The Alumina Limited Board is the organisation’s highest governing body. In 2017 it comprised one executive and five non-executive (four independent) directors who meet regularly throughout the year. Alumina Limited’s executive team, headed by the Chief Executive Officer, Mike Ferraro, reports directly to the Board.
Assisting the Board in its oversight responsibility are 3 Board Committees comprised of only independent, non-executive directors. The Board Committees are: Audit & Risk Management Committee (statutory reporting and risk management), Nomination Committee (succession planning and appointment of CEO) and the Compensation Committee (remuneration matters).
Governance policies and practices ensure that all regulatory requirements are met and ethical standards maintained.
In 2017 the composition of the Board and its Committees were:
|DIRECTOR||BOARD||AUDIT & RISK MANAGEMENT||NOMINATION||COMPENSATION|
|Mr John Pizzey (retired 31 March 2018)||Chair Independant, Non-Executive Director||Member||Member||Member|
|Ms Emma Stein||Member Independant, Non-Executive Director||Member||Member||Chair|
|Mr Peter Wasow (retired 31 May 2017)||Member Executive Director||n/a||n/a||n/a|
|Mr Chen Zeng||Member Non-Executive Director||Member||Member||Member|
|Mr Peter Day||Member Independant, Non-Executive Director||Chair||Member||Member|
|Mr Michael Ferraro||Member Independant, Non-Executive Director (resigned 31 May 2017)||Member||Chair||Member|
|Member Executive Director (appointed 1 June 2017)||n/a||n/a||n/a|
A full description of Alumina Limited’s governance principles and practices including details about Alumina Limited’s three Board Committees, policies, director independence and remuneration is available in the governance section and Alumina Limited’s 2017 Governance Statement on our website.
In terms of sustainability governance for AWAC, Alumina Limited’s principal interest is the integration of sound environmental, social and governance practices alongside sustainable financial performance.
We do this through:
- discussing AWAC’s long term strategies and objectives with managing partner Alcoa
- supporting the policies and practices that are implemented in AWAC companies to ensure sustainable operations
- reviewing reports of non-compliances including for environmental and labour matters.
Alumina Limited assesses potential sustainability risks and opportunities for shareholders. We do this through our Risk Management Framework’s processes that are reviewed and updated through the Audit and Risk Management Committee.
Central to the Board’s role is risk management and mitigation. Alumina Limited's Risk Management Framework identifies and describes the risks identified by Alumina Limited as potentially significant for the current operations and profitability and/or the long-term value of the Company. The Risk Management Framework makes explicit the strategies and actions in place by the Company to manage each identified risk. Included are risks identified associated with the AWAC enterprise.
In terms of the AWAC joint venture, Alcoa Corporation is the manager/operator and has a key risk management role over the operations and administrative and marketing functions. Alumina Limited reviews the management and mitigation of AWAC risks through participation on the AWAC Strategic Council and Boards of the key operating entities.
Ultimately, Alumina Limited’s directors oversee risk identification and management through the Audit & Risk Management Committee. It is also the direct responsibility of the Audit & Risk Management Committee to review business risk assessments to ensure appropriate coverage in the internal audit plans.
AWAC’S GOVERNANCE FRAMEWORK
AWAC has a clearly defined governance and management framework which relies on informal and formal mechanisms. Alcoa as manager of the joint venture has key operating responsibility. Regular contact between Alumina Limited and Alcoa, is the most effective and immediate way for the joint venture to operate in a dynamic global environment. Senior managers and board members hold regular face-to-face meetings and site visits, which is supported through online communications. Formal governance is based on the AWAC Agreements that were modified1995 (the Formation Agreement and the Charter of the Strategic Council) and includes Alumina Limited’s participation in:
• AWAC’s Strategic Council and
• AWA LLC Board
• the Alcoa of Australia (AofA) Board
• the AWA of Brazil SA Advisory Board (effective late 2011).
CLIMATE CHANGE LEGISLATION
In 2017, AWAC's alumna refinery in Spain was operating under Phase 3 of the European Union's Trading Scheme (EUETS).
Since the inclusion in the EUETS, relatively modest payments have been incurred or purchasing allowances under the scheme. It is anticipated that Phase 4 of the EUETS, covery the period 2021 - 2030, will directly impact both carbon and energy pricing.
Energy costs and supply of electricity may be impacted by emerging mandatory renewable energy tarftes and /or energy taxes in Australia, Brazil, the US and potentially other regions in the world where AWAC has operating facilities.
The Australian Federal Government committed to the Paris climate change conference with a target to reduce emissions to 26 - 28 per cent on 2005 levels by 2030. The current Government has as it deliverable, its Direct Action policies and at is core, the Emissions Reduction Fund and Renewable Energy Target, energy efficiency improvements, phasing out very potent sythetic greenhouse gases, and direct support for investments in low emissions technologies and practices. The Renewable Energy Targets (RET) had the potential to increase cost of production however, in June 2015 the Australian Government passed a regulation that provided a full exemption from RET for alumnium smelters and for alumina refineries. While this is a prsent outcome, it has the potential to change with a change of government or could be introduced at other AWAC operations in countries other than Australia.
AWAC’S STRATEGIC COUNCIL
The Strategic Council is AWAC’s formal governing body. It has five members, three appointed by Alcoa (of which one is Chairman) and two by Alumina (of which one is Deputy Chairman). In 2017 those representatives were the Chief Executive Officer, Peter Wasow (until retirement on 31 May 2017) and Mike Ferraro (commencing 1 June 2017), and Chief Financial Officer, Chris Thiris.
The Strategic Council meets to consider:
- AWAC’s long-term strategy
- Development, acquisition and disposal of assets
- Sustainability matters
- Capital and operating budgets of AWAC companies
- Industry and market outlook.
While meetings are usually held twice a year, this can vary depending on business requirements. The Council receives detailed reports of AWAC’s sustainability performance against targets and key indicators.
AWAC SITE VISITS
Alumina runs a program of site visits and industry updates for Board and senior management.
Site visits include:
• Discussions with site operational managers,
• Site operational tours,
• discussion with industry experts, and
• Meetings with representatives of local communities