Sustainability

• About this report
• Governance
• Sustainability & Alumina
• Environment
• Employees & Community
• Economic contribution
  • Economic contribution
  • Climate change impacts
  • Product contribution & quality
• AWAC’s global operations
• GRI Index

Climate change impacts

Alumina Limited recognises that climate change presents potential risks to the sustainability of both our business and the AWAC joint venture through:

1. Increased physical events such as more extreme weather events and systemic climactic changes.
2. Regulatory responses from governments worldwide to control greenhouse gas emissions.
3. Public perception that aluminium production is too energy intensive in a carbon constrained world.  
4. Changed financial performance as a result of regulatory pressures, increased energy costs and depressed market prices.  

Climate change risk was identified and assessed through to Alumina Limited’s Risk Management Framework, which assesses risk levels and identifies strategies to minimise impact and maximise opportunity.  Through our role on AWAC’s Strategic Council and other relevant boards, we support Alcoa in managing the risks specific to the AWAC joint venture.  

While we recognise our role in reducing GHG emissions through the AWAC joint venture and our own operations, we believe climate change is an issue requiring international attention, involving governments, businesses and communities in finding workable solutions. 

As yet the full impact of climate change on AWAC and consequently on Alumina Limited is difficult to quantify, especially as details of regulatory mechanisms to control GHG emissions are still evolving (link to Carbon Tax discussion). The table below provides a summary of potential impacts to AWAC at this point in time.

On the upside, AWAC’s end product – aluminium - offers a climate change solution through numerous lightweight applications of the metal that substantially reduce fuel consumption and emissions. It can also be endlessly recycled, using only five per cent of the energy required to make the original metal.  

CLIMATE CHANGE IMPACT  

Risk Areas	Risk Descriptions	Actions
Physical	Increased frequency and severity of extreme weather conditions in the seven countries where AWAC operates, posing risks to personnel, business continuity, production and facilities.   Operations in Jamaica and Texas can be affected by hurricane activity that seriously damages facilities and infrastructure, stopping production, reducing revenue and incurring capital costs (eg. Hurricane Dean that affected Jamaican operations in 2007).   Climactic changes leading to changes in rainfall and sea levels Water is a key element in alumina and aluminium production. AWAC’s Western Australian facilities are in a water-scarce region that continues to experience stress from ongoing drought conditions. In the longer term sea level changes may also impact access to ports, significant for the daily functioning of AWAC’s worldwide business.	Incorporate the physical risks into the design of construction of new facilities or the expansion of existing facilities.        Various projects to conserve and use alternative sources of water.
Regulation	Increasing regulations around climate change and associated GHG emissions from governments worldwide, leading to increased energy costs in particular. Potential inconsistency of regulations, particularly between developed and developing countries.   The Australian Government will introduce a carbon tax in 2012 (link to Carbon Tax box), which will develop into an emissions trading scheme by 2015. The aluminium industry will be incorporated into the European Union emissions trading scheme in 2013.   Financial impacts are yet to be determined pending finalisation of relevant regulations.	Alumina Limited and Alcoa brief and advise governments and associated agencies on the impact on AWAC and the aluminium industry overall of new regulations.   Support position of industry bodies in ensure climate change regulation does preserves the competitiveness of the industry worldwide
Perception	Community perception that aluminium production is an energy intensive process with little climate change benefits, negatively affecting consumers demand for the product, depressing alumina and aluminium prices and restricting profitability.	Promoting aluminium as a green metal with strong environmental credibility , including its lightweight and ability to be endlessly recycled
Financial	Increased energy costs caused through carbon reductions scheme could have a detrimental impact on profitability. A drop in demand leading to depressed alumina and aluminium prices restricting profitability. Increasing capital costs due to damage repair costs from weather events and the need to better ‘weatherproof’ new and existing operations.