Alumina Limited

From IntFX

See also: AWC for realtime information.

Alumina Limited is an investment company with investments in bauxite mining, alumina refining and aluminum smelting operations across the world through its 40% ownership of Alcoa World Alumina and Chemicals (AWAC). Alcoa, the Company’s partner is the primary operator of AWAC and owns the remaining 60% stake. The AWAC joint venture was formed in 1994.

Alumina Limited is listed on the Australian Securities Exchange and the New York Stock Exchange. The group is headquartered in Melbourne, Australia.

Recent development on AWAC:

• In 2006, Alumina Limited and Alcoa entered into new funding arrangements to provide the AWAC partners with additional dividends from Alcoa of Australia for funding AWAC’s capital projects.

• In 2006, AWAC completed the Pinjarra efficiency upgrade, increasing annual production capacity by 657,000 tonnes

• Construction of the Jamalco refinery which increased the capacity by 146,000 mtpy in 2007

• AWAC continued construction of the 2.1 million mtpy expansion of the jointly owned Alumar alumina refinery in Brazil. AWAC owns 54% interest in the refinery

• AWAC commenced development of the 2.6 million mtpy Juruti bauxite mine in Brazil

The Company is expected to benefit from the strong worldwide demand of aluminum, which according to the management increased 6.9% to 34.2 million tons from 32.0 million tons in 2005.

[edit] Strategy

Alumina Limited’s strategy is to participate in bauxite mining, alumina refining and selected aluminum smelting operations globally, solely through its 40% interest in AWAC. The Company focuses on generating profitable growth from planned and sustainable expansion of the AWAC enterprise. AWAC plans to add low-cost production capacity principally through brownfield expansions building on proven AWAC competencies.

[edit] Financial and operational performance

In 2006, the Company’s net profit after taxes increased 62% to A$511.1 million from A$ 315.6 million in 2005 primarily driven by higher realized alumina and aluminum prices and higher production and sales from the AWAC joint venture, which achieved record alumina production of 14.3 million tons.

Alumina Limited’s return on equity increased to 32% from 22% in 2005 primarily owing to higher underlying earnings partly offset by significant capital investment in AWAC’s growth projects. AWAC’s total capital expenditure in 2006 was US$836 million significantly higher than US$604 million in 2005. Alumina Limited’s investment in AWAC has generated an average return on equity of 20.7% since 2002.

AWAC production data for 2006 is given below:

Alumina:	14.3 million tons	grew 4.4% over 2005
Aluminum:	0.4 million tons	in line with 2005

The Company has witnessed refining productivity (alumina production per full time equivalent employee) increase of 7.35% to 1.46 in 2006 from 1.36 in 2005.