Alumina Limited

Chairman and CEO's overview

Chairman and CEO’ letter

 

Welcome to Alumina Limited’s 2015 Sustainability Update.

 2015 was an important year for Alumina Limited and its 40 per cent interest in AWAC because it included the continued repositioning of the AWAC asset portfolio that commenced in 2014. In 2015, the repositioning efforts included curtailment or closure of higher-cost assets to create a more sustainable, efficient and financially competitive business with a stated goal of meeting or exceeding the 21st percentile on the alumina cost curve in 2016.

 The decisions to curtail or close assets were not taken lightly. Serious consideration was made of the impact of numerous factors that included employee welfare, impact on the community with the overriding goal being the sustainability of the business.

 In November 2015, production at the Suralco alumina refinery in Suriname was completely curtailed. Also in 2015, it was announced that 1.2 million metric tons of production at AWAC’s Point Comfort refinery in Texas would be curtailed and in January 2016 it was announced that the remaining 810,000 tons would be curtailed. 2015 also saw the closure of the Anglesea Power Station and the associated coal mine that had served as a source of power for the now closed Point Henry aluminium smelter in Victoria.

 The global alumina and aluminium markets have been in flux with oversupply resulting in the Alumina Price Index falling approximately 40 per cent during 2015 contributing to the underlying stimulus to make the AWAC business more competitive, and low-cost global leader in alumina production.

 Despite the challenges to the business from the marketplace, AWAC has continued to focus on the attainment of its non-financial sustainability objectives in 2015. In the pursuit of more efficient energy sources, AWAC’s San Ciprian alumina refinery in Spain fully transitioned from fuel oil to natural gas as its major source of energy. The refinery’s transition to natural gas also facilitated a reduction in greenhouse gases, cutting CO2 by 30 percent at the refinery and eliminating SO2 emissions. Total energy consumed by AWAC in 2015 fell approximately nine per cent mainly as a result of the closure of the Point Henry aluminium smelter that was partially reliant on electricity sourced from brown coal power stations and also as result of the sale in December 2014 of the Clarendon alumina refinery in Jamaica. Likewise, total greenhouse gas (GHG) emissions for AWAC declined in 2015 by approximately 17 per cent compared to the 2014.

 In land and biodiversity management, AWAC’s Western Australian bauxite mining operations, the Portland aluminium smelter in Australia and the Juruti bauxite mine in Brazil, completed biodiversity action plans which will serve as blueprints for other locations to follow. The plans will identify the biodiversity values of the land, including sensitive habitats and the presence of threatened species and communities in context with the surrounding land. The plans will also assist with biodiversity mitigation measures.

 Waste management is also a key focus, especially due to the large volume of bauxite residue generated in the production of alumina. In 2015, AWAC generated approximately 22.8 million metric tons of bauxite residue. The residue consists of mud, sand and water with some caustic soda residue. A goal is to reduce the amount of space required to store the residue. Since a base year of 2005, the bauxite residue storage efficiency has improved almost 21 per cent. A new technology, residue filtration, has been introduced at AWAC’s Kwinana refinery in Western Australia that processes the residue through very large filters that extract water and caustic soda from the mud. This new technology has defered the need to construct another 30 hectare residue storage area for at least 20 years. It will also reduce freshwater use by 1.2 gigalitres annually.

 The integrated sustainability goals are driving positive environmental and social outcomes and also contributing to the future viability of the business and returns to stakeholders.

 As a business, AWAC is still on a path to continually improve outcomes across a spectrum of activities and measures. A critical area is employee safety and health. Regrettably in 2015, a contractor fell approximately 20 metres to his death at the Kwinana facility while entering a digester tank. A thorough investigation was conducted into this tragic incident and the findings were communicated to all of AWAC's locations. It is a stated target to eliminate work related injuries and illnesses and the potential for fatalities.

 In partnership with Alcoa’s expertise, we will continue to introduce innovations and process improvements into the AWAC business to the benefit of our stakeholders.

 We hope this report is informative in regards to key sustainability goals and practices and provides insight into achievements to date. We welcome any feedback that you may have regarding this report.

  

Peter Wasow signature

Peter Wasow

Chief Executive Officer

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John Pizzey

Chairman