Alumina Limited’s fundamental purpose is to generate long-term value for our approximate 50,000 shareholders through the 40 per cent ownership of the AWAC joint venture, which leads the global alumina market.
The sustainable economic performance of AWAC is vital to our future success and this is predicated on its ongoing ability to secure access to land, natural resources, employees, community support, financial capital and future market demand.
In 2017 AWAC produced its best cash returns since 2007. AWAC’s full year net profit after tax was US$901 million (US GAAP). AWAC's realised alumina prices averaged $335 per tonne in 2017 and its position in the lowest quartile on the cost curve produced alumina margins of $137 per tonne in 2017, compared with $51 per tonne in 2016. AWAC’s high quality refineries at Pinjarra and Wagerup in Australia achieved production records in 2017. Total AWAC alumina production was 12.5 million tonnes in 2017. AWAC’s bauxite mines in Australia and Brazil also achieved production records for 2017. AWAC’s cost of alumina production increased to $198 per tonne in 2017, a 3.7 percent increase year on year mainly driven by an increase in caustic soda prices – a key production input. During 2017 Ma'aden's Saudi Arabian alumina refinery (in which AWAC holds a 25.1 per cent interest) produced 1.5 million tonnes of alumina (AWAC's share was 0.4 million tonnes). The Ma’aden refinery has recently operated near its full production capacity of 1.8 million mtpa in 2017.
With higher alumina prices and margins in 2017, AWAC’s cash from operations increased to $1,102.4 million. Alumina Limited received a higher level of cash distributions of $343m from AWAC. The changes to the AWAC Agreements on distributions agreed in September 2016 ensured that the benefits of strong cash flow were quickly distributed to Alumina Limited.
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Investing in AWAC for Sustainable Growth
AWAC’s bauxite mining business unit consolidated its position during 2017. AWAC supplied 6.6 million bone dry tonnes (BDT) to the third-party bauxite market in 2017. The Juruti mine in Brazil has undergone two separate expansions from 2016, which will increase production capacity to 5.7 million mtpa during 2018. These expansions have been made at a very low capital investment by utilising existing infrastructure. AWAC is also supplying bauxite from its Huntly mine in Western Australia to China. This is an important step forward in leveraging the existing resource and infrastructure of the Western Australian bauxite operations. AWAC has committed to a capital project to provide increased bauxite export capability through Western Australia. The project includes bauxite unloading facilities, a new rail loop and a train unloading facility.
Broader Economic Contribution
Alumina Limited directly contributes economic value through dividends to shareholders as well as payments to employees, suppliers and service providers.
In 2017 Alumina Limited distributed of a final dividend of US9.3 cents per share, bringing the total declared dividend for the year to US13.5 cents per share ($210.2 million). This is a substantial increase on the US6.0 cents per share ($135.3 million) for 2016. During 2017, Alumina Limited general and administrative expenses were $13.6 million compared to $25.7 million in 2016. The decrease was due to approximately $14.0 million of costs incurred in 2016 arising from the Company’s actions in relation to Alcoa’s corporate separation. 2017 included approximately $1 million associated with the previous CEO’s retirement.
*In 2016 combined payments to suppliers and employees was $27.9 million (2015: $12.1). Payments for suppliers and employees included $13.7 million arising from the Company’s actions in relation to Alcoa’s separation. Prior to the separation of Alcoa Inc and as announced by Alumina Limited on 2 September 2016, Alcoa Inc. and Alumina Limited agreed certain changes to the governance and financial policies of the joint venture.
In 2017 AWAC employed 5,107 people, contributing directly to the economy of the many communities and seven countries in which it operates. In the normal course of its operations, AWAC also supports regional economic growth through paying taxes and royalties. Local communities benefit from grants and financial assistance offered in community projects and infrastructure development.
Alumina Limited Dividends
Generally the Board intends, on an annual basis, to distribute cash from operations after debt servicing and corporate costs commitments have been met. The Board will also consider the capital structure of Alumina Limited, the capital requirements for the AWAC business and market conditions. Dividends paid will be fully franked for the foreseeable future.
|Payment date||Type||Payment amount in $US||Aust cents||Franking Tax rate %||Franked amount||DRP Price per share $A|
|15 Mar 2018||2017 Final||$0.093||11.93||30||Full||DRP Suspended|
|14 Sep 2017||2017 Interim||$0.042||5.2774||30||Full||DRP Suspended|
|22 Mar 2017||2016 Final||$0.031||4.0362||30||Full||DRP Suspended|
|15 Sep 2016||2016 Interim||$0.029||3.8543||30||Full||DRP Suspended|
|23 Mar 2016||2015 Final||$0.018||2.4705||30||Full||DRP Suspended|
|28 Sep 2015||2015 Interim||$0.045||6.4185||30||Full||DRP Suspended|
|25 Mar 2015||2014 Final||$0.016||2.047||30||Full||DRP Suspended|
|21 Aug 2014||2014 Interim||Nil||Nil||n/a||n/a||DRP Suspended|
|20 Feb 2014||2013 Final||Nil||Nil||n/a||n/a||DRP Suspended|
|22 Aug 2013||2013 Interim||Nil||Nil||n/a||n/a||DRP Suspended|
|21 Feb 2013||2012 Final||Nil||Nil||n/a||n/a||DRP Suspended|