About this report
Welcome to Alumina Limited’s 2016 Sustainability Update. This report is designed to provide the reader with a description of the economic, social and environmental performance of Alumina Limited and its investment in AWAC (Alcoa World Alumina and Chemicals), our global joint venture with Alcoa.
This update supports Alumina Limited’s commitment to report on non-financial performance as outlined in our sustainability policyand our commitment to high-levels of transparent disclosure. It is specifically designed for the investment community including institutional and retail shareholders who are interested in the long-term sustainability of Alumina Limited, though it may also be of interest to representatives from government and local communities where AWAC operates<./p>
While the report covers Alumina Limited’s results, its emphasis remains on AWAC operations where the greatest sustainability impact lies. Therefore the aim of the report is to give easy access to consolidated information about AWAC’s sustainability performance and lead to greater understanding about the quality and value of these assets.
This report covers Alumina Limited’s office operations located in Melbourne as well as AWAC’s global operations, which include:
- Four AWAC 100% owned and active bauxite mines (Australia and Brazil), closed mine in Suriname and equity interest in a mine in Guinea, Brazil and Saudi Arabia)
- Seven alumina refineries (Australia, Brazil, Spain, Suriname (closed) and United States (curtailed) and equity interest in a joint venture refinery in Saudi Arabia)
- One aluminium smelter located at Portland, Victoria, Australia
The bulk of this Report focuses on Alumina Limited’s 40 per cent interest in the AWAC enterprise. However, this update includes full facility results from the AWAC operations (unless indicated otherwise) to provide readers with a more meaningful overview of AWAC’s assets.
The performance data in this report covers Alumina Limited and AWAC’s operations for the calendar year to 31 December 2016. This report is an update to the report published in 2016 covering AWAC's operations in 2015 and follows our commitment of reporting annually on sustainability matters. More current commentary is included to ensure coverage of substantive and material issues. Qualitative and quantitative data is used to explain policies, programs and outcomes. All financial data is expressed in US ($US) dollars and environmental data is metric.
To aid understanding and comparability with Alcoa's Sustainability Report, as well as those of other resources companies and associated industries, the report's content is informed by Global Reporting Initiative's Sustainability Guidelines (GRI - G4).
The report contains Standard Disclosures from the GRI Sustainability Reporting Guidelines.
Guide to entity references
Three main entities are mentioned throughout this sustainability report - Alumina Limited, AWAC and Alcoa Corporation. To aid the reader’s understanding, we have described each entity’s role below as well as the rationale for when these entities are referred to in the report.
Alumina Limited is the non-operating partner in the AWAC joint venture of which it owns 40 per cent. As this is an Alumina Limited’s sustainability report to stakeholders, the organisation is sometimes referred to in the first person (we, ours). Other references to Alumina Limited are made with respect to:
- joint venture partner undertakings
- the governance procedures and frameworks that guide the strategic direction of Alumina Limited, including policies, values and codes
- activities that it takes to pursue long-term value for shareholders.
AWAC (Alcoa World Alumina and Chemicals) is the joint venture enterprise owned jointly by Alumina Limited (40 per cent) and Alcoa Corporation (60 per cent). In September 2016, Alumina Limited’s original partner in AWAC, Alcoa Inc. separated into two companies, Arconic (holding the former downstream businesses of Alcoa Inc.) and Alcoa Corporation (consisting of the former upstream businesses which includes the AWAC assets). This enterprise includes global bauxite, alumina and selected aluminium assets. AWAC references are used to describe:
- the physical assets, interests and operations that form the basis of the joint venture (e.g. AWAC’s Huntly bauxite mine)
- the outcomes and performance levels from the operation of these assets (e.g. AWAC’s production levels, AWAC’s revenue, emissions, resource usage, market position)
- the governance procedures and frameworks that determine the strategic directions, investments and acquisitions of the enterprise (e.g. the AWAC Strategic Council).
Legally the joint venture is conceived as an unincorporated joint venture based on a Formation Agreement originally between Alumina Limited and Alcoa Inc. However, due to the separation of Alcoa Inc. into two companies in 2016, a revised Formation Agreement was negotiated between Alumina Limited and its new joint-venture partner, Alcoa Corporation. Alumina Limited hold direct ownership in some operating entities of the AWAC enterprise. Although equity ownership remains the same under the revised Agreements, certain rights pertaining to Alumina Limited have altered including:
- improved control over Alumina Limited’s investment in AWAC
- improved cash flow and capital structure
- increase Alumina Limited’s strategic flexibility and autonomy as a corporate entity
AWAC produces and sells alumina, bauxite and aluminium into the global market. AWAC's principal business is the production of alumina, the main raw material used in the manufacture of aluminium. AWAC's products are sold around the world to Alcoa and third parties.
Alcoa Corporation (Alcoa) owns 60 per cent of the AWAC joint venture and is the operating manager of the enterprise. Based on this role, references to Alcoa are used in relation to joint venture partner undertakings as well as actual on-site management of AWAC facilities, including:
- the management team and employees who carry out day-to-day activities
- policies, procedures and processes that are applied to everyday activities at AWAC operations.
Alumina Limited as a non-operating joint venture partner relies on the data measurement techniques and bases of calculations employed by AWAC's manager/operator, Alcoa. Alcoa uses a variety of internal standards and data collection systems, as well as a rigorous internal and external audit process. Alcoa conform to external data reporting standards, such as the Carbon Disclosure Project, and comply with government statutes like the US Sarbanes-Oxley Act<./p>
Alcoa as manager/operator of the AWAC enterprise, are responsible for the data management, data collection and calculation of sustainability metrics such as CO2 emissions. Alcoa engaged First Environment Inc. to provide limited assurance on their consolidated Scope 1 and Scope 2 greenhouse gas (CO2, CH4, N2O, FPC’s and SF6) emissions data (that includes AWAC operations) un the ISO 14064, Part 3: Specification with guidance for the validation and verification of greenhouse gas assertions.
In 2017, Alumina Limited submitted an Investor CDP (Climate Change) report and also a CDP Water Information report in respect of Alumina Limited’s equity interest in AWAC for the 2016 operation year. It is Alcoa's intent to provide future water data assurance.