Alumina : Chairman and CEO AGM speeches

ASX Announcement 25 May 2017

Chairman's and CEO's Speeches - 2017 AGM

Attached are the Chairman's and Chief Executive Officer's speeches delivered at the 2017 Annual General Meeting of the Company held today.

Neither Alumina nor any other person warrants or guarantees the future performance of Alumina or any return on any investment made in Alumina securities. This document may contain certain forward-looking statements, including forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. The words "anticipate", "aim", "believe", "expect", "project", "estimate", "forecast", "intend", "likely", "should", "could", "will", "may", "target", "plan" and other similar expressions (including indications of "objectives") are intended to identify forward-looking statements. Indications of, and guidance on, future financial position and performance and distributions, and statements regarding Alumina's future developments and the market outlook, are also forward-looking statements.

Any forward-looking statements contained in this document are not guarantees of future performance. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Alumina and its directors, officers, employees and agents that may cause actual results to differ materially from those expressed or implied in such statements. Those risks, uncertainties and other factors include (without limitation): (a) material adverse changes in global economic conditions, alumina or aluminium industry conditions or the markets served by AWAC; (b) changes in production or development costs, production levels or sales agreements; (c) changes in laws, regulations or policies; (d) changes in alumina or aluminium prices or currency exchange rates;

(e) Alumina Limited does not hold a majority interest in AWAC and decisions made by majority vote may not be in the best interests of Alumina Limited; and (f) the other risk factors summarised in Alumina's Annual Report 2016. Readers should not place undue reliance on forward-looking statements. Except as required by law, Alumina disclaims any responsibility to update or revise any forward-looking statements to reflect any new information or any change in the events, conditions or circumstances on which a statement is based or to which it relates.

This presentation contains certain non-IFRS financial information. This information is presented to assist in making appropriate comparisons with prior year and to assess the operating performance of the business. Where non-IFRS measures are used, definition of the measure, calculation method and/or reconciliation to IFRS financial information is provided as appropriate or can be found in the Alumina Limited's ASX Full-Year Report for the period ended 31 December 2016.

Stephen Foster Company Secretary

25 May 2017

Chris Thiris	For investor enquiries: Charles Smitheram	For media enquiries: Tim Duncan
Chief Financial Officer		Manager - Treasury & Investor Relations	Hinton and Associates
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JOHN PIZZEY

Good morning ladies and gentlemen.

I am John Pizzey and as Chairman of Alumina Limited, it is my pleasure to welcome you to the 47th Annual General Meeting of the Company.

I will briefly discuss some housekeeping matters before moving on to the business of the meeting.

In the unlikely event that evacuation of the Auditorium is required, Mr Jason Bulner, who is in charge of security for the meeting, will give directions and the meeting will be adjourned.

We would follow Mr Bulner's directions for an orderly evacuation of the Auditorium to the pre- determined evacuation point which is the

grassed area beside Orrs Dock in front of the Exhibition Centre, opposite Yarra doors 1 and 2. Before formally beginning the meeting, I would like to introduce to you my fellow directors.

On my far right is Mike Ferraro, a non-executive Director. Mike is standing for re-election today.

Next to Mike Ferraro is Peter Day, a non-executive Director.

Peter is Chairman of the Audit Committee. Peter is also standing for re-election today. I will ask each of Peter and Mike to address the meeting regarding their re-election.

Next to Peter is Chen Zeng, a non-executive Director.

Next to Chen is Emma Stein, a non-executive Director and Chair of the Compensation and Nominations Committee.

Next to Emma is Peter Wasow, our Chief Executive Officer.

On my immediate right is Stephen Foster, Alumina Limited's General Counsel and Company Secretary. And finally, the Company's Chief Financial Officer, Chris Thiris, is seated to my right in the front row.

The Company's auditor, PricewaterhouseCoopers, is represented by Ms Nadia Carlin, who is also seated in the front row.

Ms Carlin is available to answer any questions regarding the conduct of the audit and the content and preparation of the Audit Report.

Copies of both my address and that of the Chief Executive Officer will be available at the conclusion of the meeting.

Copies of the Alumina Limited Annual Review 2016 and the Annual Report are available today at the Registration table and on the Company website. These documents give more detail than we will cover detail.

I am advised that a quorum of members is present and I declare the meeting open. The Notice of Meeting has been circulated and I will take it as read.

The Minutes of the last Annual General Meeting of the Company have been signed and are available at the registration desk for any shareholder to view.

The proxies received for today's meeting are held by the Company Secretary.

We have received proxies representing approximately 2.4 billion shares or 82.5 per cent of the Company's issued shares.

The first item on the agenda of the meeting is to receive and consider the financial statements. No resolution or vote is required on the financial statements.

To deal with this item, I will make some introductory comments and then ask Peter Wasow, our Chief Executive Officer, to address shareholders.

After my comments and those of the CEO, I will open the meeting for general questions before dealing with the agenda items.

This morning I want to discuss Alumina Limited's financial performance for 2016 and how Alumina Limited changed in 2016.

Peter Wasow will then review the strategy and performance of the AWAC business. This year there will be five resolutions to be considered.

Before I go any further let me touch on the announcement we made on Monday this week concerning the retirement of Peter Wasow as CEO and the appointment of Mike Ferraro.

Peter became CEO on the first of January 2014 and has led the Company through some difficult times. He leaves the Company in a much stronger position than when he joined. The negotiations in 2016 with Alcoa were long, involved and very stressful. The outcome has been a stronger company better placed to face the future challenges and opportunities. The Company has also built a new relationship with Alcoa Corporation which has had a very positive beginning. The Board thanks Peter for his great contribution to the Company.

Once Peter indicated his desire to retire the Board initiated a search using outside consultants. That search covered a broad range of opportunities and was led in the first instance by Emma Stein and Peter Day. The Board's final decision was to ask Mike Ferraro to take the position. Mike has been a senior Melbourne based lawyer with experience in the commercial and resource sector. Mike was also Chief Legal Counsel at BHP Billiton from January 2008 to mid-2010 where he was responsible for the global legal needs of the company. He has been a director for three years and understands the challenges in general facing a Joint Venture company and appreciates the specific challenges facing our company. I am very pleased that Mike accepted the position.

Because of the challenges of timing and notice periods, Mike stands for election as a Non-executive director at this meeting. Mike will continue as a non-executive director until his appointment as CEO on the first of June 2017.

Now let's turn our attention to the 2016 year.

Results

The Company reported a net loss of thirty million dollars. The loss includes restructuring and impairment charges of one hundred and fifteen million dollars. If we exclude AWAC's restructuring and impairment charges, the Company would have reported a profit of eighty five million dollars.

The lower operating profit for Alumina Limited was mainly due to an eighteen per cent decline in alumina prices. This was partly offset by a twenty-five dollar per tonne reduction in AWAC's alumina operating costs. This was achieved through productivity initiatives, a stronger US dollar, and lower

energy costs.

AWAC's strategy has been to achieve an asset portfolio of essentially tier one assets. As part of this strategy, the Point Comfort refinery was fully curtailed and the Suralco refinery was closed.

These actions have been part of a comprehensive three year restructure of the AWAC asset portfolio, which is now largely completed. Peter Wasow, our CEO, will speak in more detail on that restructuring.

Our corporate charges were higher in 2016, due to the work undertaken in responding to Alcoa's separation into two companies comprising its upstream and downstream businesses respectively. I will discuss that subject further in a moment.

Dividends

The Company received net cash flows from AWAC of one hundred and eighty five million dollars for 2016, eighty one million dollars higher than the previous year. This was after AWAC made a

two hundred million dollar prepayment under a new twelve year gas supply agreement. After corporate and financing costs, the Company had free cash flow of one hundred and fifty two million dollars for 2016.

Ninety four per cent of net cash flows were distributed to shareholders through a six US cents per share dividend for 2016.

Changes to Alumina Limited

Now let's move to how Alumina Limited changed in 2016.

While it is not an operating company, the Company is a very significant forty per cent joint venture partner in AWAC with responsibilities to see shareholders' interests promoted and, where necessary, defended.

I would like to recap what late 2015 and 2016 looked like for your board and management as a result of the changes Alcoa announced those many months ago.

On a Sunday in September 2015 the Chair of Alcoa advised me and Peter Wasow that there was an imminent announcement concerning Alcoa's separation into two companies. We understood that Alcoa would spin off the downstream businesses and we knew that sounded like what WMC did in 2002 when they formed Alumina Limited and WMC Resources Limited. The Board knew there may be impacts for the Company but in that scenario the various agreements may not have triggered obvious rights for Alumina. Work was initiated to clarify our rights and obligations.

A short time later it seemed that Alcoa might not proceed as we understood but might spin off the upstream businesses. This was a very different situation. Much more work was needed to understand and protect our Company's rights.

Over the next six months, and with a lot of input from Australian and US advisors, our negotiating team pursued our claims. Negotiations were always respectful but never easy.

In May 2016, Alcoa brought the negotiations to a halt and issued proceedings in the Supreme Court of Chancery of Delaware, USA.

In August 2016 a mutual breakthrough on possible terms of an agreement was reached which would avoid the companies going to court. The teams from both sides then worked to complete the dozens of agreements required.