Alumina Limited

Climate change impacts

The AWAC business is actively working to manage climate change risks, adapt to changing climate and seize opportunities to produce shareholder value.

Alumina Limited recognises the scientific basis that climate change, represented by global warming, presents potential risks and challenges for business, the environment and society. However, working towards a satisfactory result of preventing continued global warming also opens opportunities. We acknowledge that AWAC’s operations of transforming an ore into a commodity are energy intensive and energy and process efficiency gains are important to reducing carbon emissions.

Alcoa have prepared a business strategy that incorporates goals to reduce;

  • energy intensity of its processes
  • carbon and other GHG emissions from its operations.

Climate Change Risk

Climate change risk is assessed in 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 AWAC boards, we support Alcoa’s efforts in managing risks such as described in the following table:

RISK AREASRISK DESCRIPTIONSACTIONS
Physical

Increased frequency and severity of extreme weather conditions in the seven countries where AWAC operates, poses risks to personnel, business continuity, production and facilities.

The potential physical impacts of climate change on AWAC operations are highly unclear and will vary depending on the geographic location and related circumstances. Comprehensive analysis of climate risk and changing weather patterns assisted in how these potential impacts may adversely affect the cost, production, and financial performance of our operations over the next several decades. Climate factors are likely to have an impact on AWAC’s global mining operations, access to freshwater, supply chain efficiencies, and the transportation of raw materials. Climactic changes leading to changes in rainfall and sea levels

 

To minimise the potential impact of changing climate conditions, Alcoa have included additional considerations into the design criteria for new facilities and expansions/upgrades of existing operations.

 

Regulation - Cap and trade schemes

The increased scrutiny by governments on GHG emissions and the establishment of carbon pricing mechanisms, emissions trading schemes, carbon taxes etc present a challenge and a financial risk to the business, and AWAC incurred modest costs (<US$10,000) associated with purchasing required permit allowances for Scope 1 emissions for its alumina refinery in Europe under Phase 3 of the EU Emissions Trading Scheme.

Alcoa uses financial modelling to quantitatively assess the economic impact of enacted and proposed cap & trade and other climate/energy measures.

Also, to reduce the financial risk of cap & trade schemes, Alcoa has adopted aggressive annual, incentive based targets and long term CO2e & energy targets for all its operating facilities which include the AWAC operations.

Market changes and perceptions

Consumer demand for the end product of aluminium may change or the markets preference for greener products and energy could impact on access to finance and social licence.

Continual monitoring of markets and community trends. Seize on opportunities of utilising aluminium in reducing the carbon footprint in the transport and construction industries.

Changed financial performance as a result of pressures, increased energy costs and depressed market prices.

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.

Securing low-cost, low-environmental-impact and long-term energy is an important focus and adopting developing technological advances.

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.  

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