million
Suralco restructuring related charges1,2
Point Comfort restructuring related charges2
Other3
Total significant items (pre-tax)
Total significant items (after-tax)4
Year ended 31 Dec 2021
Year ended 31 Dec 2020
(68.8)
(3.4)
12.7
(59.5)
(160.5)
(9.9)
(11.3)
21.9
0.7
(5.2)
1. Includes $63.2 million non-cash settlement charge for the pension action in Suriname in 2021. 2. Includes holding costs. 3. Other significant items include net credits related to Portland
government facility forgiveness offset by severance and other charges in other locations. 4. Includes a non-cash charge relating to the valuation allowance on the deferred tax asset of
approximately $97 million.
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AWAC balance sheet (US GAAP)
US$ million
31 Dec 2021
31 Dec 2020
Cash and cash equivalents
Receivables
Inventories
Deferred income taxes
Property, plant & equipment
Other assets
Total Assets
Borrowings & capital lease obligations
Accounts payable
Taxes payable and deferred
Assets retirement obligations
Other liabilities
Total Liabilities
Equity
443.8
542.0
682.5
73.7
2,889.5
1,739.2
6,370.7
76.0
711.1
320.9
466.8
827.3
2,402.1
3,968.6
440.2
307.0
567.1
190.3
3,151.7
1,753.4
6,409.7
78.5
590.0
174.7
500.2
951.9
2,295.3
4,114.4
Changes in the value of assets and liabilities includes the effect of the
weaker Australian dollar and Brazilian Real against the US dollar as at
31 December 2021 compared to 31 December 2020.
The increase in accounts receivables and payables as well as inventories
reflect the increase in API and raw material prices respectively.
The decline in property, plant and equipment was as a result of
depreciation and amortisation and unfavourable exchange rate.
Deferred income taxes decreased primarily due to a valuation allowance
recorded against the net deferred tax assets at Espanola. The increase in
taxes payable is mainly attributable to an increase in the taxable income,
particularly for Australian operations.
Other liabilities decreased mainly due to lower lease liability and accrued
pension benefits.
40
AWAC cash flow (US GAAP)
US$ million
Year ended 31 Dec 2021
Year ended 31 Dec 2020
Cash from operations
Capital contributions from partners
Net movement in borrowings
Capital expenditure
Other financing and investing activities1
Effects of exchange rate changes on cash and cash equivalents
Cash flow before distributions
Distributions paid to partners
Net change in cash and cash equivalents
1. Includes proceeds from sales of assets and other.
718.3
65.0
1.5
(240.7)
29.9
(20.9)
553.1
(549.5)
3.6
671.8
60.1
(0.4)
(211.3)
2.0
16.4
538.6
(517.1)
21.5
Cash from operations in 2021 increased primarily due to higher average
realised alumina prices, which was partially offset by a higher cash cost
of alumina production. Consequently, gross distributions paid to partners
increased to $549.5 million (2020: $517.1 million).
In 2021, sustaining capital expenditure was approximately $227 million
(2020: $202 million) with the most significant expenditure relating to
Willowdale’s mine crusher move, the construction of a new tailings
and residue storage areas at Alumar and Juruti.
Growth capital expenditure was approximately $14 million (2020:
$10 million).
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5. Alumina Limited Financial Review
Alumina Limited profit and loss
US$ million
Year ended 31 Dec 2021
Year ended 31 Dec 2020
Share of net profit of associates accounted for using the equity method
General and administrative expenses
Finance costs
Foreign exchange losses, tax and other
Profit for the year after tax
Add back: Significant items (after tax)
Net profit after tax excluding significant items
204.6
(13.3)
(3.7)
–
187.6
38.4
226.0
164.6
(12.6)
(5.2)
(0.2)
146.6
(0.1)
146.5
Significant items (IFRS, post-tax)
US$ million
Year ended 31 Dec 2021
Year ended 31 Dec 2020
Suralco restructuring charges1,2
Point Comfort restructure-related charges2
Deferred tax assets valuation allowance
Other3
Total significant items
(2.2)
(0.9)
(38.8)
3.5
(38.4)
(4.0)
(4.5)
–
8.6
0.1
1. Due to GAAP differences above item does not include $63.2 million non-cash settlement charge for the pension action in Suriname. 2. Includes holding costs. 3. Other significant items
include net credits related to Portland government facility forgiveness offset by severance and other charges in other locations.
Alumina Limited recorded a net profit after tax of $187.6 million (2020:
$146.6 million).
Excluding significant items, net profit would have been $226.0 million
(2020: $146.5 million).
The increase in the Company’s net profit was primarily due to an increased
share of net profit of associates, which in turn reflects AWAC performance
during 2021 as compared to the previous year.
General and administrative expenses in 2021 were higher than 2020
predominantly due to the stronger Australian dollar. General and
administrative expenses expressed in AUD remained consistent with
the previous year.
The Company’s finance costs in 2021 are lower than 2020 as a result
of the lower debt level during 2021.
Alumina Limited balance sheet
US$ million
31 Dec 2021
31 Dec 2020
Cash and cash equivalents
Investment in associates
Other assets
Total Assets
Payables
Interest bearing liabilities
Provisions and other liabilities
Total Liabilities
Net Assets
9.1
1,741.8
3.8
1,754.7
0.3
65.0
3.8
69.1
1,685.6
10.4
1,784.5
1.8
1,796.7
0.7
60.0
1.4
62.1
1,734.6
The decrease in investments in associates was principally due to
foreign currency balance sheet valuations as well as net distributions
from investments in associated entities.
Alumina Limited has a US$350 million syndicated bank facility
with tranches maturing in October 2022 (US$100 million), July 2023
(US$150 million), and July 2024 (US$100 million).
Alumina Limited’s net debt as at 31 December 2021 was $55.9 million
(2020: $49.6 million) and gearing was 3.2% (2020: 2.8%).
As at 31 December 2021 there was US$65 million drawn against
the syndicated facility.
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Alumina Limited cash flow
US$ million
Year ended 31 Dec 2021
Year ended 31 Dec 2020
Dividends received
Net finance costs paid
Payments to suppliers and employees
GST refund, interest received & other
Cash from operations
Receipts — capital returns from associates
Payments — investment in associates
Payment for shares acquired by the Alumina Employee Share Plan
Effects of exchange rate changes on cash and cash equivalents
“One off” quarantine of approximate tax shield cash benefit1
Free cash flow available for dividends
191.1
(3.3)
(13.0)
0.4
175.2
28.4
(26.0)
(0.8)
(0.3)
(30.0)
146.5
171.4
(4.9)
(12.3)
0.2
154.4
35.8
(24.5)
(0.9)
0.9
–
165.7
1. Tax shield cash benefit is Alumina Limited’s share of the net estimated amount of tax benefit in relation to the compounded interest on the primary tax amount partially offset by the payment
of 50% of the primary tax amount arising from the Notices of Assessment issued by the ATO in relation to the transfer pricing matter (please refer page 86 for further details). This amount is
being retained by Alumina Limited until the matter is fully resolved.
Net receipts from AWAC totalled $193.5 million (2020: $182.7 million).
Contributions to AWAC in 2021 of $26.0 million (2020: $24.5 million)
were to support working capital requirements in the Americas.
The increase in distributions received from AWAC resulted primarily
from higher realised alumina prices, partially offset by a higher cash
cost of production.
Alumina Limited’s dividend policy is to distribute free cash flow derived
from net AWAC distributions less the Company’s corporate and finance
costs, whilst taking into consideration its capital structure, any capital
requirements for AWAC and market conditions.
The benefit of the higher AWAC margins as a result of the sharp
alumina price increase in fourth quarter of 2021 was reflected in the
AWAC distributions to Alumina Limited in the first quarter of 2022.
Alumina received net AWAC distributions of $33.8 million in January 2022
and further distributions of approximately $80.7 million in February 2022.
The Board have taken these exceptional circumstances into account
when declaring the 2021 final dividend for Alumina Limited and decided
to bring forward part of the dividend that would otherwise be paid as a
part of the interim dividend in 2022.
This resulted in an additional amount of $31.9 million available for
distribution to shareholders as a final dividend. Therefore, on 22 February
2022 Alumina Limited declared a final dividend of 2.8 US cents per share.
The Dividend Reinvestment Plan was applied to the 2020 interim dividend
but was not in effect for the 2020 final dividend and remains suspended
in 2021.
6. Market, Outlook and Guidance
Aluminium
The global production of primary aluminium in 2021 grew by 3% over
2020 to 67.34 million tonnes. Over 2021, the LME aluminium price ranged
between $1,952 per tonne and $3,180 per tonne. The price mainly
climbed throughout the year to peak in October, before falling sharply for
a few weeks and then climb back up to $2,806 by the end of December.
Smelting cuts announced at some European smelters around the end of
2021, due to very high energy costs, will tighten regional supply. However,
over the course of 2022, it is expected that restarts and new capacity
at low carbon and lower cost smelters elsewhere will drive primary
aluminium production globally above 2021 levels. Other factors which
could impact on aluminium demand or production this year include
COVID-related slowdowns, on-going shipping abnormality, risks that
China’s real estate sector may reduce construction demand, tightening
of monetary policies reducing stimulus growth, geopolitical tensions,
higher than expected recycling at higher aluminium prices and strong
Chinese semi-finished product exports.
Total aluminium consumption is expected to grow by over 33 million
tonnes in this decade, mainly for electric vehicles and other transport and
in the electrical, construction and packaging sectors. Whilst the volume
of recycled aluminium is forecast to grow by 2030, primary aluminium
production is also expected to grow strongly over that period. By 2030,
emissions from aluminium production are expected to reduce, largely
through higher contributions from wind, solar, hydro and nuclear
electricity and in the longer term through inert anodes, carbon capture
and storage and potentially green hydrogen. Whilst emissions from
alumina production are much smaller than from aluminium, alumina
refining is also expected to decarbonise. The AWAC joint venture is
already well-positioned, sitting in the first quartile of global refining
emissions curve.
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Carbon reduction and energy consumption control have been the themes
of China’s primary aluminium industry in 2021. Capacity curtailment, which
started from Inner Mongolia in the north of China, spread to the southern
provinces in the second half of the year. Coupled with energy shortages
(from both coal and hydro) a total of 2.6 million tonnes of capacity was
impacted throughout the year. In addition, there were delays in new
capacity rollouts and so China produced 39 million tonnes of primary
aluminium in 2021 (4.6% year-on-year increase), slightly lower than
forecast. The lost production was made up by a record level of primary
aluminium imports at 1.6 million tonnes, resulting in a broadly balanced
primary aluminium market in China.
China’s coal prices spiked in October, which fueled soaring electricity
prices. Supply disruption and cost pressure saw aluminium prices in
China continued to improve in the second half, reaching a near all-time
high in October, at RMB 24,695 per tonne (includes 13% VAT). Coal
prices softened after Chinese authorities intervened in late October,
and aluminium prices have returned to an RMB 19,000-20,000 per tonne
level by the end of 2021. The Chinese aluminium price averaged RMB
18,940 per tonne in 2021, a 35% y-o-y increase.
Despite a subdued real estate sector, Chinese aluminium demand grew
strongly in 2021, at 7.8%, as the Chinese economy recovered strongly
from COVID-19. The chip shortage eased towards the last quarter of 2021.
In the auto sector, electric vehicle production registered a 160% growth
year-on-year. The Chinese energy sector is targeting the installation of
1,200 GW of renewable capacity by 2030. Packaging and construction
sectors are aiming for more sustainable solutions.
Transportation, renewable energies and the packaging sector are forecast
to be the driving forces for Chinese aluminium demand growth in 2022,
albeit at a slower rate than in 2021.
Carbon polices are likely to remain in full force in 2022. Chinese smelters
will continue to look for decarbonisation opportunities, such as moving
capacity to the hydro-rich Southwest, developing more renewable energy,
or installing more secondary aluminium capacity. At the end of 2021,
China’s primary aluminium capacity was estimated to be 43 million tonnes
per annum. A moderate 1.6 million tonnes of additional annual primary
aluminium capacity are expected to be installed in 2022, as China
approaches the 45 million tonne per annum capacity ceiling, and
production is forecast to increase marginally.
Alumina
The global growth in aluminium production
in 2021 caused higher demand for smelter-
grade alumina.
There was a surplus of alumina over demand outside China of
about 3.2 million tonnes, which was exported to China. It is
expected over 2022 there will be a slightly smaller surplus of
alumina outside China. Despite the surplus overall in 2021,
alumina production disruptions in the second half of 2021 in
Brazil, Jamaica and the USA caused regional shortages and the
price to spike to $484 per tonne. The price fell back to $345 per
tonne in late December after production was largely restored.
The average alumina price index over 2021 was $329 per tonne,
an increase of 21% over the 2020 average price.
The alumina price was supported by cost increases over 2021,
particularly energy and caustic soda costs, which increased
globally by 64% and 8% respectively. COVID and other factors
continued to distort the global shipping market in 2021. This
had an impact on the alumina price outside China by increasing
freight costs to China, which disincentivised alumina imports
into China and reduced the Chinese import parity price.
Over 2021 the alumina price index as a percentage of the LME
aluminium price averaged 13.3%. This is considerably lower than
the 10 year historical average of 17.3%. However, in a pricing
sense alumina is largely delinked from the aluminium price. In
terms of a direct connection, approximately 71% of third party
alumina sales outside China was priced off a spot or alumina
index basis in 2021, compared with around 12% of sales being
formally linked to the aluminium price. The alumina price index
over 2021 has reflected the fundamentals of the alumina supply/
demand balance and the costs of alumina production.
46
The second half of 2021 witnessed one of the largest volatility ranges in
China’s alumina prices in history. After a relatively stable first half, prices
started to rally in July, as key producers in Shandong curtailed production
to meet the energy consumption cap. Surging coal prices triggered
a spike in caustic soda costs, a military coup in Guinea cast doubts on
bauxite supply, and, together with production curtailments at the same
time, average alumina price in China reached a multi-year high of nearly
RMB 4,100 per tonne (includes 13% VAT) in October. Prices then dropped
to around the RMB 2,800 per tonne level at the end of the year, as coal
prices rationalised and production ramped back up.
Average production costs in China rose by 18% in 2021 to $320 per
tonne. This was caused by a cost escalation in all input materials —
average costs rose for bauxite by 4%, for caustic soda by 32%, and
for energy by 46%. The exchange rate between the US dollar and
Chinese Yuan was stable in 2021. Chinese production costs are forecast
to remain at elevated levels in 2022, as control measures on energy
consumption and carbon emissions remain in force.
Similar to the primary aluminium industry, China’s alumina production
was disrupted by carbon policies, natural disasters, energy shortages and
environmental inspections in 2021. However, unlike aluminium smelters,
Chinese alumina refineries can switch back on quickly at low cost, making
the overall disruption less significant. Metallurgical alumina production in
China increased by 7.7% to 72.7 million tonnes, attributed to new capacity
commissioned in the first half and production ramping up when prices
were surging in the second half.
As China continues to import surplus alumina from outside China, and
has limited primary aluminium production growth, a moderate alumina
surplus is forecast in 2022.
There is the on-going potential for COVID-related disruptions to alumina
or aluminium production.
84% of China’s alumina capacity is based on coal. Over the medium
to longer term, as China slowly phases down coal, and if China lacks
mature technology to use renewable energy in alumina refining,
together with strict environmental requirements (particularly around
red mud storage), new greenfields refining projects are unlikely to be
approved in China. Instead, more Chinese-sponsored or encouraged
alumina and primary aluminium projects are expected to emerge
outside China in the long term.
Bauxite
A military coup in September 2021 in Guinea, the largest bauxite exporter
to China, had minimal impact on bauxite production and exports from the
country. However, higher ocean freights rates in 2021 drove up seaborne
bauxite prices from all major bauxite mining regions to China, which
incentivised Chinese alumina refineries to use more domestic bauxite.
Average delivered bauxite prices from Guinea rose by 5.7%, from
Indonesia by 4.0%, and from Australia by 0.7%.
Approximately 57% of China’s alumina production was based on imported
bauxite in 2021, as compared to 58% in 2020.
Chinese bauxite imports decreased by 3.7% year on year, to 107 million
tonnes in 2021. Guinea, Australia and Indonesia remain the three major
bauxite exporters, accounting for 99.4% of China’s total imports.
In the fourth quarter of 2021, the Indonesian President reiterated his
country’s plan to halt bauxite exports to encourage domestic value-add
activities. To date, the ban has not yet been enforced, but it has
encouraged Chinese refineries to start looking for alternative sources
of bauxite.
In the longer term, China’s reliance on imported bauxite is expected
to continue. However, China’s aspiration to carbon neutrality by 2060 is
likely to constrain additional alumina capacity in China. At the same time, a
few bauxite beneficiation technologies have been trialled in recent years,
including developing bauxite under coal (so far proven to be technically
unviable, uneconomic or limited to small scale). These factors could
reverse the expected growth in imported bauxite in the longer term.
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AWAC guidance
The following 2022 guidance is provided to assist the understanding of the sensitivity of AWAC results to key external factors. The guidance cannot be
expected to be predictive of exact results; rather it provides direction and approximate quantum of the impact on AWAC results. Sensitivity of each element
of the guidance has been considered in isolation and no correlation with movements in other elements within the guidance has been made.
Item
Production — alumina
Production — aluminium
Third party bauxite shipments
SGA shipments expected to be based on alumina price indices or spot
AWAC sustaining capital expenditure
AWAC growth capital expenditure
AWAC Point Comfort after tax restructuring1
Charges (IFRS)
Cash Flows
AWAC Suralco after tax restructuring1
Charges (IFRS)
Cash Flows
AWAC Point Henry and Anglesea after tax restructuring1
Charges (IFRS)
Cash Flows
1. Ongoing costs will be recognised in future financial years relating to the curtailments and closures.
Sensitivity
Alumina Price Index1: +$10/t
Australian $: + 1¢ AUD/USD
Brazilian R$: + 10¢ USD/BRL
Caustic price2: +$10/dry metric tonne
Brent: +$1/barrel
1. Excludes equity accounted income/losses for the Ma’aden joint venture. 2. Caustic inventory flow is 5-6 month.
2022 guidance
Approximately 12.8 million tonnes
Approximately 165,000 tonnes
Approximately 5.3 million BD tonnes
Approximately 97% for the year
Approximately $300 million
Approximately $40 million
Approximately $10 million
Approximately $30 million
Approximately $10 million
Approximately $30 million
Approximately $5 million
Approximately $10 million
2022 guidance
Approximately +$115 million EBITDA
Approximately -$23 million EBITDA
Approximately +$5-6 million EBITDA
Approximately -$10 million EBITDA
Approximately -$2-3 million EBITDA
48
LETTER BY CHAIR
OF COMPENSATION
COMMITTEE
Dear Shareholders,
I am pleased to present Alumina Limited's 2021 remuneration report.
Company performance in 2021
Alumina Limited reported a strong result of $187.6 million dollars (net
profit after tax) and distributed fully franked dividends to shareholders
of US 6.2 cents, representing an average dividend yield of 7.3 % over
the last 5 years.
Alumina Limited's financial performance reflects the resilience and
quality of AWAC asset base and its ability to deliver strong returns
throughout the cycle.
In 2021, alumina one month lagged price remained under or around
$300 dollars for almost three quarters of the year. During the third
quarter production disruptions reduced the rest of world alumina
supply. As a result, alumina prices surged, reaching a peak of $484
dollars per tonne, and averaged $324 dollars per tonne for the year,
$54 higher than in 2020.
Despite a slight decrease in alumina production and increased input
costs, the higher average alumina price resulted in strong year on year
performance for AWAC.
Working with the AWAC joint venture, Alumina Limited is also
progressing sustainability initiatives in preparation of the lower
carbon energy transition and striving for net zero emissions by 2050.
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Remuneration strategy and structure
Alumina Limited’s structures and levels of remuneration have
been designed to reflect the unique nature of the company, the
role of the executives, and their focus on longer term value creation
for shareholders. In any one financial year, the Company's financial
result is heavily determined by global commodity prices and the
stage of the industry cycle.
For these reasons, Alumina Limited’s remuneration is designed:
· To pay fixed remuneration at a competitive level that will attract and
retain high caliber executives, with reference to the non-operating
nature of the company;
· To offer meaningful incentives but to avoid large windfall gains as a
result of factors outside of management’s control (i.e. world alumina
price increases or exchange rates); and
· To provide a meaningful part of the total remuneration package in
equity that is earned and released over the medium to longer term
to provide alignment with the shareholders experience.
Remuneration outcomes in 2021
· CEO — The Board determined that the CEO’s 2021 remuneration
package would remain unchanged from his 2020 remuneration
package in the context of the ongoing COVID-19 pandemic and
its impacts on both Alumina Limited and the broader community.
· CFO — On 1 November 2021, Mr Grant Dempsey resigned from the
CFO position effective 31 January 2022. Mr Dempsey served until
the end of his notice period and was not entitled to any additional
termination benefits.
The Board will consider remuneration structure and quantum
for the new CFO at the time of appointment.
· Performance under the LTI — The FY19 LTI was tested in 2021
(testing period December 2018 to December 2021) with zero
per cent of the total award vesting. This outcome reflects the
shareholder experience during the testing period and illustrates
the LTI functioning as intended.
· Senior Executives — Performance under STI — As a result of the scorecard
assessment, reviewed by the Compensation Committee, $484,000
was awarded in 2021 (in 2020 those same KMP received $417,000).
Achievements in sustainability and climate change related matters,
improvements in external sustainability reporting and disclosures as
well as progress in long term strategic objectives, underpinned the
2021 STI decisions.
· NED fees — As reported last year, NED base fees and committee fees,
other than the fee for the Chair of the Nomination Committee, did not
change in 2021.
Remuneration decisions for 2022
· CEO — In 2021, the Board undertook a benchmarking exercise to
validate that the CEO’s remuneration package remained appropriate
relative to market, while continuing to align with Alumina Limited’s
remuneration strategy.
In addition to considering the market data, the Board also had regard
to other factors such the CEO’s performance and contribution in his
role, the 2021 salary freeze, inflation, changes in the superannuation
guaranteed contribution rate and market outlook.
As a result, for 2022 the CEO has been awarded an increase of 6.0%
to his total reward opportunity. The majority of this increase is delivered
in equity, in the form of performance tested LTI.
Even with this increase, the CEO’s total reward opportunity remains
in the lowest quartile compared to his market peers.
· NED fees — As reported last year, NED base fees and Committee fees,
other than the fee for the Chair of the Nomination Committee, did not
change in 2021.
I am grateful for the dialogue we have had with stakeholders in 2021,
and as always we’re pleased to receive thoughts from shareholders and
the wider community. I look forward to continuing to work with you.
Shirley In’t Veld
22 March 2022
50
REMUNERATION REPORT
THE REMUNERATION REPORT IS PRESENTED IN THE FOLLOWING SECTIONS:
1. Remuneration framework
1.1 Persons covered by this Report
1.2 Remuneration in business context
1.3 Remuneration governance framework
1.4 Remuneration strategy, components and mix
2. Company performance and executive
remuneration outcomes
2.1 Company performance
2.2 Remuneration decisions and outcomes for 2021
2.3 CEO, CFO and Senior Executives performance
under the LTI plan
2.4 Senior Executives (excluding CEO and CFO)
performance under the STI plan
2.5 CEO and Senior Executives 2021 statutory remuneration
2.6 Actual “take home” 2021 remuneration
awarded to CEO and Senior Executives
51
51
52
52
55
57
58
61
64
66
3. Non-Executive Directors remuneration
3.1 Remuneration decisions and outcomes for 2021
3.2 Non-Executive Directors share holdings
4. Additional disclosures
4.1 Reconciliation of Conditional Rights held by CEO
4.2 Value change over time of the CEO’s Conditional Rights
4.3 Reconciliation of Performance Rights held
by Executive KMP
4.4 Reconciliation of ordinary shares held by
Executive KMP
4.5 CEO and Senior Executives service agreements
4.6 Cessation of employment
4.7 Change of control
4.8 Clawback policy
4.9 Share trading and hedge prohibition
68
70
71
71
72
74
75
76
76
76
76
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1. Remuneration framework
1.1 Persons covered by this Report
This Report sets out remuneration information for Key Management Personnel (“KMP”) which includes Non-Executive Directors (“NED”), Executive Director
(the Chief Executive Officer (“CEO”) and those key executives who have the authority and responsibility for planning, directing and controlling the activities
of the group, either directly or indirectly (together with Executive Director, herein referred to as Executive KMP).
Name
Role
Non-Executive Directors
Peter Day
Emma Stein
Chen Zeng
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Deborah O’Toole
Non-Executive Director
Non-Executive Director
Non-Executive Director
John Bevan
Shirley In’t Veld
Executive KMP
Mike Ferraro
Grant Dempsey
Stephen Foster
Andrew Wood
Appointed Chairman 1 April 2018. Director since 1 January 2014
Appointed 3 February 2011. Retired 25 May 2021
Appointed 15 March 2013
Appointed 1 December 2017
Appointed 1 January 2018
Appointed 3 August 2020
Managing Director and CEO
Appointed CEO from 1 June 2017
Chief Financial Officer (CFO)
Appointed 1 July 2019. Resigned 31 January 2022
General Counsel/Company Secretary
Appointed 4 December 2002
Group Executive Strategy and Development
Employed 1 September 2008
1.2 Remuneration in business context
Alumina Limited’s remuneration strategy and policy has been developed
in recognition of the unique nature of the Company, the complexities
of managing a significant but non-controlling interest in a global joint
venture and the significance of external factors’ influence on the sector
and the Company’s performance.
Alumina Limited owns a 40 per cent interest in the multibillion-dollar
global enterprise, AWAC, one of the world’s largest bauxite and alumina
producers. AWAC is a large capital-intensive business operating in a
number of jurisdictions with some in remote locations. Alumina Limited’s
executives are responsible for protecting and advancing the interests
of its approximately 55,000 shareholders in the management of AWAC.
Consistent with the governing joint venture agreements, Alumina
executives are responsible for providing strategic input and advice
into the joint venture.
This, in turn, draws on their abilities to persuade and influence our joint
venture partner to a common or at times, different conclusion. To do so,
they must have a clear position on the bauxite, alumina and aluminium
markets to allow detailed and substantive discussion with our joint venture
partner and our shareholders on portfolio management, investment
opportunities, sustainability and disruptive threats.
Financial History 52
At the Board’s direction, the CEO and Senior Executives are required to
maintain Alumina Limited’s financial metrics consistent with an investment
grade rating, maximize cash flow from AWAC and support the joint venture
in its efforts to improve its relative cost position and strategic options.
Alumina Limited's goal is to be an active, informed and engaged joint
venture partner and therefore it requires and must retain, high calibre
people with strong skills sets and commercial experience to ensure the
Company and its investment are managed well. Hence, Alumina Limited’s
remuneration needs to be competitive, valued and relevant.
1.3 Remuneration governance framework
The Board of Directors
Reviews and approves the Charter of the Compensation Committee.
The Board approves the remuneration philosophy, policies and practices.
Compensation Committee
Delegated authority to:
· Take advice from management and where relevant, independent advisers.
· Devise a remuneration framework, strategy, policies and practices.
· Oversee the implementation of the remuneration strategy and policy.
· Establish appropriate performance objectives and measures.
· Monitor performance against objectives and recommend incentive awards.
· Approve remuneration outcomes.
The Compensation Committee is solely formed of Non-Executive Directors
and is chaired by Ms In’t Veld.
External consultants
· Provide independent advice on remuneration trends and practices.
· Provide benchmarking data and analysis.
· Support the Compensation Committee in relation to changes to
remuneration policy, employment contracts, structures and practices etc.
· Provide governance and legal advice on remuneration related matters.
Management
Provides the Compensation Committee with information to assist in its
remuneration decisions including remuneration recommendations.
1.4 Remuneration strategy, components and mix
Remuneration strategy
Alumina Limited’s remuneration strategy is based on the following principles, which determine remuneration components, their mix and way of delivery.
ALIGNMENT
Our remuneration is designed to aid
alignment of Company, Executive,
Board and Stakeholders interests.
RELEVANCE
Appropriate mix of fixed and at-risk components, short and
long-term incentives reflecting a balance of financial and
non-financial objectives relevant to target the non-operating
nature of the Company and specific executive roles.
REMUNERATION
PRINCIPLES
SUSTAINABILITY
Remuneration that is market competitive, that attracts and retains
executives with capabilities and expertise to deliver our strategy.
TRANSPARENCY
Remuneration outcomes that are based on a set of clear
objectives and expectations linked to Company strategy.
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Executive KMP remuneration components and pay mix
The table below sets out the different components of remuneration for Alumina’s Executive KMP, the performance measures used to determine the amount
of remuneration executives will receive and how they are aligned with Alumina Limited’s remuneration strategy.
Executive remuneration
components
Fixed remuneration
(“FAR”)
Long-term incentive
(“LTI”)1
CEO & CFO equity —
based award
Short-term incentive for
Senior Executives (“STI”)1
Attract and retain executives
with the capability and
experience to deliver
our strategy.
Align performance focus
with the long-term business
strategy and shareholders
experience.
Align performance
focus with the long-term
business strategy and
shareholder experience.
Performance incentive
directed to achieving Board
approved targets, reflective
of market circumstances.
Strategic intent
Performance
measure
FAR is set based on
market relativities,
reflecting responsibilities,
qualifications, experience
and effectiveness.
There is a three-year trading
restriction on the shares
from grant date.
The value of the equity
remains subject to
performance of the
Company’s share price.
LTI vesting is subject to
service and performance
tested three years from
the grant date. The testing
criteria is three-year
Company TSR equal to or
outperforming the median
of the two (one local, one
international) comparator
groups (half of the LTI is
attributable to each
comparator group).
Delivery
Cash payment
Performance Rights
Conditional Rights
1. More detail on the STI and LTI remuneration components and their link to company performance is included in section 2 of this report.
STI award assessed annually
at the end of the year with
reference to:
· A minimum performance
threshold requirement
(the “Corporate Gate”)
· Financial metrics
· Strategic objectives
· Individual performance
and effort relevant to the
specific objective.
Mix of cash and equity
· GE Strategy &
Development: 100% cash
· Company Secretary:
50% cash, 50% equity
with three years trade
restriction period.
Financial History % of potential total remuneration
FAR 58%
Conditional Rights 20%
Restriction period
LTI Performance Rights 22%
Year 1
Year 2
Year 3
C
a
s
h
E
q
u
i
t
y
The actual remuneration awarded during the year comprises of the
same components, however their values will differ from the potential total
remuneration, specifically in relation to the value of the equity components
at the time of the vesting. The actual remuneration received by CEO in
2021 comprise of a FAR component of $1,369,600, a Conditional Rights
of $394,341 and zero Performance Rights at the time of vesting.
CEO
% of 2021 total actual remuneration
The design of the CEO’s remuneration package reflects the requirements
of this critical leadership role to create long term shareholder value,
the responsibility for the relationship with our joint venture partner and
influence on the strategic direction of joint venture development and
growth whilst advocating for the interests of shareholders.
The CEO’s remuneration package excludes an STI component, which has
been replaced with the restricted equity grant.
This design continues to reflect the primarily influence-based (rather than
operational) nature of the role and align with Alumina Limited’s remuneration
strategy. It focuses on the value creation activities, whilst eliminating potential
prioritisation of the short-term goals over longer-term strategic objectives. It
also ensures that through increased exposure to equity-based component
CEO’s remuneration reflects shareholders experience and is not
excessively affected by swings in the commodity cycle.
The CEO’s remuneration package comprises of a FAR component of
$1,369,600 and equity components delivered via Conditional Rights
and Performance Rights equal to $472,800 and $525,281 respectively
at the time of the grant.
C
a
s
h
E
q
u
i
t
y
FAR 78%
Conditional Rights 22%
Restriction period
Year 1
Year 2
Year 3
The Board continues to set specific annual objectives for the CEO,
some will relate to the year ahead, whereas others may take longer
to achieve. Progress is reviewed formally quarterly and at the end of the
year. This process provides the Board with a basis to assess and discuss
CEO performance in the short term. Also, and importantly, it provides
a basis to ensure that the Board and CEO are aligned on priorities that
will underpin long-term shareholder value creation and go to the heart
of the role as Alumina’s CEO.
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In 2020, taking into account the impact of the global pandemic on
company performance and performance against corporate objectives,
the Board decided that the CEO 2021 remuneration should remain the
same as in 2020.
In 2021, the Board undertook a benchmarking exercise to validate that the
CEO’s remuneration package remained competitive relative to the market
and continued to align with Alumina’s philosophy of positioning the total
CEO reward opportunity in the lower quartile of market peers.
In doing so, the Board reviewed the relevant comparator group, to ensure
that it was reflective of Alumina’s current market positioning at around
the midpoint of ASX 76 — 125. As a result, the Board compared the CEO’s
remuneration package to companies within both the ASX 76 — 125 Rank
(which includes companies significantly smaller than Alumina Limited)
and the ASX 51 — 100 Rank (which was used for benchmarking purposes
in prior years). The outcomes of the review continued to validate the
positioning of the CEO’s total reward in the lowest quartile for each
of the comparator groups.
The Board further considered other factors such as the 2021 salary freeze,
inflation, changes in superannuation guaranteed contribution rates and
market outlook.
For the CEO's 2022 remuneration, the Board resolved to award a
6.0% increase of the CEO’s total reward opportunity, representing a:
· 5.0% for FAR;
· no increase in the value of Conditional Rights; and
· a 14.2% increase in the value of LTI Performance Rights.
Based on the results of the benchmarking exercise, the 2022 CEO’s total
reward opportunity continues to fall within the lowest quartile of both
comparator groups.
CFO
The CFO’s remuneration was structured in the same manner as the CEO’s
package, using the same remuneration package design principles. In 2021,
the CFO's package comprised of a FAR component of $899,400 and an
equity component delivered via Conditional Rights and Performance Rights
equal to $242,200 each at the time of the grant.
Mr. Dempsey resigned from his position effective 31 January 2022.
Chapter 4.5 and 4.6 provides a summary of his termination benefits.
Senior Executives
Senior Executive remuneration packages comprise FAR, STI and LTI. The
STI component for the Senior Executives is considered appropriate and
provides the CEO with a management tool to set annual priorities in the
context of the Company’s longer-term strategic plans, reinforced through
the attachment of an incentive.
Each year, the Company’s strategic, financial and non-financial objectives
are identified. Objectives are weighted differently for each of the Executive
KMP depending on the expected level of input and responsibilities
assigned. At the end of the year performance is evaluated based on the
status of completion of objectives and individual performance relevant
to the specific objective and STI award is determined with the reference to
the “Corporate Gate” measure.
In the Board’s opinion this approach directs Executive focus to the
most significant business priorities, promotes teamwork and presents
a transparent and equitable basis of the performance assessment.
% of potential total remuneration
C
a
s
h
E
q
u
i
t
y
FAR 48%
STI 16.5%
STI Shares 16.5%
LTI 19%
FAR 55%
STI 28%
LTI 17%
Company Secretary
GE Strategy & Development
2. Company performance and executive
remuneration outcomes
2.1. Company performance
Alumina Limited recorded a net profit after tax of $187.6 million.
This was a strong result and is higher than the previous year by 28%.
Financial History 56
Alumina Limited announced a fully-franked, final dividend of 2.8 US cents
per share, bringing the total 2021 dividend to 6.2 US cents per share, which
represents a five-year average dividend yield of 7.3%, all fully franked.
Last five years average dividend yield (excl. franking credits)
8.8%
7.3%
4.8%
4.1%
3.8%
Rio
Tinto
Alumina
Limited
South32
Alba
Norsk
Hydro
0.8%
Rusal
0.1%
Alcoa
Corp.
No
dividends
Century
Aluminium
AWAC recorded an EBITDA of $1.146 billion dollars and $443.8 million
dollars of net profit after tax. Excluding significant items, recorded
EBITDA and profit after tax were $1.206 billion and $604.3 million
dollars respectively.
AWAC’s production costs increased in 2021, as a result of a stronger
Australian dollar, higher global energy and raw material costs, as well
as costs associated with higher than planned maintenance events.
Notwithstanding this, AWAC’s margin increased, year on year to $85
per tonne, demonstrating how AWAC’s low position on the cost curve,
and high exposure to API, enables it to capitalise on increased prices.
Alumina Limited’s unique direct and undiluted exposure to AWAC’s
portfolio of low cost, world class assets, together with a continued strong
balance sheet, underpins the Company’s capacity to deliver strong returns
to shareholders.
Alumina Limited’s strong financial performance reflects the resilience
and quality of the AWAC asset base and its ability to deliver strong
returns throughout the cycle.
Alumina Limited’s TSR compared to relevant ASX indices, demonstrates
a track record of solid returns to investors over the last 5 years which
included highs and lows of the commodity cycle.
Alumina TSR vs. ASX indices – last 5 years
250
230
210
190
170
150
130
110
90
70
50
7
1
n
a
J
7
1
r
p
A
7
1
l
u
J
7
1
t
c
O
8
1
n
a
J
8
1
r
p
A
8
1
l
u
J
8
1
t
c
O
9
1
n
a
J
9
1
r
p
A
9
1
l
u
J
9
1
t
c
O
0
2
n
a
J
0
2
r
p
A
0
2
l
u
J
0
2
t
c
O
1
2
n
a
J
1
2
r
p
A
1
2
l
u
J
1
2
t
c
O
Alumina Ltd. TSR (excl. franking credits)
ASX 100 Accumulation Index
ASX 200 Materials Accumulation Index
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Historical company performance
Net Profit/(Loss) after tax (US$ million)
Net Profit/(Loss) after tax (excluding
significant items) (US$ million)
Dividend declared (US cents per share)
Share price at the end of the period
(AUD per share)
Total shareholder return —
including franking credits (%)
Total shareholder return —
excluding franking credits (%)
2.2. Remuneration decisions and outcomes for 2021
Fixed remuneration
2021
187.6
226.0
6.2
1.865
9.0
6.8
2020
146.6
146.5
5.7
1.835
(14.2)
(16.0)
2019
214.0
326.6
8.0
2.30
15.5
10.8
2018
635.4
689.9
22.7
2.30
7.7
3.8
2017
339.8
363.1
13.5
2.43
41.8
39.1
2021 outcomes
No changes were made to fixed remuneration for any Executive KMP in 2021.
From 2022, fixed remuneration for the CEO increased by 5% and Senior Executives increased by 4%, which was in line with
the increases applied to the broader staff in the Company.
Long-term incentive
2021 outcomes
Short-term incentive
2021 outcomes
The FY19 LTI was tested in 2021 (testing period December 2018 to December 2021), Alumina Limited’s performance
against the ASX and International Comparator Groups fell below the minimum required vesting threshold of 50th
percentile ranking and therefore zero per cent of the potential entitlement vested. This outcome reflects the shareholder
experience during the testing period and illustrates the LTI functioning as intended.
In 2021, STI payments were assessed against a range of corporate objectives, including ESG, financial, strategic
and non-financial objectives.
“Corporate Gate” requirements were satisfied therefore STI was assessed based on 100% of the potential award.
Senior Executives achieved on average 79% of the maximum STI.
Financial History 58
2.3. CEO, CFO and Senior Executives performance under the LTI plan
2021
Key features of the LTI Plan
Description
The LTI is delivered in the form of Performance Rights that are tested over a three-year performance period. Each Performance
Right that vests deliver to the holder an ordinary share in Alumina Limited upon exercising of the Right.
Performance
period
Performance
hurdles
Three years
Alumina Limited’s performance is tested using relative TSR compared against two comparator groups. Relative TSR was chosen
as an appropriate means of measuring Company performance as it incorporates both capital growth and dividends.
The two comparator groups against which Alumina Limited’s performance were tested are:
· ASX Comparator Group (Test 1 — 50% weighting): Australian listed entities in S&P/ASX 100 Index, excluding property trusts,
the top 20 companies by market capitalisation and Alumina Limited.
· International Comparator Group (Test 2 — 50% weighting): reflecting the Company’s direct competitors in the market comprising
nine selected companies in the alumina and/or aluminium industries that are listed in Australia or overseas, excluding the Company.
The following companies were included in the group: Shandong Nanshan Aluminium ‘A’, South 32, Hindalco Industries, Century
Aluminium, Norsk Hydro, Yunnan Aluminium ‘A’ (CNY), Aluminium Corporation of China ‘A’ (CNY), United Company Rusal, Alcoa.
Performance
assessment
Performance hurdles are independently measured by Mercer Consulting (Australia) at the conclusion of the relevant performance
period. Alumina Limited’s TSR is ranked against the TSR of companies in each of the comparator groups.
Alumina Limited’s TSR percentile rank
Percentage of vesting in (applies individually to each comparator group)
Below 50th
Equal to 50th
0%
50%
Between 50th and 75th (ASX Comparator Group)1
An additional 2% of award for each percentile increase
Equal to or greater than 75th
100%
Following testing, any Performance Rights that have not vested will lapse.
Entitlements
The participant is only entitled to proportionally receive dividends and other distributions, bonus issues or other benefits if the
performance conditions applicable to Performance Rights are satisfied (or waived) and the Performance Rights vest and are exercised.
Shares relating to Performance Rights, are not automatically allocated upon vesting. Instead, participants are entitled to exercise
each relevant Performance Right at any time during the applicable exercise period (Exercise Period) after vesting. The Exercise
Period will generally end seven years after vesting of the relevant Performance Rights. However, the Exercise Period may be
shortened in certain circumstances such as cessation of employment or a change of control event. Performance Rights that
do not vest as at the end of the vesting period will lapse.
1. If the Company’s TSR performance is equal to that of any entity (or security) between the 50th percentile and the 75th percentile of the International Comparator Group ranked by TSR
performance, the number of Performance Rights in the relevant half of the LTI award that vest will be equal to the vesting percentage assigned by the Board to that entity (or security). If the
Company’s TSR performance is between that of any two such entities (or securities) in the International Comparator Group, the number of Performance Rights in the relevant half of the LTI
award that vest will be determined on a pro rata basis relative to the vesting percentages assigned by the Board to those entities (or securities).
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2021
Key features of the LTI Plan (continued)
Opportunity
levels2
Percentage of FAR (%)
CEO
Approx 38
CFO
Approx 27
Company Secretary
GE Strategy and Development
40
30
2. To determine the number of Performance Rights to be offered, the LTI opportunity is allocated using a face value allocation methodology being the annual dollar value of the LTI grant divided
by the average Company share price over the 20 trading days leading up to the time that the Board determined to make offers of Performance Rights to CEO, CFO and Senior Executives under
the LTI plan for the relevant year.
Alumina Limited’s performance resulted in zero per cent of the total potential entitlement in relation to the FY19 LTI vesting in December 2021. The tables
below summarise Alumina Limited’s TSR performance against each of the comparator groups, and the number and value of the Performance Rights vested
to Executive KMP as result of this performance. Full reconciliation of number of rights at the beginning and the end of the financial year provided in section
4.3 of this report.
LTI — FY19 (tested in 2021)
Description
Currency
Performance period
Alumina Limited’s TSR
Alumina Limited’s TSR percentile rank
75th percentile TSR
50th percentile TSR
ASX comparator group
International comparator group
AUD
(0.18%)
35.8%
84.76%
25.03%
13 December 2018 — 13 December 2021
USD1
(1.32%)
Ranked last
116.43%
62.77%
1. TSR for the International comparator group is calculated using prices and dividends converted to US dollars on a daily basis.
Financial History 60
Executive KMP
Michael Ferraro
Grant Dempsey
Stephen Foster2
Andrew Wood
Number of performance
rights vested in 2021
(FY19 Tranche)
A$ value of
performance rights
exercised1
–
–
–
–
–
–
190,221
–
1. The value of Performance Rights exercised is determined by the number of Rights
exercised in 2021 multiplied by the market price at the exercise date. 2. Mr Foster
exercised 65,600 rights that have vested in 2019 and 47,750 that have vested in 2020.
LTI — performance rights vesting in future years
Performance rights yet to vest from prior years were offered to the CEO
and Senior Executives in 2020 and 2021 and have the following grant
date fair values:
Tranche No
FY20
FY21
CEO1
$0.60
$0.74
Executive KMP
$1.15
$0.96
1. CEO’s performance rights grant is subject to shareholders approval. Therefore, the
grant date is deemed to be the date of AGM.
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2.4. Senior Executives (excluding CEO and CFO) performance under the STI plan
2021
Key features of the STI plan
Description
The Board sets financial and non-financial performance objectives at the start of each year. Performance is then assessed
against each objective at the end of each year to determine whether executives receive payment under the STI plan.
Performance
period
Performance
hurdles
Financial Year
The STI is subject to the “Corporate Gate”, a minimum performance threshold requirement under which Alumina Limited must pay
a dividend or report an underlying profit before significant items. Significant items may include, subject to the Board discretion, any
positive or negative one-off items such as profit on asset sales, asset impairments or generally any matter which is not recurring.
Where scorecard objectives are met and the “Corporate Gate” is satisfied, the STI payment can be at the target level. If the
“Corporate Gate” is not satisfied the overall scorecard performance scores will be halved in determining STI payments. Where
objectives are significantly exceeded, the STI payment can approach the maximum level indicated below.
Performance
assessment
The Compensation Committee reviews individual performance against the scorecard at year end. It takes into account actual
performance outcomes and internal and external factors that may have contributed to the results based on a comprehensive
report provided by the CEO.
In determining its recommendations to the Board on the level of STI payments, the Compensation Committee decides and,
through discussion, tests:
· whether each individual element was achieved or surpassed
· if an element was not achieved, whether this was due to the element no longer being considered a priority during the year
due to changes in the operating environment, or whether due to poor performance (in which case a zero is likely to be given).
Given the nature of the building blocks to the Alumina Limited STI scheme, a simple distinction between threshold, at target and stretch
performance is not always apparent, especially at the beginning of the year. But in making its assessments as described above, the
Compensation Committee is focused on a scheme which is sufficiently demanding and rewards achievements by executives.
Opportunity
levels
Level of performance
Company Secretary/General Counsel
GE Strategy and Development
Percentage of FAR (%)
Below expectations
Corporate gate not met (50% of target)
Corporate gate satisfied (100% of target)
Maximum
0
28
56
70
0
17.5
35
50
Financial History 62
The tables below provide a summary assessment of performance against the STI scorecard, the actual value of STI paid to participating Senior Executives
and the percentage of total maximum STI paid.
The Company’s philosophy is to reward management effort and actions rather than Senior Executives generating benefits of the outcomes from
the cyclicality of the alumina industry and positive movements in the market prices of aluminium and alumina. STI outcomes for participating
Senior Executives are therefore anticipated from time to time to deviate from company performance based on the point of the commodity cycle.
In 2021 the Board grouped ESG objectives in a separate category to emphasise the importance of progress in this area. The Board also continued to prioritise
strategic objectives designed to focus management efforts on influence over the AWAC’s future development and strategic direction of Alumina Limited.
2021 STI scorecard
Performance measure
Strategic objectives:
· Engage with Alcoa on 10 years AWAC’s planning, including capex
requirements and long-term portfolio options
· Implement Alumina Limited Risk Management plan and contribute
to risk management planning and actions undertaken in AWAC
· Engage with Alcoa to develop a medium term proactive plan to address
increased regulatory requirements in various jurisdictions as well as
trends and developments in alumina and aluminium markets.
Weighting
Performance assessment
55%
Partially achieved:
Whilst progress was made in long-term planning for
the AWAC’s operating activities, further advancement
is needed in future strategic development of the joint
venture’s portfolio of assets.
ESG objectives:
· Assess the quality of the AWAC’s risk management approach to climate
change and review the technology projects and carbon reducing options
20%
· Develop Alumina Limited climate change policy and determine the
corporate position on carbon neutrality
· Work towards aligning sustainability disclosures to the recommendations
of the TCFD
· Work with Alcoa on review of residue disposal areas and provide input
into the recommendations and their implementation plans
Financial objectives:
· Ensure the cash distributions required under the AWAC Joint Venture
agreements for 2021 are received and equity contributions properly assessed
· Maintain key financial metrics of Debt / EBITDA < 2 times
Non-financial objectives:
· Effective and good working relationship is maintained with Alcoa
· Focus on health and safety of employees. Support inclusion,
communication and staff welfare whilst working remotely
· Office relocation
15%
At target
10%
At target
Above target:
Management specifically focused on engaging with
stakeholders on sustainability and climate change
related matters as well as improving external
sustainability reporting and disclosures.
Both Alumina Limited and Alcoa issued climate change
position statements this year and, in October 2021,
Alumina Limited held its first sustainability roadshow.
The above performance measures were reflected in the higher percentage of the STI awarded compared to the previous year. The Board noted that whilst
performance against the STI scorecard achieved healthy percentage outcomes, the actual total STI opportunity paid to both Senior Executives is quite low
relative to the market.
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2021 STI outcomes
Name and Role
Year
STI paid
A$
Paid as a
percentage of
target award
Forfeited as a
percentage of
target award
Paid as a
percentage of
maximum award
Forfeited as a
percentage of
maximum award
Executive KMP
Stephen Foster
(Company Secretary)
Andrew Wood
(GE Strategy &
Development)
Total Executive STI
2021
2020
2021
2020
2021
2020
335,000
284,000
149,000
133,000
484,000
417,000
105%
89%
100%
89%
103%
89%
–
11%
–
11%
–
11%
84%
71%
70%
63%
79%
68%
16%
29%
30%
37%
21%
32%
Financial History 64
2.5 CEO and Senior Executives statutory remuneration
The following table shows details of the remuneration expense recognised for the Group’s Executive KMP for the current and previous financial
year measured in accordance with the requirements of the Australian Accounting Standards. Amounts shown under share-based payments reflect
the accounting expense recorded during the year with respect to awards that have or are yet to vest.
Executive KMP
Mike Ferraro
Year
2021
2020
Grant Dempsey
2021
Stephen Foster
Andrew Wood
Total executive
remuneration
2020
2021
2020
2021
2020
2021
2020
Short-term benefits (A$)
Post employment benefits4 (A$)
Share based payments (A$)
FAR1
STI
Non-monetary2
Other3
Total
Superannuation
Conditional Rights5
Performance Rights6,7
Total
1,346,969
1,358,753
876,769
878,052
545,200
545,200
402,869
404,152
3,171,807
3,186,157
–
–
–
–
335,000
284,000
149,000
133,000
484,000
417,000
113,162
121,707
53,239
83,184
12,044
60,582
25,338
48,517
203,783
313,990
–
–
–
–
–
–
–
–
–
–
1,460,131
1,480,460
930,008
961,236
892,244
889,782
577,207
585,669
3,859,590
3,917,147
22,631
10,847
22,631
21,348
25,000
25,000
22,631
21,348
92,893
78,543
472,800
472,800
242,200
301,262
–
–
–
–
715,000
774,062
221,619
233,513
65,668
19,443
121,528
126,347
68,048
70,773
476,863
450,076
694,419
706,313
307,868
320,705
121,528
126,347
68,048
70,773
1,191,863
1,224,138
remuneration
Total
(A$)
2,177,181
2,197,620
1,260,507
1,303,289
1,038,772
1,041,129
667,886
677,790
5,144,346
5,219,828
1. FAR is the total cash cost of salary, exclusive of superannuation. 2. Non-monetary benefits represent the movement in accrued annual leave, long service leave and value of the car park.
Prior year numbers were updated to include the movement in the annual leave provision. 3. Other short-term benefits include personal financial advice allowance and travel allowance.
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2.5 CEO and Senior Executives statutory remuneration
The following table shows details of the remuneration expense recognised for the Group’s Executive KMP for the current and previous financial
year measured in accordance with the requirements of the Australian Accounting Standards. Amounts shown under share-based payments reflect
the accounting expense recorded during the year with respect to awards that have or are yet to vest.
Grant Dempsey
2021
Executive KMP
Mike Ferraro
Stephen Foster
Andrew Wood
Total executive
remuneration
Year
2021
2020
2020
2021
2020
2021
2020
2021
2020
1,346,969
1,358,753
876,769
878,052
545,200
545,200
402,869
404,152
3,171,807
3,186,157
–
–
–
–
335,000
284,000
149,000
133,000
484,000
417,000
113,162
121,707
53,239
83,184
12,044
60,582
25,338
48,517
203,783
313,990
–
–
–
–
–
–
–
–
–
–
1,460,131
1,480,460
930,008
961,236
892,244
889,782
577,207
585,669
3,859,590
3,917,147
Short-term benefits (A$)
Post employment benefits4 (A$)
Share based payments (A$)
FAR1
STI
Non-monetary2
Other3
Total
Superannuation
Conditional Rights5
Performance Rights6,7
Total
22,631
10,847
22,631
21,348
25,000
25,000
22,631
21,348
92,893
78,543
472,800
472,800
242,200
301,262
–
–
–
–
715,000
774,062
221,619
233,513
65,668
19,443
121,528
126,347
68,048
70,773
476,863
450,076
694,419
706,313
307,868
320,705
121,528
126,347
68,048
70,773
1,191,863
1,224,138
Total
remuneration
(A$)
2,177,181
2,197,620
1,260,507
1,303,289
1,038,772
1,041,129
667,886
677,790
5,144,346
5,219,828
4. Superannuation reflect the SGC contributions for all Executive KMP. No other post-employment benefits (such as termination benefits) were paid to Mr Dempsey in connection with his
cessation of employment. 5. The CEO’s and CFO’s remuneration packages include a Conditional Rights component. In accordance with AASB 2, the value attributed to the Conditional Rights
represents the amortisation for the reporting period of the value at grant date of all previously granted Conditional Rights that have neither vested nor lapsed. 6. In accordance with AASB 2,
the value attributed to Performance Rights represents the amortisation for the reporting period of the value at grant date of all previously granted Performance Rights that have neither vested
nor lapsed. The value at grant date is amortised over a three-year period. 7. The award of performance rights to the CEO is approved by shareholders at the AGM.
Financial History 66
2.6. Actual “take home” 2021 remuneration awarded to CEO and Senior Executives
The actual remuneration awarded during the year comprises the following elements:
· Cash salary including superannuation benefits and any salary sacrifice arrangements, but excluding termination payments;
· Other short-term benefits comprised of the personal financial advice allowance and travel allowance
· STI cash payment;
Executive KMP
Mike Ferraro
Year
2021
2020
Grant Dempsey
2021
Stephen Foster
Andrew Wood
Total executive
remuneration
2020
2021
2020
2021
2020
2021
2020
FAR including
superannuation
1,369,600
1,369,600
899,400
899,400
570,200
570,200
425,500
425,500
3,264,700
3,264,700
Short-term benefits (A$)
Share based payments (A$)
STI
Other
Total
Conditional Rights
Performance Rights
Total “take home”
remuneration, excluding
termination (A$)
Total
Total statutory
remuneration
(A$)
–
–
–
–
335,000
284,000
149,000
133,000
484,000
417,000
–
–
–
–
–
–
–
–
–
–
1,369,600
1,369,600
899,400
899,400
905,200
854,200
574,500
558,500
3,748,700
3,681,700
394,341
418,414
202,006
79,000
–
–
–
–
596,347
497,414
–
–
–
–
381,256
190,221
96,600
49,060
190,221
526,916
394,341
799,670
202,006
79,000
190,221
96,600
–
49,060
786,568
1,024,330
1,763,941
2,169,270
1,101,406
978,400
1,095,421
950,800
574,500
607,560
4,535,268
4,706,030
2,177,181
2,197,620
1,260,507
1,303,289
1,038,772
1,041,129
667,886
677,790
5,144,346
5,219,828
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· Conditional Rights vested (being the number of Conditional Rights that vested multiplied by the market price at the vesting date);
· LTI vested and exercised (being the number of Performance Rights that vested and exercised multiplied by the market price at the exercise date).
These values differ from the executive statutory remuneration table and have not been prepared in accordance with statutory requirements and
Australian Accounting Standards.
Short-term benefits (A$)
Share based payments (A$)
STI
Other
Total
Conditional Rights
Performance Rights
Total “take home”
remuneration, excluding
termination (A$)
Total
Total statutory
remuneration
(A$)
394,341
418,414
202,006
79,000
–
–
–
–
596,347
497,414
–
381,256
–
–
190,221
96,600
–
49,060
190,221
526,916
394,341
799,670
202,006
79,000
190,221
96,600
–
49,060
786,568
1,024,330
1,763,941
2,169,270
1,101,406
978,400
1,095,421
950,800
574,500
607,560
4,535,268
4,706,030
2,177,181
2,197,620
1,260,507
1,303,289
1,038,772
1,041,129
667,886
677,790
5,144,346
5,219,828
Year
2021
2020
2020
2021
2020
2021
2020
2021
2020
Grant Dempsey
2021
Executive KMP
Mike Ferraro
Stephen Foster
Andrew Wood
Total executive
remuneration
FAR including
superannuation
1,369,600
1,369,600
899,400
899,400
570,200
570,200
425,500
425,500
3,264,700
3,264,700
–
–
–
–
335,000
284,000
149,000
133,000
484,000
417,000
–
–
–
–
–
–
–
–
–
–
1,369,600
1,369,600
899,400
899,400
905,200
854,200
574,500
558,500
3,748,700
3,681,700
Financial History 68
of Non-Executive Directors are included in the fees amounts presented
in the table below.
As disclosed in last year’s remuneration report, in 2021 the fee for the
Chair of the Nomination Committee increased from $10,000 to $15,000
(plus superannuation) due to increased workload. Base fees and other
committee fees were unchanged in 2021. There will be no increase of fees
payable to Non-Executive Directors in 2022.
Base fee
20211
A$
20222
A$
164,250
164,250
Compensation Committee — Chair
38,325
38,325
Compensation Committee — Member
10,950
10,950
Audit and Risk Management Committee — Chair
38,325
38,325
Audit and Risk Management Committee — Member
10,950
10,950
Sustainability Committee — Chair
–
–
Sustainability Committee — Member
10,950
10,950
Nomination Committee — Chair
16,425
16,425
Nomination Committee — Member
–
–
1. From 1 July 2021, the SGC rate increased from 9.5% to 10%. Non-Executive Directors
fees (inclusive of superannuation) have not been changed as a result of the rate change.
2. From 1 July 2022, the SGC rate will rise to 10.5%. Non-Executive Directors fees (inclusive
of superannuation) will not be changed as a result of the rate change.
All Non-Executive Directors enter into a service agreement with the
company in the form of a letter of appointment. The letter summarises
the board policies and terms, including remuneration, relevant to the
office of director.
3. Non-Executive Directors remuneration
3.1 Remuneration decisions and outcomes for 2021
The maximum remuneration for Non-Executive Directors is determined
by resolution of shareholders. At the 2016 AGM, shareholders approved
a maximum aggregate remuneration of $1,500,000 per annum for Non-
Executive Directors. A total of $1,352,085 (inclusive of superannuation)
was paid in Non-Executive Director fees in 2021. Other than the Chairman,
who receives a single base fee of $410,000 (inclusive superannuation),
Non-Executive Directors receive a base fee plus additional fees for
membership of Board Committees and superannuation contribution.
Non-Executive Directors do not participate in incentive plans or receive
any retirement benefits other than statutory superannuation contributions.
The remuneration packages for Non-Executive Directors are set out below.
There will be no increase of fees payable to Non-Executive Directors in
2022. Superannuation contributions made by the Company on behalf
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The table below provides summary of the actual remuneration received by each Non-Executive Director and is prepared in accordance with statutory
requirements and relevant accounting standards.
Non-Executive Director
Year
Short-term benefits (A$)
Post employment
benefits (A$)
Fees
Non-monetary
Total
Superannuation
Peter Day
Emma Stein1
Deborah O’Toole
Chen Zeng
John Bevan
Shirley In’t Veld2
Total Non-Executive
Director remuneration
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
387,369
388,652
85,416
205,000
204,534
205,000
179,591
180,000
194,557
190,000
194,469
74,032
1,245,936
1,242,684
–
–
–
–
–
–
–
–
–
–
–
–
–
–
387,369
388,652
85,416
205,000
204,534
205,000
179,591
180,000
194,557
190,000
194,469
74,032
1,245,936
1,242,684
22,631
21,348
8,115
19,475
19,941
19,475
17,509
17,100
18,968
18,050
18,985
7,033
106,149
102,481
Total
remuneration
(A$)
410,000
410,000
93,531
224,475
224,475
224,475
197,100
197,100
213,525
208,050
213,454
81,065
1,352,085
1,345,165
1. Ms Stein ceased to be a Non-Executive Director effective 25 May 2021. 2. Ms In’t Veld was appointed as a Non-Executive Director on 3 August 2020. Ms In’t Veld was appointed Chair of the
Compensation Committee on 25 May 2021.
Financial History 70
3.2 Non-Executive Directors share holdings
Each Non-Executive Director is required to hold shares in the Company having a value at least equal to 50 per cent of their annual fees within five years from
their appointment as a Director.
Non-Executive
Director
Peter Day
Deborah O’Toole
Chen Zeng
John Bevan
Shirley In’t Veld
Emma Stein3
Year
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2020
Number of shares as at
1 January1
Number of shares acquired
during the year
Number of shares as at 31
December1
Date on which policy
compliance achieved
133,770
75,720
40,000
8,000
4,804
4,804
300,154
300,154
102,563
–
84,794
15,000
58,050
30,000
32,000
–
–
–
–
–
102,563
–
03/11/2014
20/12/2021
–2
01/01/2018
03/08/2020
148,770
133,770
70,000
40,000
4,804
4,804
300,154
300,154
102,563
102,563
84,794
1. Number of shares held at 1 January and 31 December of the respective years include directly held shares, nominally held shares, and shares held by personally related entities. 2. Mr Zeng is
a nominee of CITIC and CITIC holds 548,959,208 ordinary fully paid shares in Alumina Limited. 3. Ms Stein retired as a Non-Executive Director effective 25 May 2021. Number of shares held by
Ms Stein has not changed between 31 December 2020 and the date of resignation.
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4. Additional disclosures
4.1 Reconciliation of Conditional Rights held by CEO and CFO
Executive
KMP
Year
Number of rights
Value of rights (A$)
Total as at
1 January
Granted
during the
year1,2,8
Vested
during the
year3,8
Lapsed
during the
year4
Total as at
31 Dec5
Granted
during the
year1,2,8
Vested
during the
year6,8
Lapsed
during the
year4
Maximum
value of
rights yet to
vest (A$)7
Mike
Ferraro
(CEO)
Grant
Dempsey
(CFO)
2021
2020
2021
2020
203,794
256,957
(203,794)
183,515
203,794
(183,515)
104,396
131,631
(104,396)
49,842
104,396
(49,842)
–
–
–
–
256,957
472,800
(394,341)
203,794
472,800
(418,414)
131,631
242,200
(202,006)
104,396
242,200
(79,000)
–
–
–
–
–
–
–
–
1. Mr Ferraro receives Conditional Rights replacing an STI component. The number of Conditional Rights is determined by dividing the set value of $472,800 (2020: $472,800) by a Volume Weighted
Average Price (VWAP) of $1.84 (2020: $2.32), independently calculated by Mercer. 2. Mr Dempsey receives Conditional Rights replacing an STI component. The number of Conditional Rights is
determined by dividing the set value of $242,200 (2020: $242,200) by a VWAP of $1.84 (2020: $2.32). 3. On vesting, each Conditional Right automatically converts into an ordinary share in Alumina
Limited. The terms of Conditional Rights granted were not altered during 2021. The number of Conditional Rights vested is the number granted in the prior years, following the completion of the
required conditions. For both Mr Ferraro and Mr Dempsey there is a three-year trading restriction on the shares from grant date as long as they remain employed by the Company. 4. No Conditional
Rights lapsed. 5. Number of Conditional Rights yet to meet the required condition and have not lapsed. 6. Value vested is equal to the number of Conditional Rights that have satisfied the required
conditions multiplied by the share price at the time of vesting. In 2021, for Mr Ferraro, it was 203,794 Conditional Rights by the share price of $1.935 on 7 January 2021 (2020: 183,515 Conditional
Rights by the share price of $2.28 on 8 January 2020). In 2021, for Mr Dempsey, it was 104,396 Conditional Rights by the share price of $1.935 on 7 January 2021 (2020: 49,842 Conditional Rights
by the share price of $1.59 on 17 August 2020). 7. The maximum value of the Conditional Rights is based on the number of rights that vest and are released at the expiration of the conditional
period, multiplied by the share price on the date of release. 8. There is a three-year trading restriction on the shares from grant date. The value of the equity remains subject to performance
of the Company’s share price.
4.2 Value change over time of the CEO’s and CFO’s Conditional Rights
Executive
KMP
Mike
Ferraro
(CEO)
Grant
Dempsey
(CFO)
Year
2021
2020
Total
2021
2020
Total
Number of rights1,2
Value of rights (A$)
As at the grant date1,2
As at vesting date3
As at 31 December 20214
256,957
203,794
460,751
131,631
104,396
236,027
472,800
472,800
945,600
242,200
242,200
484,400
–
394,341
394,341
–
202,006
202,006
479,225
–
479,225
245,492
–
245,492
1. The number of Conditional Rights is determined by dividing the set value of $472,800 (2020: $472,800) by a VWAP of $1.84 (2020: $2.32), independently calculated by Mercer. 2. The number
of Conditional Rights is determined by dividing the set value of $242,200 (2020: $242,200) by a VWAP of $1.84 (2020: $2.32), independently calculated by Mercer. 3. The value of Conditional
Rights vested is determined by the number of vested Rights multiplied by the market price at the vesting date. 4. The value of Conditional Rights as at 31 December 2021 is determined by the
number of vested Rights multiplied by the market price at the date.
Financial History 72
4.3 Reconciliation of Performance Rights held by KMP
Year1
2021
2020
Executive KMP
Mike Ferraro
Number of Performance Rights
Total as at
1 January2
Granted during
the year3
Exercised
during the
year4,5
Lapsed during
the year6
Total as at
31 December7
Yet to be
exercised as at
31 December
Yet to
vest as at
31 December
437,800
291,800
–
(213,300)
516,300
553,200
224,500
(221,886)
(118,014)
437,800
Grant Dempsey
2021
50,500
134,600
2020
–
50,500
–
–
–
–
185,100
50,500
Stephen Foster
2021
308,850
126,700
(113,350)
(98,000)
224,200
–
–
–
–
–
516,300
437,800
185,100
50,500
224,200
Andrew Wood
2020
2021
2020
319,100
109,500
108,400
97,500
70,900
54,600
(60,000)
(47,750)
308,850
113,350
195,500
–
(54,900)
125,500
(26,750)
(26,750)
109,500
–
–
125,500
109,500
1. 2021 include Performance Rights granted on 25 January 2021 (2020: 20 January 2020) for the three-year performance test period concluding 12 December 2023 (2020: 12 December 2022).
The award of performance rights to the CEO was approved by shareholders at the AGM on 25 May 2021 (2020: 20 May 2020). 2. Includes the number of Performance Rights granted that
were subject to testing in 2021. 3. The terms of Performance Rights granted were not altered during 2021. Number of Performance Rights granted calculated as the annual dollar value of
the LTI grant divided by the average Company share price over the 20 trading days leading up to the time that the Board determined to make offers under the LTI plan for the relevant year.
4. 2021 include the number of Performance Rights that, due to testing of the relevant Tranche, were vested and exercised in 2021. It also includes Performance Rights vested in previous years
that were exercised in 2021. 5. Performance Rights vest on satisfaction of the performance criteria. The eligible participant then enters an exercise period that concludes at 5:00pm (Melbourne
time) on the date that is seven years after vesting. Vested ESP entitlements that are not exercised by the end of the Exercise Period will lapse (and consequently no Shares will be allocated, and
no Cash Settlement Amounts will be paid, in respect of those vested ESP entitlements). However, if any of eligible participants vested ESP entitlements would otherwise lapse at the end of the
Exercise Period because of this rule, and they have not previously notified Alumina Limited that they do not wish those vested ESP entitlements to exercised, then they will be deemed to be
exercised by the eligible participant. 6. The number of the Performance Rights that did not meet the criteria for vesting and therefore lapsed. As disclosed in section 2.3, zero per cent of
Performance Rights vested in 2021 due to testing of Tranche 19. 7. Includes number of Performance Rights granted subject to future testing (yet to vest) and number of Performance rights
vested but yet to be exercised.
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Year1
Value of Performance Rights (A$)
Granted during
the year1
Exercised during
the year2
Lapsed during
the year1
Yet to be
exercised1
Minimum
value of grants
yet to vest3
Maximum
value of grant
yet to vest1
Executive KMP
Mike Ferraro
2021
2020
Grant Dempsey
2021
2020
Stephen Foster
2021
Andrew Wood
2020
2021
2020
214,473
134,700
129,216
58,328
121,632
112,613
68,064
63,063
–
(315,684)
381,256
(176,251)
–
–
–
–
190,221
(130,340)
–
–
–
–
–
96,600
(68,044)
135,612
–
49,060
(73,017)
(38,119)
–
–
–
–
–
–
–
–
–
–
349,173
418,389
187,544
58,328
234,245
242,953
131,127
136,080
1. Calculated by multiplying the number of Performance Rights granted by the fair value as at the date of the grant, independently calculated by Mercer Consulting (Australia) using the
assumptions underlying the Black-Scholes methodology to produce a Monte Carlo simulation model that accommodates features associated with Alumina Limited’s ESP such as exercise,
lapse and performance hurdles. 2. The value of Performance Rights exercised is determined by the number of Rights multiplied by the market price at the exercise date. 3. The minimum
value of the Performance Rights for any given year is zero.
Financial History 74
4.4 Reconciliation of ordinary shares held by KMP
Year1
Number of ordinary shares
Total as at
1 January1
Acquired
during the year
under LTI2
Acquired during the
year under CEO and
CFO Conditional Rights
Other shares
acquired during
the year
Sold during
the year
Total as at
31 December
Executive KMP
Mike Ferraro
2021
2020
764,833
–
359,432
221,886
Grant Dempsey
2021
49,842
2020
–
–
–
Stephen Foster
2021
1,084,697
113,350
Andrew Wood
2020
2021
2020
970,293
382,283
355,533
60,000
–
26,750
203,794
183,515
104,396
49,842
–
–
–
–
–
–
–
–
92,152
54,404
–
–
–
–
–
–
968,627
764,833
154,238
49,842
(160,000)
1,130,199
–
–
–
1,084,697
382,283
382,283
1. Number of shares held at 1 January and 31 December of the respective years include directly held, and nominally held shares, and shares held by personally related entities. 2. December
2021 testing of 2019 Performance Rights resulted in zero per cent vesting of total potential entitlement. Therefore, for 2021 number of Rights include Performance rights vested in prior years,
which were exercised during 2021. For 2020, includes vested 2018 Performance Rights that were tested in December 2020 and Rights vested in prior years, which were exercised in 2020.
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4.5 CEO and Senior Executives service agreements
Remuneration and other terms of employment for executives are formalised in service agreements. Major provisions of the agreements relating
to remuneration are set out below.
Termination benefits are within the limits set by the Corporations Act 2001 (Cth).
Term of agreement and notice period
Termination payments1
Mike Ferraro
· No fixed term.
· Alumina Limited may, at its discretion, make a payment in lieu of some or all of the notice period.
· 12 month written notice from either party.
· Any payment to be made to Mr Ferraro in lieu of notice shall be calculated based on his Fixed Annual
· Mr Ferraro’s employment may be
terminated immediately for any conduct
that would justify summary dismissal.
Reward. He would also receive any statutory entitlements.
· Number of shares equal to the granted Conditional Rights that would have vested during notice period.
· In addition to the above, Mr Ferraro may terminate his employment by giving notice to Alumina Limited
(effective immediately or up to six months later) in the event of a Significant Change. In that case Mr
Ferraro will be entitled to receive a payment equal to 12 months’ Fixed Annual Reward less the amount
received during any period of notice served. He will also be entitled to payment in lieu of accrued annual
and long service leave entitlements.
Grant Dempsey, Stephen Foster and Andrew Wood
· No fixed term.
· Six month notice from the Company,
three month notice from Mr Dempsey
and Mr Foster.
· Four month notice from the Company,
two month notice from Mr Wood.
A payment in lieu of accrued annual and long service leave entitlements and an additional payment which
is the greater of:
· A payment equivalent to six months Base Remuneration; or
· A payment comprising:
− Notice payment (the greater of 12 weeks or notice provided within employment contract),
− severance payment of 2.5 weeks per complete year of service, pro-rated for completed months
of service; and
− nine weeks ex gratia payment.
1. Payable upon termination with notice for reasons other than unsatisfactory performance and suitable alternative employment is not offered by the Company or if they do not accept other
employment, or in the event of a significant change (which is defined to be if Alumina Limited ceases to be listed on the ASX or if there is a significant change to the executive’s status and/or
responsibilities that is detrimental to the executive). Calculated according to the “Base Remuneration”, which is defined as FAR for Mr Ferraro and Mr Dempsey; and FAR + STI at target for
Mr Foster and Mr Wood. The above termination entitlements are subject to any restrictions imposed by the Corporations Act.
Financial History 76
4.6 Cessation of employment
4.8 Clawback policy
Subject to Board discretion, where an executive ceases employment
during the performance period any unvested incentives will be pro-rated
to time and left-on foot to be tested in accordance with the original terms
of the LTI.
On 1 November 2021, Alumina Limited announced that Mr Dempsey
resigned as the Company’s CFO, effective from 31 January 2022.
Mr Dempsey served until the end of his notice period and in accordance
with his employment contract was paid:
· FAR up to the date of resignation; Conditional Rights, granted in
January 2021,vested in January 2022 (prior to cessation of the
employment). No Conditional Rights were granted to Mr Dempsey
in 2022;
· Unvested Performance Rights were lapsed proportional to the amount
of the testing period that had not yet elapsed at the time of ceasing
employment. In total Mr Dempsey had 185,100 - Performance Rights
prior to his resignation. After applying pro rata allocation, 98,224 rights
lapsed and 86,876 rights were retained by Mr. Dempsey, subject to
future performance testing in December 2022 and December 2023.
Mr Dempsey was not entitled to any additional termination payments and
none were paid to him in connection with his cessation of employment.
4.7 Change of control
In the event of a change in control, the Board may bring forward the
testing date for the LTI performance conditions, or waive those conditions,
and/or shorten the exercise period for Performance Rights that have
already vested or that vest subsequently. The Board may also, in its
discretion, determine that cash settlement amounts will be paid in
respect of any vested Performance Rights.
Alumina Limited has a Clawback Policy that provides scope for the
Board to recoup incentive remuneration paid to the CEO and senior
executives where:
· material misrepresentation or material restatement of Alumina Limited’s
financial statements occurred as a result of fraud or misconduct by the
CEO or any senior executives; and
· the CEO or senior executives received incentive remuneration in excess
of that which should have been received if the Alumina Limited financial
statements had been correctly reported.
The Board also may seek to recover gains from the sale or disposition
of vested shares and determine to cancel unvested equity awards.
4.9 Share trading and hedge prohibition
Conditional Rights granted to CEO and CFO and Performance Rights
granted under Alumina Limited’s LTI plan must remain at risk until fully
vested. This is consistent with Alumina Limited’s Share Trading Policy
that prohibits Directors and employees from engaging in:
· short-term trading of any Alumina Limited securities
· buying or selling Alumina Limited securities if they possess unpublished,
price-sensitive information; or
· trading in derivative products over the Company’s securities, or entering
into transactions in products that limit the economic risk of their security
holdings in the Company.
This report is made in accordance with a resolution of the Directors.
W Peter Day
Chairman
22 March 2022
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FINANCIAL
REPORT
The Financial Report covers the consolidated entity consisting of
Alumina Limited (the Company or parent entity) and its subsidiaries
(together the Group). The financial report is presented in US dollars,
unless otherwise specified.
Alumina Limited is a Company limited by shares, incorporated and
domiciled in Australia. Its registered office and principal place of
business is: Alumina Limited, Level 36, 2 Southbank Boulevard,
Southbank Victoria 3006.
A description of the nature of the consolidated entity’s operations
and its principal activities is included in the Operating and Financial
Review on pages 22-47 of the Annual Report. The Operating and
Financial Review is not part of this Financial Report.
The financial report was authorised for issue by the Directors on
22 March 2022.
All press releases, financial reports and other information are available
at our Investor Centre on our website www.aluminalimited.com.
Consolidated financial statements
Consolidated statement of profit or loss and other comprehensive income 78
Consolidated balance sheet
79
Consolidated statement of changes in equity
80
Consolidated statement of cash flows
81
Notes to the consolidated financial statements
for the year ended 31 December 2021
About this report
Group structure and AWAC performance
1. Segment information
2.
3.
Investment in associates
Investments in controlled entities
Financial and capital risk
4. Financial assets and liabilities
5. Financial risk management
6. Capital management
Key numbers
Income tax expense
7. Expenses
8.
9. Equity
10. Cash flow information
Additional disclosures
11. Related party transactions
12. Share-based payments
13. Remuneration of auditors
14. Commitments and contingencies
15. Events occurring after the reporting period
16. Parent entity financial information
17. Deed of cross guarantee
18. New accounting standards and interpretations not yet adopted
Signed reports
Directors’ declaration
Independent auditor’s report to the members of Alumina Limited
82
83
84
87
88
90
94
95
96
99
101
103
104
105
106
106
106
108
110
111
112
78
Consolidated statement of profit or loss and other comprehensive income
Notes
US$ million
Revenue from continuing operations
Share of net profit of associates accounted for using the equity method
General and administrative expenses
Foreign exchange gains/(losses)
Finance costs
Profit before income tax
Income tax expense
Profit for the year attributable to the owners of Alumina Limited
Other comprehensive (loss)/income
Items that may be reclassified to profit or loss
Share of reserve movements accounted for using the equity method
Foreign exchange translation difference
Items that will not be reclassified to profit or loss
2(c)
7(a)
7(b)
8
9(b)
Re-measurements of post-employment benefit obligations accounted for using the equity method
Other comprehensive (loss)/income for the period, net of tax
Total comprehensive income for the year attributable to the owners of Alumina Limited
Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the Company
2021
–
204.6
(13.3)
–
(3.7)
187.6
–
187.6
4.5
(91.9)
33.4
(54.0)
133.6
Basic earnings per share
Diluted earnings per share
Notes
US cents
9(a)
9(a)
2021
6.5
6.5
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
2020
0.1
164.6
(12.6)
0.2
(5.2)
147.1
(0.5)
146.6
(11.5)
(14.7)
(7.5)
(33.7)
112.9
2020
5.1
5.1
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Consolidated balance sheet
Notes
US$ million
Current assets
Cash and cash equivalents
Other assets
Total current assets
Non-current assets
Right of use asset
Investment in associates
Total non-current assets
Total assets
Current liabilities
Payables
Provisions and other liabilities
Tax payable
Total current liabilities
Non-current liabilities
Borrowings
Lease liability
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Treasury shares
Reserves
Retained earnings
Total equity
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
4(a)
2(c)
4(b)
9(a)
9(a)
2021
9.1
1.5
10.6
2.3
1,741.8
1,744.1
1,754.7
0.3
1.2
–
1.5
65.0
1.7
0.9
67.6
69.1
2020
10.4
1.8
12.2
–
1,784.5
1,784.5
1,796.7
0.7
0.6
0.1
1.4
60.0
–
0.7
60.7
62.1
1,685.6
1,734.6
2,706.7
(1.2)
(1,396.8)
376.9
1,685.6
2,706.7
(0.8)
(1,310.0)
338.7
1,734.6
80
Consolidated statement of changes in equity
Balance as at 1 January 2020
Profit for the year
Other comprehensive loss for the period
Transactions with owners in their capacity as owners:
Dividends paid
Movement in share capital
9(a)
Movement in share-based payments reserve
Balance as at 31 December 2020
Balance as at 1 January 2021
Profit for the year
Other comprehensive (loss)/income for the period
Transactions with owners in their capacity as owners:
Dividends paid
Movement in treasury shares
9(a)
Movement in share-based payments reserve
Balance as at 31 December 2021
Notes
Contributed and
other equity1
US$ million
Reserves
2,682.1
(1,283.9)
–
–
–
23.8
–
–
(26.2)
–
–
0.1
2,705.9
(1,310.0)
2,705.9
(1,310.0)
–
–
–
(0.4)
–
–
(87.4)
–
–
0.6
Retained
earnings
383.9
146.6
(7.5)
Total
1,782.1
146.6
(33.7)
(184.3)
(184.3)
–
–
338.7
338.7
187.6
33.4
23.8
0.1
1,734.6
1,734.6
187.6
(54.0)
(182.8)
(182.8)
–
–
(0.4)
0.6
1. Comprises contributed equity and treasury shares.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
2,705.5
(1,396.8)
376.9
1,685.6
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Consolidated statement of cash flows
Cash flows from operating activities
Payments to suppliers and employees (inclusive of goods and services tax)
GST refund received
Dividends received from associates
Finance costs paid
Tax paid
Other
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
Payments for investments in associates
Proceeds from return of invested capital
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment for shares acquired by the Alumina Employee Share Plan
Dividends paid
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
4(a)
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Notes
US$ million
10(a)
2(c)
2021
(13.0)
0.5
191.1
(3.3)
(0.1)
–
175.2
(26.0)
28.4
2.4
160.0
(155.0)
(0.8)
(182.8)
(178.6)
(1.0)
10.4
(0.3)
9.1
2020
(12.3)
0.5
171.4
(4.9)
(0.4)
0.1
154.4
(24.5)
35.8
11.3
197.0
(207.0)
(0.9)
(160.5)
(171.4)
(5.7)
15.2
0.9
10.4
82
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
About this report
Alumina Limited is a for profit company limited by shares incorporated
and domiciled in Australia whose shares are publicly traded on the
Australian Securities Exchange. The consolidated financial report of the
Group for the year ended 31 December 2021 was authorised for issue
in accordance with a resolution of the Directors on 22 March 2022.
The consolidated financial report is a general purpose financial
report which:
· incorporates assets, liabilities and results of operations of all Alumina
Limited’s subsidiaries and equity accounts its associates. For the list
of the Company’s associates and subsidiaries refer Notes 2(a) and
3 respectively.
· has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards (AAS)
and Interpretations issued by the Australian Accounting Standards
Board (AASB). Alumina Limited is a for profit entity for the purpose
of preparing the financial statements.
· complies with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board.
· has been prepared under the historical cost convention, as modified
by the revaluation of certain financial assets and liabilities (including
derivative instruments) at fair value through profit or loss.
· the Company is of a kind referred to in the Australian Securities and
Investments Commission Corporations Instrument 2016/191, relating
to the “rounding off” of amounts in the financial report. Amounts in
the financial report have been rounded off in accordance with that
Legislative Instrument to the nearest hundred thousand dollars, and
presented in US dollars, except where otherwise required.
· adopts all new and amended Accounting Standards and Interpretations
issued by the AASB that are effective for the annual reporting period
beginning 1 January 2021.
· does not early adopt Accounting Standards and Interpretations
that have been issued or amended but are not yet effective.
· presents reclassified comparative information where required
for consistency with the current year’s presentation.
The notes to the financial statements
The notes include information which is required to understand the
financial statements and is material and relevant to the operations,
financial position and performance of the Group. Information is
considered material and relevant if, for example:
· the amount in question is significant because of its size or nature,
· it is important for the understanding of the results of the Group, or
· it relates to an aspect of the Group’s operations that is important
to its future performance.
The notes are organised into the following sections:
· Group structure and Alcoa World Alumina and Chemicals (“AWAC”)
performance: explains the group structure and information about
AWAC’s financial position and performance and its impact on the Group.
· Financial and capital risk: provides information about the Group’s
financial assets and liabilities and discusses the Group’s exposure to
various financial risks and explains how these affect the Group’s financial
position and performance and what the Group does to manage these
risks. It also describes capital management objectives and practices
of the Group.
· Key numbers: provides a breakdown of individual line items in the
financial statements that the Directors consider most relevant and
summarises the accounting policies, judgements and estimates
relevant to understanding these line items.
· Additional disclosures: provides information on items, which require
disclosure to comply with Australian Accounting Standards and other
regulatory pronouncements. However, they are not considered critical
in understanding the financial performance of the Group and are not
immediately related to the individual line items in the financial statements.
Accounting policies, critical accounting estimates and judgements
Significant and other accounting policies that summarise the
measurement basis used and are relevant to the understanding of
the financial statements, as well as critical accounting estimates and
judgements are provided throughout the notes to the financial statements.
Foreign currency translation
The consolidated financial statements are presented in US dollars,
which is Alumina Limited’s presentation and functional currency.
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Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of these transactions.
Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at year-end exchange rates
of monetary assets and liabilities denominated in foreign currencies are
recognised in the profit or loss, except when they are deferred in other
equity as qualifying cash flow hedges and qualifying net investment hedges
or are attributable to part of the net investment in a foreign operation.
The results and financial position of the Group entities and associates
that have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
· assets and liabilities for each balance sheet presented are translated
at the closing rate at the date of that balance sheet.
· income and expenses are translated at average exchange rates
(unless this is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the dates of the transactions).
· all resulting exchange differences are recognised in other
comprehensive income.
· on consolidation, exchange differences arising from the translation
of any net investment in foreign entities, and of borrowings and other
financial instruments designated as hedges of such investments, are
recognised in other comprehensive income. When a foreign operation
is sold, its share of such exchange differences is reclassified to the profit
or loss, as part of the gain or loss on sale.
Group structure and AWAC performance
1. Segment Information
Alumina Limited’s sole business undertaking is in the global bauxite,
alumina and aluminium industry, which it conducts primarily through
bauxite mining and alumina refining. All of those business activities are
conducted through its 40% investments in AWAC. Alumina Limited’s
equity interest in AWAC forms one reportable segment. A full description
of Alumina Limited’s business model is included in the Operating and
Financial Review on pages 22–47 of the Annual Report.
The equity interest in AWAC is represented by investments in a number
of entities in different geographical locations.
Year ended 31 December 2021
Investments in associates
Assets
Liabilities
Consolidated net assets
Year ended 31 December 2020
Investments in associates
Assets
Liabilities
Consolidated net assets
Australia
1,204.8
12.4
(69.0)
1,148.2
Australia
1,188.0
11.6
(61.9)
1,137.7
Brazil
429.9
0.2
–
430.1
Brazil
448.0
0.3
–
448.3
US$ million
Spain
69.1
–
–
69.1
US$ million
Spain
133.5
–
–
133.5
Other
38.0
0.3
(0.1)
38.2
Other
15.0
0.3
(0.2)
15.1
Total
1,741.8
12.9
(69.1)
1,685.6
Total
1,784.5
12.2
(62.1)
1,734.6
84
2. Investment in associates
a) Alcoa World Alumina and Chemicals
Alumina Limited has an interest in the following entities forming AWAC:
Name
Principal
activities
Country of
incorporation
Percentage ownership
2021
2020
Alcoa of Australia Limited
Bauxite, alumina & aluminium production
Australia
Alcoa World Alumina LLC
Bauxite and alumina trading & production
USA
Alumina Espanola S.A.
Alumina production
Alcoa World Alumina Brasil Ltda.
Bauxite and alumina production
Spain
Brazil
AWA Saudi Ltda.
Bauxite and alumina production
Hong Kong
40
40
40
40
40
40
40
40
40
40
The audited combined financial statements of the entities forming
AWAC are prepared in accordance with Accounting Principles Generally
Accepted in the United States of America (US GAAP). Alcoa of Australia
Limited (AWAC entity) further issues audited financial statements
prepared in accordance with the requirements of the Corporations
Act 2001, Australian Accounting Standards and interpretations issued
by Australian Accounting Standards Board.
For the remaining AWAC entities, adjustments are made to convert the
accounting policies under US GAAP to Australian Accounting Standards.
The principal adjustments are to create an additional asset retirement
obligation for dismantling, removal and restoration of certain refineries,
differences in the recognition of actuarial gains and losses on certain
defined benefit pension plans and the reversal of certain fixed asset
uplifts included in Alcoa World Alumina Brasil Ltda.
In arriving at the value of these GAAP adjustments, Management is
required to use accounting estimates and exercise judgement in applying
the Group’s accounting policies. The note below provides an overview
of the areas that involved a higher degree of judgement or complexity.
b) Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations of
future events that may have a financial impact on the Group and that
are believed to be reasonable under the circumstances. The resulting
accounting estimates will by definition, seldom equal the related actual
results. The estimates and judgements that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are disclosed below.
Retirement benefit obligations
The Group recognises a net liability for retirement benefit obligations under
the defined benefit superannuation arrangements through its investment
in AWAC. All plans are valued in accordance with AASB 119 Employee
Benefits. These valuations require actuarial assumptions to be made.
All re-measurements are recognised in other comprehensive income.
Asset retirement obligations
The estimated costs of rehabilitating mined areas and restoring operating
sites are reviewed annually and fully provided at the present value. The
amount of obligations recognised under US GAAP by AWAC is adjusted
to be in compliance with AAS. This requires judgemental assumptions
regarding the reclamation activities, plant and site closure and discount
rates to determine the present value of these cash flows.
Carrying value of investments in associates
The Group assesses at each reporting period whether there is objective
evidence that the investment in associates is impaired by:
· Performing an impairment indicators assessment to consider whether
indicators of impairment exist;
· If indicators of impairment exist, calculating the recoverable amount
of the investment in AWAC using a discounted cash flow model
(“DCF model”); and
· Comparing the resulting value to the carrying value.
The key considerations reviewed as a part of impairment indicators
assessment are the assumptions used in the DCF model to estimate future
cash flows, including those relating to future alumina and aluminium
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
prices, exchange rates, energy prices and other input prices. Key
assumptions are determined with reference to industry participants and
brokers’ forecasts, commodity and currency forward curves and industry
consultant views. The effect of climate related risks and opportunities is
also considered when performing a test for impairment indicators.
If a DCF model is prepared, the cash flows are discounted to net present
value using the weighted average cost of capital (WACC).
Furthermore, the following sensitivity analyses (stress testing) are
performed over the value in use calculation:
· Commodities, including aluminium, alumina, caustic, coal, oil and
gas price fluctuations (plus or minus 10%). AWAC’s future cash flows
are most sensitive to alumina price fluctuations.
· Currency rate fluctuation (plus or minus 10%).
· Increased WACC.
As a final check, the carrying value of the investment in associates is
compared to Alumina Limited’s market capitalisation and to major
analysts’ valuations.
An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell and value in use.
No indicators of impairment were identified, therefore there was no
requirement to prepare a full impairment analysis and no impairment loss was
recognised in the years ended 31 December 2021 and 31 December 2020.
c) Summarised financial information for AWAC
The information disclosed in the tables below reflects the amounts
presented in the AWAC financial statements amended to reflect
adjustments made by Alumina Limited when using the equity method,
including adjustments for differences in accounting policies.
Summarised balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Reconciliation to investment in associates balance:
Group Share as a percentage
Group Share in dollars
Goodwill
Net value of mineral rights and bauxite assets
Deferred tax liability (DTL) on mineral rights and bauxite assets
Carrying value
Reconciliation of carrying amount:
Opening carrying value 1 January
Net additional (return)/funding in AWAC entities
Profit for the year
Other comprehensive (loss)/income for the year
Dividends and distributions paid
Closing carrying value
US$ million
2021
1,735.8
4,876.4
(1,413.6)
(1,445.2)
3,753.4
40%
1,501.4
175.8
96.4
(31.8)
1,741.8
1,784.5
(2.4)
204.6
(53.8)
(191.1)
1,741.8
2020
1,349.4
5,305.6
(1,184.7)
(1,613.9)
3,856.4
40%
1,542.6
175.8
98.5
(32.4)
1,784.5
1,836.8
(11.3)
164.6
(34.2)
(171.4)
1,784.5
86
2. Investment in associates (continued)
Summarised statement of profit or loss and other comprehensive income
US$ million
Revenues
Profit from continuing operations
Profit for the year
Other comprehensive(loss)/ income for the year
Total comprehensive income for the year
Reconciliation to share of net profit of associates:
Group Share of profit for the year as a percentage
Group Share of profit for the year in dollars
Mineral rights and bauxite amortisation
Movement in deferred tax liability on mineral rights and bauxite assets
Share of net profit of associates accounted for using equity method
d) Commitments and contingent liabilities for AWAC
Contingent liabilities — claims
There are potential obligations due to the various lawsuits and claims and
proceedings which have been, or may be, instituted or asserted against
entities within AWAC, including those pertaining to environmental, product
liability, safety and health and tax matters. While the amounts claimed may
be substantial, the ultimate liability cannot now be determined because of
the considerable uncertainties that existed at balance date. Also, not every
plaintiff has specified the amount of damages sought in their complaint.
Therefore, it is possible that the results of operations or liquidity in a
particular period could be materially affected by certain contingencies.
Pursuant to the terms of the AWAC Formation Agreement, Arconic Inc,
Alcoa Corporation and Alumina Limited have agreed to remain liable
for Extraordinary Liabilities (as defined in the agreement) as well as for
certain other pre-formation liabilities, such as environmental conditions,
to the extent of their pre-formation ownership of the AWAC entity or
asset with which the liability is associated.
2021
5,224.1
515.3
515.3
(134.5)
380.8
40%
206.1
(2.1)
0.6
204.6
2020
4,329.5
415.3
415.3
(85.6)
329.7
40%
166.1
(2.1)
0.6
164.6
a 20-year period. As a result of that examination, the ATO had issued a
statement of audit position (SOAP) to AoA. The SOAP was the subject
of an internal review process within the ATO. The ATO completed that
process, and on 7 July 2020 issued AoA with Notices of Assessment (the
Notices) in respect of this matter. The Notices assert claims for additional
income tax payable by AoA of approximately A$214 million. The Notices
also include claims for compounded interest on the primary tax amount
totalling approximately A$707 million.
In accordance with the ATO’s dispute resolution practices, on 30 July
2020, AoA paid 50% of the assessed primary income tax amount
(exclusive of interest and any penalties), being approximately A$107
million, out of cash flows. In exchange, the ATO will not seek further
payment prior to final resolution of the matter.
On 17 September 2020, the ATO issued a position paper with its
preliminary view on the imposition of administrative penalties related
to the tax assessment issued to AofA. This paper proposed penalties
of approximately A$128 million.
As previously reported, the Australian Taxation Office (ATO) has
undertaken a transfer pricing examination in respect of certain historical
third-party alumina sales made by Alcoa of Australia Limited (AoA) over
AofA disagreed with the Notices and with the ATO’s proposed position on
penalties. In September 2020, AoA lodged formal objections to the Notices.
In the fourth quarter of 2020, AoA provided a submission on the ATO’s
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
imposition of interest, and also submitted a response to the ATO’s position
paper on penalties. AoA submissions propose that the interest amount
should be remitted (i.e. should not be fully payable) and no penalties
should be payable. After the ATO completes its review of AofA’s response
to the penalties position paper, the ATO could issue a penalty assessment.
To date, AofA has not received a determination from the objections
team on the Notices, nor has it received a response to its position paper
on interest or its response to the ATO’s position paper on penalties.
On 1 February 2022, AofA submitted statutory notices to the ATO requiring
the ATO to make decisions on AoA’s objections within a 60-day period.
AoA’s obligation to make any further payment of the primary tax amount,
or payment of any penalty or interest amount, will be determined through
the objection and court processes available to AoA. If AoA is ultimately fully
successful, the 50% part-payment to the ATO would be refunded. Further
interest on the unpaid amounts will continue to accrue during the dispute.
The Company understands that AoA will defend its position in respect
of the ATO’s Notices and any penalties imposed.
Commitments
AWAC has outstanding bank guarantees and letters of credit primarily
related to environmental and leasing obligations, legal matters, and
customs duties, among others.
The total amount committed under these instruments, which automatically
renew or expire at various dates, mostly before 2022, was $113.3 million at
December 31, 2021.
AWAC has outstanding surety bonds primarily related to customs duties.
The total amount committed under these bonds, which automatically
renew or expire at various dates, between 2023 and 2026, was $4.8
million at December 31, 2021.
3. Investment in controlled entities
The consolidated financial statements incorporate the assets and liabilities
of all subsidiaries of Alumina Limited as at 31 December 2021 and the
results of their operations for the year then ended. The Group has formed
a trust to administer the Group’s employee share scheme. This trust is
consolidated, as the substance of the relationship is that the trust is
controlled by the Group. Shares held by the Alumina Employee Share Plan
Trust are disclosed as treasury shares and deducted from contributed
equity. The Group’s subsidiaries at 31 December 2021 are set out below.
Name
Notes
Place of incorporation
Percentage ownership
2021
2020
Alumina Employee Share Plan Pty Ltd
Alumina Finance Pty Ltd.
Alumina Holdings (USA) Inc.
Alumina International Holdings Pty. Ltd.
Alumina Brazil Holdings Pty Ltd
Alumina Limited Do Brasil SA
Alumina (U.S.A.) Inc.
Butia Participaçoes SA
Westminer Acquisition (U.K.) Limited
A
A
B
C
A
D
B
D
D
VIC, Australia
VIC, Australia
Delaware, USA
VIC, Australia
VIC, Australia
Brazil
Delaware, USA
Brazil
UK
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
A. A small proprietary company, which is not required to prepare a financial report. B. A company that has not prepared audited accounts as it is non-operating or audited accounts is not required in
its country of incorporation. Appropriate books and records are maintained for the company. C. The company has been granted relief from the necessity to prepare accounts pursuant to Australian
Securities and Investment Commission (ASIC) Class Order 2016/785. For further information refer Note 17. D. A company that prepares separate audited accounts in the country of incorporation.
88
Financial and capital risk
4. Financial assets and liabilities
This note provides information about the Group’s financial instruments, including:
· an overview of all financial instruments held by the Group.
· specific information about each type of financial instrument.
· accounting policies.
· information about determining the fair value of the instruments.
2021
Cash and cash equivalents — Note 4(a)
Total financial assets
Payables
Borrowings — Note 4 (b)
Lease liability
Total financial liabilities
Net financial (liabilities)/assets
2020
Cash and cash equivalents — Note 4(a)
Total financial assets
Payables
Borrowings — Note 4 (b)
Total financial liabilities
Net financial (liabilities)/assets
At fair value through profit or loss
At amortised cost
Total
US$ million
–
–
–
–
–
–
–
9.1
9.1
(0.3)
(65.0)
(1.7)
(67.0)
(57.9)
9.1
9.1
(0.3)
(65.0)
(1.7)
(67.0)
(57.9)
At fair value through profit or loss
At amortised cost
Total
US$ million
–
–
–
–
–
–
10.4
10.4
(0.7)
(60.0)
(60.7)
(50.3)
10.4
10.4
(0.7)
(60.0)
(60.7)
(50.3)
The Group’s exposure to various risks associated with the financial instruments is disclosed in Note 5. The maximum exposure to credit risk at the end
of the reporting period is the carrying amount of each class of financial assets mentioned above. The carrying amounts of financial assets and liabilities
approximate their fair values.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
a) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with financial institutions, other short-term highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value,
and bank overdrafts.
Cash on hand and at bank
Money market deposits
Total cash and cash equivalents as per the Statement of Cash Flows
b) Borrowings
US$ million
2021
9.1
–
9.1
2020
9.1
1.3
10.4
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference
between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the
effective interest method.
Fees paid on establishment of loan facilities are recognised as transaction costs to the extent that it is probable that some or all of a facility will be drawn
down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of a facility will be
drawn down, the fee is capitalised as a prepayment for the liquidity services and amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after
the balance sheet date. Refer to note 5(b).
Bank loans
Total borrowings
US$ million
2021
65.0
65.0
2020
60.0
60.0
Bank loans
Alumina Limited has a US$350 million syndicated bank facility with three tranches maturing in October 2022 (US$100 million), July 2023 (US$150 million)
and July 2024 (US$100 million).
As at 31 December 2021 there was US$65 million drawn against the syndicated facility so the undrawn available facility amount as at 31 December 2021
was $285 million.
90
5. Financial risk management
This note explains the Group’s exposure to financial risks and how these risks could affect the Group’s future financial performance.
Risk
Exposure arising from
Measurement
Market risk: foreign currency
Financial assets and liabilities denominated
in a currency other than US$
Cash flow forecasting
& sensitivity analysis
Market risk: interest rate
Credit risk
Liquidity risk
Long-term borrowings
at fixed rates
Cash and cash equivalents, and
derivative financial instruments
Borrowings and
other liabilities
Sensitivity analysis
Credit ratings
Cash flow
forecasting
Management
Cross-currency
interest rate swaps
Cross-currency
interest rate swaps
Credit limits, letters of credit,
approved counterparties list
Availability of committed
borrowing facilities
Financial risk management is carried out by the Treasury Committee which is responsible for developing and monitoring risk management policies. Risk
management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks
and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.
a) Market risk
Foreign exchange risk
Foreign exchange risk for the Group arises when future commercial transactions and recognised assets and liabilities are denominated in a currency
that is not the Group’s functional currency.
Except as described above, the Group generally does not hedge its foreign currency exposures except through the near-term purchase of currency
to meet operating requirements.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
The Group’s exposure to foreign currency risk at the end of the reporting period, as expressed in US$, was as follows:
2021
Cash and cash equivalents
Total non-derivative financial assets
Payables
Borrowings
Total non-derivative financial liabilities
Net non-derivative financial assets/(liabilities)
Net financial assets/(liabilities)
2020
Cash and cash equivalents
Total non-derivative financial assets
Payables
Borrowings
Total non-derivative financial liabilities
Net non-derivative financial assets/(liabilities)
Net financial assets/(liabilities)
USD
AUD
Other
US$ million
8.3
8.3
–
(65.0)
(65.0)
(56.7)
(56.7)
0.7
0.7
(0.3)
–
(0.3)
0.4
0.4
0.1
0.1
–
–
–
0.1
0.1
USD
AUD
Other
US$ million
9.8
9.8
–
(60.0)
(60.0)
(50.2)
(50.2)
0.5
0.5
(0.7)
–
(0.7)
(0.2)
(0.2)
0.1
0.1
–
–
–
0.1
0.1
Total
9.1
9.1
(0.3)
(65.0)
(65.3)
(56.2)
(56.2)
Total
10.4
10.4
(0.7)
(60.0)
(60.7)
(50.3)
(50.3)
92
5. Financial risk management (continued)
Cash flow and fair value interest rate risk
The Group’s main interest rate risk arises from its borrowings.
Borrowings by the Group at variable rates expose it to cash flow interest rate risk. Borrowings at fixed rates would expose the Group to fair value interest
rate risk. When managing interest rate risk the Group seeks to reduce the overall cost of funds. Group policy is to generally borrow at floating rates subject
to availability of attractive fixed rate deals.
The consolidated entity’s exposure to interest rate risk and the effective weighted interest rate after the effect of derivative instruments is set out below:
Floating interest
Fixed interest
Non-interest bearing
Total
US$ million
2021
Cash and cash equivalents
Total non-derivative financial assets
Payables
Borrowings
Total non-derivative financial liabilities
Net non-derivative financial (liabilities)/assets
Weighted average interest rate before derivatives
Weighted average interest rate after derivatives
2020
Cash and cash equivalents
Total non-derivative financial assets
Payables
Borrowings
Total non-derivative financial liabilities
Net non-derivative financial (liabilities)/assets
Weighted average interest rate before derivatives
Weighted average interest rate after derivatives
9.1
9.1
–
(65.0)
(65.0)
(55.9)
1.8%
1.8%
–
–
–
–
–
–
–
–
9.1
9.1
–
(60.0)
(60.0)
(50.9)
2.6%
2.6%
1.3
1.3
–
–
–
1.3
–
–
–
–
(0.3)
–
(0.3)
(0.3)
–
–
–
–
(0.7)
–
(0.7)
(0.7)
9.1
9.1
(0.3)
(65.0)
(65.3)
(56.2)
–
–
Total
10.4
10.4
(0.7)
(60.0)
(60.7)
(50.3)
Floating interest
Fixed interest
Non-interest bearing
US$ million
Had interest rates on floating rate debt during 2021 been one percentage point higher/lower than the average, with all other variables held constant,
pre-tax profit for the year would have been US$0.5 million lower/higher (2020: US$1.0 million lower/higher).
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
b) Credit risk
c) Liquidity risk
Credit risk arises from cash and cash equivalents, derivative financial
instruments and deposits with banks and financial institutions, as well
as credit exposures to customers, including outstanding receivables
and committed transactions. For banks and financial institutions, only
independently rated parties with a minimum rating of ‘A-‘are accepted,
and exposure limits are assigned based on actual independent rating
under Board approved guidelines.
Credit risk further arises in relation to cross guarantees given to wholly
owned subsidiaries (see Note 17 for details). Such guarantees are only
provided in exceptional circumstances and are subject to Board approval.
The carrying amount of financial assets recorded in the financial
statements, net of any allowances for losses, represent the Group’s
maximum exposure to credit risk.
Prudent liquidity risk management requires maintaining sufficient cash
and credit facilities to ensure the Group’s commitments and plans can be
met. This is managed by maintaining committed undrawn credit facilities
to cover reasonably expected forward cash requirements. Management
monitors rolling forecasts of the Group’s liquidity, including undrawn
borrowing facilities and cash and cash equivalents on the basis of
expected cash flows.
The Group had the following undrawn borrowing facilities at the end
of the reporting period:
Expiring within one year
Expiring beyond one year
Total undrawn borrowing facilities
The table below details the Group’s remaining contractual maturity for its financial liabilities.
2021
Payables
Borrowings
Lease liability
Total non-derivative financial liabilities
2020
Payables
Borrowings
Total non-derivative financial liabilities
Less than
6 months
6-12
months
0.3
–
0.2
0.5
0.7
–
0.7
–
–
0.1
0.1
–
–
–
1-2
years
US$ million
–
65.0
0.3
65.3
US$ million
–
60.0
60.0
US$ million
2021
100.0
185.0
285.0
2-5
years
–
–
1.1
1.1
–
–
–
2020
–
290.0
290.0
Total
0.3
65.0
1.7
67.0
0.7
60.0
60.7
94
6. Capital management
a) Risk management
The Group’s objective when managing capital is to safeguard the ability to continue as a going concern, so that it can continue to provide returns
for shareholders and to maintain an optimal capital structure to reduce the cost of capital.
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development
of the business. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The Group calculates the gearing ratio as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents.
Total capital is calculated as ‘equity’ as shown in the balance sheet plus debt.
The gearing ratios at 31 December 2021 and 31 December 2020 were as follows:
Total borrowings
Less: cash and cash equivalents
Net debt
Total borrowings
Total equity
Total capital
Gearing ratio
b) Dividends
Interim dividend of US3.4 cents fully franked at 30% per fully paid share declared 24 August 2021 and paid
on 15 September 2021 (2020: US2.8 cents fully franked at 30% per fully paid share declared 25 August 2020
and paid on 25 September 2020)
Final dividend of US2.9 cents fully franked at 30% per fully paid share declared 23 February 2021 and paid
on 16 March 2021 (2020: US3.6 cents fully franked at 30% per fully paid share declared 25 February 2020
and paid on 17 March 2020)
US$ million
2021
65.0
(9.1)
55.9
65.0
1,685.6
1,750.6
3.2%
US$ million
2021
98.7
84.1
2020
60.0
(10.4)
49.6
60.0
1,734.6
1,794.6
2.8%
2020
80.6
103.7
Total dividends
182.8
184.3
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Since the year-end the Directors have recommended the payment of a final dividend of US2.8 cents per share (2020: US2.9 cents per share),
fully franked based on the tax paid at 30%. The record date to determine entitlements to the dividend is 28 February 2022. The aggregate amount
of the proposed dividend expected to be paid on 17 March 2022 out of retained earnings at 31 December 2021, but not recognised as a liability
at the year-end, is $81.2 million.
c) Franked dividends
Franking credits available for subsequent financial years, based on a tax rate of 30% (2020: 30%)
US$ million
2021
377.7
The above amounts are calculated from the balance of the franking credits as at the end of the reporting period, adjusted for franking credits
and debits that will arise from the settlement of liabilities and receivables for income tax and dividends after the end of the year.
Fully franked dividends received from AWAC in the financial year
Key numbers
7. Expenses
a) Employee benefits expense
US$ million
2021
187.8
2020
376.6
2020
171.4
Liabilities for salaries and annual leave are recognised in current provisions (i.e. short-term employee benefits), and are measured as the amount unpaid
at the reporting date at expected pay rates in respect of employees’ services up to that date, including related on-costs.
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments
to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting
period of high-quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash flows.
All employees of Alumina Limited are entitled to benefits upon retirement, disability or death from the Group’s superannuation plan. Alumina Limited’s
employees are members of the Alumina Limited Super Plan managed by MLC MasterKey Super, except for employees who elected to contribute to an
alternate fund. The plan is an accumulation category plan which offers a minimum Company contribution of 10 percent (9.5 percent prior to 1 July 2021)
of basic salary to each member’s account. Members also have the option to make voluntary contributions to their account. Employer contributions to these
funds are recognised as an expense.
96
7. Expenses (continued)
Profit/(loss) before income tax included the following specific expenses:
Defined contribution superannuation expense
Other employee benefits expense
Total employee benefits expense
b) Finance costs
US$ million
2021
0.3
5.9
6.2
2020
0.2
5.6
5.8
Finance costs comprise interest payable on borrowings using the effective interest rate method, commitment fees and amortisation of capitalised facility fees.
Finance costs:
Interest expense
Commitment and upfront fees
Amortisation of capitalised upfront fees
Total finance costs
8. Income tax expense
a) Income tax expense and deferred taxes
US$ million
2021
1.0
2.4
0.3
3.7
The income tax expense/benefit for the period is the tax payable/receivable on the current period’s taxable income based on the applicable income
tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting period in the countries
where the Company’s subsidiaries and associates operate and generate taxable income.
Current tax
Deferred tax
Aggregate income tax expense
US$ million
2021
–
–
–
2020
2.9
2.0
0.3
5.2
2020
(0.5)
–
(0.5)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Deferred income tax is provided in full, using the liability method,
on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial
statements. Deferred income tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by the reporting date
and are expected to apply when the related deferred income tax asset
is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences
and unused tax losses only if it is probable that future taxable amounts will
be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary
differences between the carrying amount and tax bases of investments
in controlled entities where the parent entity is able to control the timing
of the reversal of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority. Current tax
assets and liabilities are offset where the entity has a legally enforceable
right to offset and intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
Alumina Limited and its wholly-owned Australian controlled entities have
implemented the tax consolidation legislation. As a consequence, these
entities are taxed as a single entity and the deferred tax assets and liabilities
of these entities are set off in the consolidated financial statements.
The Group’s deferred tax assets and liabilities are attributable to the following:
Deferred tax liabilities
Right of use asset
Unrealised foreign exchange gains
Total deferred tax liabilities
Deferred tax assets
Employee benefits
Lease liability
Other
Total deferred tax assets other than tax losses
Net deferred tax assets/(liabilities) before tax losses
Deductible temporary differences and tax losses not recognised
Net deferred tax assets/(liabilities)
US$ million
2021
(0.6)
–
(0.6)
0.8
0.6
0.6
2.0
1.4
(1.4)
–
2020
–
(0.1)
(0.1)
0.7
–
0.6
1.3
1.2
(1.2)
–
Deferred tax assets are recognised only to the extent of deferred tax liabilities existing at the reporting date. Remaining deferred tax assets
are not recognised as it is not probable that future taxable amounts will be available to utilise those temporary differences and losses.
98
8. Income tax expense (continued)
b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax
Prima facie tax expense for the period at the rate of 30%
The following items caused the total charge for income tax to vary from the above:
Share of equity accounted profit not assessable for tax
Foreign income subject to accruals tax
Tax losses not recognised
Non-deductible expenses
Net movement
Tax Effect of the above adjustments at 30% (2020:30%)
Under provision of tax in prior years
Consequent decrease in charge for income tax at the rate of 30%
Aggregate income tax expense
c) Tax expense relating to items of comprehensive income
US$ million
2021
187.6
(56.3)
2020
147.1
(44.1)
(204.6)
(164.6)
7.0
9.4
0.6
7.6
9.8
0.6
(187.6)
(146.6)
56.3
–
56.3
–
43.9
(0.3)
43.6
(0.5)
2020
(4.9)
(3.3)
(8.2)
Current and deferred tax balances attributable to amounts recognised directly in other comprehensive income and equity are also recognised directly
in other comprehensive income and equity.
Cash flow hedges
Actuarial gains on retirement benefit obligations
Total tax (credit)/expense relating to items of other comprehensive income
US$ million
2021
1.9
15.7
17.6
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
d) Tax losses not recognised
Tax losses — revenue
Tax losses — capital
Total unused tax losses
Potential tax benefit — revenue
Potential tax benefit — capital
Total potential tax benefit
9. Equity
a) Contributed equity
US$ million
2021
1,226.9
1,131.8
2,358.7
293.5
339.5
633.0
2020
1,187.3
1,109.3
2,296.6
285.3
332.8
618.1
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax,
from the proceeds.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Movement in share capital
Number of shares
US$ million
Balance brought forward
Movement for the year1
Total issued capital
1. Movement for the year represents shares issued under the Dividend Reinvestment Plan.
2021
2020
2,901,681,417
2,879,843,498
–
21,837,919
2,901,681,417
2,901,681,417
2021
2,706.7
–
2,706.7
2020
2,682.9
23.8
2,706.7
100
9. Equity (continued)
Treasury shares
Treasury shares are Alumina Limited shares held by the Alumina Employee Share Plan Trust for the purpose of issuing shares under the Alumina Employee
Share Plan.
Movement in treasury shares
Number of shares
US$ million
Balance brought forward
Shares acquired by Alumina Employee Share Plan Pty Ltd
(average price: A$1.70 per share (2020: A$1.53 per share))
Employee performance rights vested
Total treasury shares
2021
788,702
637,500
(432,572)
993,630
2020
435,368
944,500
(591,166)
788,702
2021
781,180
832,242
(414,586)
1,198,836
2020
786,253
928,073
(933,146)
781,180
The weighted average number of ordinary shares used as the denominator in the calculation of basic earnings per share is calculated as the weighted
average number of ordinary shares outstanding during the financial year, adjusted for treasury shares issued.
Weighted average number of ordinary shares used as the denominator in the calculation of basic
and diluted earnings per share
US$ million
2021
2020
2,900,802,609
2,884,845,133
b) Other reserves
Other Reserves include assets revaluation reserve, capital reserve, option premium on convertible bonds reserve, share-based payments reserve,
cash-flow hedge reserve and foreign currency translation reserve.
Foreign currency translation reserve
The foreign currency translation reserve represents exchange differences arising on the translation of non-US dollar functional currency operations
within the Group into US dollars.
Balance at the beginning of the financial year
Currency translation differences arising during the year
Balance at the end of the financial year
US$ million
2021
(1,369.7)
(91.9)
(1,461.6)
2020
(1,355.0)
(14.7)
(1,369.7)
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History
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
10. Cash flow information
a) Reconciliation of profit after income tax to net cash inflow from operating activities
Profit from continuing operations after income tax
Share of net profit of associates accounted for using the equity method
Dividends and distributions received from associates
Share based payments
Other non-cash items (depreciation, net exchange differences, other)
Sub-total
Change in assets and liabilities
(Decrease)/increase in payables
(Decrease)/increase in other liabilities
(Decrease)/increase in provisions
Decrease/(increase) in other assets
Net cash inflow from operating activities
US$ million
2021
187.6
(204.6)
191.1
1.0
0.1
175.2
(0.5)
1.7
0.8
(2.0)
175.2
2020
146.6
(164.6)
171.4
1.0
(0.4)
154.0
(0.1)
-
0.5
–
154.4
b) Non-cash financing and investing activities
In September 2020, 21,837,919 shares in Alumina Limited, valued at $23.8 million were issued to shareholders, who elected to participate in the dividend
reinvestment plan which was applicable to the interim dividend for 2020. There were no non-cash financing and investing activities during the year ended
31 December 2021.
102
10. Cash flow information (continued)
c) Net debt reconciliation
This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.
Cash and cash equivalents
Borrowings — repayable after one year
Net debt
Cash and liquid investments
Gross debt — fixed interest rates
Net debt
Net debt as at 1 January 2020
Cash flows
Foreign exchange adjustments
Other non-cash movements
Net debt as at 31 December 2020
Cash flows
Foreign exchange adjustments
Other non-cash movement
Net debt as at 31 December 2021
US$ million
2021
9.1
(65.0)
(55.9)
9.1
(65.0)
(55.9)
US$ million
Cash/bank
overdraft
Borrowings due
within 1 year
Borrowings due
after 1 year
15.2
(5.7)
0.9
–
10.4
(1.0)
(0.3)
–
9.1
–
–
–
–
–
–
–
–
–
(70.0)
10.0
–
–
(60.0)
(5.0)
–
–
(65.0)
2020
10.4
(60.0)
(49.6)
10.4
(60.0)
(49.6)
Total
(54.8)
4.3
0.9
–
(49.6)
(6.0)
(0.3)
–
(55.9)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Additional disclosure
11. Related party transactions
The parent entity within the Group is Alumina Limited. Balances and transactions between the parent entity and its subsidiaries have been eliminated
on consolidation and are not disclosed in this note.
a) Ownership interests in related parties
Interests held in the following classes of related parties are set out in the following notes:
· associates — Note 2.
· controlled entities — Note 3.
b) Compensation of key management personnel
Detailed remuneration disclosures for the key management personnel, defined as Group Directors, CEO and Senior Executives, are provided
in the remuneration report on pages 50 to 76 of this annual report.
The remuneration report has been presented in Australian dollars, whilst the financial report has been presented in US dollars. The average exchange
rate for 2021 of 0.7504 (2020: 0.6908) has been used for conversion.
Directors and Senior Executives
Short-term employee benefits
Post-employment and termination benefits
Share based payments
Total
US$ 000’s
2021
3,831
150
889
4,870
2020
3,564
125
875
4,564
c) Other transactions and balances with related parties
There have been no other related party transactions made during the year or balances outstanding as at 31 December 2021, between the Group,
its related parties, the Directors or key management personnel (2020: Nil).
104
12. Share-based payments
The Group provides benefits to employees (including the CEO and Senior Executives) through share-based incentives. Employees are incentivised
for their performance in part through participation in the grant of conditional entitlement to fully paid ordinary shares (a Performance Right) via the
Alumina Limited Employee Share Plan (ESP).
For further details on key features of the ESP refer to the remuneration report on pages 50 to 76 of this annual report.
Set out below are summaries of performance rights granted under the ESP.
2021
Grant date
Expiry date
21/1/2019
12/12/2021
20/1/2020
12/12/2022
25/1/2021
13/12/2023
Total
2020
Balance at start
of the year
number
Granted during
the year
number
Vested during
the year
number
Lapsed during
the year
number
Balance at
end of the
year number
454,300
549,800
–
1,004,100
–
–
790,700
790,700
–
–
–
–
(454,300)
–
–
–
549,800
790,700
(454,300)
1,340,500
Grant date
Expiry date
Balance at start
of the year
number
Granted during
the year
number
Vested during
the year
number
Lapsed during
the year
number
Balance at
end of the
year number
1/6/2017
31/5/2020
18/1/2018
4/12/2020
21/1/2019
12/12/2021
141,900
467,408
454,300
–
–
–
20/1/2020
12/12/2022
–
549,800
(122,886)
(233,705)
(19,014)
(233,703)
–
–
–
–
–
–
454,300
549,800
Yet to be
exercised at
the end of the
year number
Yet to vest at
the end of the
year number
–
–
–
–
–
549,800
790,700
1,340,500
Yet to be
exercised at
the end of the
year number
Yet to vest at
the end of the
year number
–
58,782
–
–
–
–
454,300
549,800
Total
1,063,608
549,800
(356,591)
(252,717)
1,004,100
58,782
1,004,100
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
The weighted average remaining contractual life of performance rights outstanding at the end of the period was 1.5 years (2020: 1.5 years).
In addition to the ESP, the CEO’s and CFO’s remuneration includes an annual share right component. This component is conditional on a minimum
of 12 months service and subject to three years trading restriction from the date of the grant.
For further details refer to the remuneration report on page 53 of this Annual Report.
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefits expense were as follows:
Performance rights granted under the Alumina Employee Share Plan
CEO annual conditional share rights grant
CFO annual conditional share rights grant
Total
13. Remuneration of auditors
US$ 000’s
2021
499
355
182
1,036
During the period the following fees were paid or payable for services provided by the auditor of the parent entity, and its related practices
and non-related audit firms:
PricewaterhouseCoopers Australia:
Audit and review of the financial reports
Other assurance services
Related practices of PricewaterhouseCoopers Australia:
Audit and review of financial reports
Overseas taxation services
Total
US$ 000’s
2021
439
3
25
11
478
It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where PricewaterhouseCoopers’
expertise and experience with the Group are important provided such arrangements do not compromise audit independence. These assignments
are principally tax advice or where PricewaterhouseCoopers is awarded assignments on a competitive basis.
2020
466
326
208
1,000
2020
393
3
20
16
432
106
Where the parent entity has provided financial guarantees in relation to
loans and payables of subsidiaries for no compensation, the fair values
of these guarantees are accounted for as contributions and recognised
as part of the cost of the investment.
Intercompany loans
Loans granted by the parent entity to its subsidiaries are classified
as non-current assets.
Tax consolidation legislation
Alumina Limited and its wholly-owned Australian controlled entities
have implemented tax consolidation legislation. The head entity, Alumina
Limited, and the controlled entities in the tax consolidated Group account
for their own current and deferred tax amounts. These tax amounts are
measured as if each entity in the tax consolidated Group continues to
be a standalone taxpayer in its own right. In addition to its own current
and deferred tax amounts, Alumina Limited also recognises the current
tax liabilities (or assets) and the deferred tax assets arising from unused
tax losses and unused tax credits assumed from controlled entities in
the tax consolidated Group.
14. Commitments and contingencies
Capital commitments
There are no contractual capital commitments at reporting date
but there could be future equity calls by AWAC entities in relation to
working capital support. However, this is subject to market conditions.
Contingent liabilities
There are no contingent liabilities of the Group as at 31 December
2021 and 31 December 2020, other than as disclosed in Note 2(d)
and Note 16(c).
15. Events occurring after the reporting period
Except as disclosed in the Director’s report or elsewhere in the
Financial Statements, there have been no significant events occurring
since 31 December 2021. Please refer to Note 6(b) for the final dividend
recommended by the Directors.
16. Parent entity financial information
The financial information for the parent entity has been prepared on
the same basis as the consolidated financial statements, except as set
out below.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are
accounted for at cost in the financial statements of Alumina Limited.
Dividends received from associates are recognised in the parent entity’s
profit or loss, rather than being deducted from the carrying amount
of these investments.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
a) Summarised financial information
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Retained earnings
Total shareholders’ equity
Profit for the year
Total comprehensive income for the year
b) Guarantees entered into by the parent entity
The parent entity has provided guarantees to certain third parties in
relation to the performance of contracts by various AWAC companies.
Alumina Limited has proportionally (40%) guaranteed the payment of the
obligations of Alumina Espanola SA (“Espanola’) in relation to certain
financial services provided by Espanola by a bank. The maximum amount
payable under the guarantee is EUR8.0 million and the guarantee expires
on 15th August 2022.
In addition, the parent entity has entered into a Deed of Cross
Guarantee with the effect that it guarantees the debts of its wholly-owned
subsidiaries. Further details of the Deed of Cross Guarantee are disclosed
in Note 17. Alumina, at the request of Alcoa of Australia has also entered
into a guarantee for the performance of Espanola through an inter-
company short-term loan agreement if required. This will expire on
the 27th September 2022.
US$ million
2021
10.1
3,758.7
1.1
74.9
2,706.7
236.9
740.2
3,683.8
171.1
171.1
2020
11.6
3,762.8
1.2
67.8
2,706.7
236.4
751.9
3,695.0
153.9
153.9
No liability was recognised by the parent entity of the group in relation
to the abovementioned guarantees, as the fair values of the guarantees
are immaterial.
c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 31 December
2021 or 31 December 2020. For information about guarantees given by
the parent entity refer above.
d) Contractual commitments for the acquisition of property,
plant and equipment
There are no contractual commitments by the parent entity for the
acquisition of property, plant and equipment as at 31 December 2021.
108
17. Deed of cross guarantee
Alumina Limited and Alumina International Holdings Pty. Ltd. are parties to a cross guarantee under which each of these companies guarantees the
debts of the other. By entering into the deed, wholly-owned entities have been relieved from the requirement to prepare a financial report and directors’
report under Class Order 2016/785 (as amended) issued by the Australian Securities and Investments Commission.
The above companies represent a “closed group” as defined in the Class Order, and there are no other parties to the deed of cross guarantee
that are controlled by Alumina Limited, they also represent the “extended closed group”.
a) Consolidated statement of profit or loss and other comprehensive income and summary movements in consolidated retained earnings
Consolidated statement of profit or loss and other comprehensive income
Dividends and distributions
Other income
General and administrative expenses
Foreign exchange losses
Finance costs
Profit from ordinary activities before income tax
Income tax expense
Net profit for the year
Other comprehensive income net of tax
Total comprehensive income for the year
Movement in consolidated retained earnings
Retained profits at the beginning of the financial year
Net profit for the year
Dividends provided for or paid
Retained profits at the end of the financial year
US$ million
2021
187.8
–
(13.0)
–
(3.7)
171.1
–
171.1
–
171.1
619.2
171.1
(182.8)
607.5
2020
171.4
0.1
(12.5)
0.2
(5.3)
153.9
–
153.9
–
153.9
649.6
153.9
(184.3)
619.2
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
b) Consolidated balance sheet
Current assets
Cash and cash equivalents
Receivables
Other assets
Total current assets
Non-current assets
Right of use asset
Investment in associates
Other financial assets
Total non-current assets
Total assets
Current liabilities
Payables
Provisions and other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Other financial liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits
Total equity
US$ million
2021
9.0
271.1
1.0
281.1
2.3
1,631.4
1,711.3
3,345.0
3,626.1
0.3
1.1
1.4
70.9
1.8
0.8
73.5
74.9
2020
10.2
252.7
1.3
264.2
–
1,631.4
1,734.5
3,365.9
3,630.1
0.6
0.6
1.2
65.9
–
0.7
66.6
67.8
3,551.2
3,562.3
2,706.7
237.0
607.5
3,551.2
2,706.5
236.6
619.2
3,562.3
110
18. New accounting standards and interpretations
i) Adopted by the group
The group has applied the following standards and amendments for the
first time for the annual reporting period commencing 1 January 2021:
· AASB 2020-4 Amendments to Australian Accounting Standards —
Covid-19-Related Rent Concessions [AASB 16], and
· AASB 2020-8 Amendments to Australian Accounting Standards —
Interest Rate Benchmark Reform — Phase 2 [AASB 4, AASB 7, AASB 9,
AASB 16 & AASB 139].
The change in accounting policies and amendments listed above did
not have any impact on the amounts recognised in prior periods and
are not expected to significantly affect the current or future periods.
ii) Not yet adopted by the group
Certain new accounting standards and interpretations have been
published that are not mandatory for the 31 December 2021 reporting
period and have not been early adopted by the Group. These standards
are not expected to have a material impact on the entity in the current
or future reporting periods and on foreseeable future transactions.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Directors’ declaration
In the Directors’ opinion:
a)
the financial statements and notes set out on pages 77 to 110 are
in accordance with the Corporations Act 2001, including:
(i)
complying with Accounting Standards, the Corporations
Regulations 2001 and other mandatory professional reporting
requirements; and
(ii) giving a true and fair view of the consolidated entity’s financial
position as at 31 December 2021 and of its performance for the
financial year ended on that date; and
b) there are reasonable grounds to believe that the Company will be able
to pay its debts as and when they become due and payable; and
c)
at the date of this declaration, there are reasonable grounds to believe
that the members of the Extended Closed Group identified in Note 3
will be able to meet any obligations or liabilities to which they are, or
may become, subject by virtue of the deed of cross guarantee
described in Note 17.
The financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive
Officer and Chief Financial Officer required by section 295A of the
Corporation Act 2001.
This declaration is made in accordance with a resolution of the Directors.
W Peter Day
Chairman
22 March 2022
112
INDEPENDENT AUDITOR’S REPORT
To the members of Alumina Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Alumina Limited (the Company) and its controlled entities (together the Group) is in accordance with the
Corporations Act 2001, including:
(a) giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
· the consolidated balance sheet as at 31 December 2021;
· the consolidated statement of profit or loss and other comprehensive income for the year then ended;
· the consolidated statement of changes in equity for the year then ended;
· the consolidated statement of cash flows for the year then ended;
· the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information; and
· the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements
of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
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Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due
to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking
into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates.
Alumina Limited’s (Alumina) sole business undertaking is investing globally in
bauxite mining and alumina refining with some minor alumina-based chemical
businesses and aluminium smelting operations. All of these business activities
are conducted through Alumina’s 40% investment in several entities (including
Alcoa of Australia Limited) which collectively form Alcoa World Alumina and
Chemicals (AWAC). Alcoa Corporation owns the remaining 60% of AWAC and is
the manager of these business activities. Alumina’s equity interest in AWAC forms
one reportable segment. Alumina participates in AWAC through the Strategic
Council, which consists of three members appointed by Alcoa Corporation and
two members appointed by Alumina. As Alumina does not control or operate
the AWAC assets, its role involves strategic investment management on behalf
of its shareholders. Accordingly, this investment has been determined to be in
an associate and is accounted for under the equity method.
Materiality
Key audit
matters
Audit
Scope
Materiality
Audit Scope
· For the purpose of our audit we used overall Group materiality
of $18 million, which represents approximately 1% of the Group’s
total assets.
· The Group engagement team directed the involvement of the component
audit teams, which performed an audit of the financial information of Alcoa
of Australia and AWAC.
· We applied this threshold, together with qualitative
considerations, to determine the scope of our audit and the
nature, timing and extent of our audit procedures and to evaluate
the effect of misstatements on the financial report as a whole.
· We chose Group total assets because, in our view, it is the
benchmark against which the performance of the Group,
through its investment in AWAC, is most commonly measured.
· We utilised a 1% threshold based on our professional judgement,
noting it is within the range of commonly acceptable thresholds.
· We, the Group engagement team, determined and undertook an appropriate
level of involvement in the work performed by the component audit teams,
in order for us to be satisfied that sufficient audit evidence had been obtained
to support our opinion on the Group financial report as a whole. We had
regular communication with the component audit teams throughout the
year and performed a review of their audit working papers.
· We audited the equity accounting for Alumina’s 40% investment in AWAC.
This process included auditing certain adjustments made by Alumina to
convert the AWAC results (which are prepared under US GAAP), to comply
with Australian Accounting Standards (AAS). Our audit also focused on where
the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
114
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current
period. The key audit matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context.
We communicated the key audit matters to the Audit and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Equity accounting for Alumina Limited’s investment in AWAC
(Refer to note 2)
To assess the equity accounting for the Group’s 40% investment in AWAC,
we performed the following procedures amongst others:
Alumina Limited’s equity accounted investment in AWAC is
carried at $1,741.8 million and its current year share of the
net profit of AWAC, accounted for using the equity accounting
method, is $204.6 million.
The equity accounting method requires consistent accounting
standards to be applied by the investing company and its
associates. Alcoa of Australia Limited (AWAC entity) already
prepares financial information under Australian Accounting
Standards (AAS), therefore no conversion is required.
The financial information of AWAC entities other than Alcoa of
Australia Limited is prepared under US Generally Accepted
Accounting Principles (US GAAP), therefore adjustments are
required to convert certain amounts to comply with AAS.
We determined equity accounting for Alumina Limited's
investment in AWAC to be a key audit matter because of the
magnitude of the investment in associates balance and the
complexity and significance of, and judgement involved, in
preparing the adjustments required by the Group to convert
amounts accounted for under US GAAP to AAS.
Judgement is involved in determining the differences in the
accounting for areas such as the asset retirement obligation
provisions, defined pension plans, and the reversal of fixed
asset uplifts included in Alcoa World Alumina Brasil Ltda.
· Considered the appropriateness of the equity accounting method
by reference to AAS.
· Agreed the financial information of Alcoa of Australia Limited accounted
for under AAS to the equity accounting schedule prepared by the Group.
· Agreed the financial information of AWAC accounted for under US GAAP
to the equity accounting schedule prepared by the Group.
· Considered adjustments required to convert amounts accounted
for under US GAAP to comply with AAS. To do this we:
− Tested material US GAAP to AAS adjustments by agreeing
the adjustments to supporting schedules and documentation,
considering the appropriateness of any judgements made; and
− Considered whether all material transactions during the year that
required a different treatment under AAS compared with US GAAP
had been adjusted for.
· Reconciled the opening equity accounted investment balance to the final
balance reflected in the financial report. To do this we:
− Recalculated the share of net profit and changes in reserves of AWAC
by examining the schedule prepared by the Group and recalculating
Alumina’s 40% share; and
− Compared dividends, distributions and capital returns received from
AWAC and additional investments made through cash calls to the relevant
declaration documents and bank statements.
· Considered the reasonableness of the disclosures made in the financial
report against the requirements of Australian Accounting Standards.
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Key audit matter
How our audit addressed the key audit matter
Impairment indicator assessment for Alumina Limited’s equity
accounted investment in AWAC
(Refer to note 2)
Alumina’s equity accounted investment in AWAC ($1,741.8 million)
is the most material balance sheet item in the consolidated
financial report.
Under Australian Accounting Standards, Alumina Limited is
required to perform an assessment to determine whether there
are indicators that the equity accounted investment in AWAC
could be impaired.
Alumina’s conclusion was that there was no indicator of impairment
for the year ended 31 December 2021.
We considered the impairment indicator assessment a key audit
matter because Alumina’s equity accounted investment in AWAC is
the most material balance sheet item in the consolidated financial
report and significant judgement is required to assess whether there
are any indicators of impairment by reviewing future alumina and
aluminium prices, exchange rates, energy prices and other input
prices, and the effect of climate related risks and opportunities.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the annual report for
the year ended 31 December 2021, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and
accordingly we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility
is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial report
or our knowledge obtained in the audit, or otherwise appears to be
materially misstated.
If, based on the work we have performed on the other information that we
obtained prior to the date of this auditor’s report, we conclude that there
is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
To evaluate the Group’s impairment indicator assessment of the AWAC
investment we performed the following procedures amongst others:
· Developed an understanding of the process by which the Group
conducted the impairment indicator assessment and whether it was
appropriate under AAS.
· Performed an independent assessment of indicators of impairment by:
− Considering future alumina and aluminium prices, exchange rates,
energy prices and other input prices and the effect of climate related
risks and opportunities, by reviewing both internal information and that
published by external economic and industry analysts and participants;
− Comparing the Group’s market capitalisation to its net assets at
31 December 2021, noting that market capitalisation exceeded
net assets; and
− Evaluating the completeness of the Group’s assessment of whether
there were any other external or internal sources of information that
could indicate that the investment may be impaired.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the
financial report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of
the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for
assessing the ability of the Group to continue as a going concern,
disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either
intend to liquidate the Group or to cease operations, or have no
realistic alternative but to do so.
116
Auditor’s responsibilities for the audit of the financial report
Responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial report as a whole is free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the
Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial
report is located at the Auditing and Assurance Standards Board website
at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf.
This description forms part of our auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 50 to 76
of the directors’ report for the year ended 31 December 2021.
The directors of the Company are responsible for the preparation
and presentation of the remuneration report in accordance with section
300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the remuneration report, based on our audit conducted
in accordance with Australian Auditing Standards.
PricewaterhouseCoopers
In our opinion, the remuneration report of Alumina Limited for the
year ended 31 December 2021 complies with section 300A of the
Corporations Act 2001.
John O’Donoghue
Partner
Melbourne,
22 March 2022
ALUMINA LIMITED ANNUAL REPORT 2021 About
Alumina Limited
Chairman and
CEO Report
Sustainability
Directors'
Report
Remuneration
Report
Financial
Report
Financial
History
117
Details of shareholdings and shareholders Listed Securities — 25 February 2022
Alumina Limited has 2,901,681,417 issued fully paid ordinary shares.
Range of Units as of 25/02/2022
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 Over
Rounding
Total
Total holders
Units
% of Issued Capital
19,431
20,287
7,113
8,162
409
9,014,219
51,855,266
53,805,263
207,803,075
2,579,203,594
55,402
2,901,681,417
0.31
1.79
1.85
7.16
88.89
0.00
100.00
Of these, 6,049 shareholders held less than a marketable parcel of $500 worth of shares (260) a total of 874,965 shares. In accordance with ASX Business
Rules, the last sale price on the Company’s shares on the ASX on 25 February 2022 was used to determine the number of shares in a marketable parcel.
Rank
Name
Units
% Units
1
2
3
4
5
6
7
8
9
HSBC CUSTODY NOMINEES (AUST)
CITICORP NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITIC RESOURCES AUSTRALIA PTY LTD
BESTBUY OVERSEAS CO LTD
NATIONAL NOMINEES
BESTBUY OVERSEAS CO LTD
CITIC RESOURCES AUSTRALIA PTY LTD
BNP PARIBAS NOMINEES PTY LTD
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