Sustainability report 2007

The Australian Aluminium Council is the peak industry association representing the Australian aluminium industry. The Council’s members are companies operating in each of the following sectors:

n bauxite mining

n alumina refining

n aluminium metal production

n semi-fabricated aluminium production and distribution

The Council aims to:

n increase understanding of the aluminium industry in Australia and internationally

n encourage the growth of the aluminium industry in Australia and in the use of aluminium in Australia and overseas

n act as a focal point for the industry on key national issues such as climate change, trade, health and the environment

n inform and assist all those with an interest or involvement with the industry

The Council through its technical group develops and maintains material specifications, standards and other technical data for those users both within and outside the industry.

A u s t r A l i A n A l u m i n i u m C o u n C i l | m e m b e r s

Alcoa Australia Rolled Products

Alcoa of Australia

Alumina Limited

Boyne Smelters Limited

Capral Aluminium

Hydro Aluminium Kurri Kurri

Portland Aluminium

Queensland Alumina

Rio Tinto Alcan

Rusal Australia

Tomago Aluminium

Ullrich Aluminium

Worsley Alumina

This is our fourth sustainability report on the Australian bauxite, alumina and aluminium industries — and remains a work-in-progress.

The report continues to show how our industry is using physical resources, the impacts of that use, what we are producing — and the by-products from our activities. We also show how we are managing these outputs and working to reduce the impacts of the production processes.

We recognise the ongoing interest of governments and communities in knowing how aluminium production affects their environment and their society.

As our Australian industry seeks to create value for its shareholders, we recognise the legitimate interests of other stakeholders: employees, local/regional communities, customers, suppliers, and society at the national level.

Key performance indicators from the range of inputs of raw materials, product outputs and by-product flows, both gaseous and non-gaseous, have been retained — with the focus on key issues in sustainability — greenhouse gas emissions, efficient use of resources and recycling.

Aluminium Technical Advice Service — Telephone 1800 642 230

While all reasonable care has been taken to ensure the accuracy of the material contained herein, the AAC shall not be held to be liable or responsible for any loss or damage incurred by any person through the use of this material.

1

In 2007, the Australian industry:

produced ■ 67 million tonnes (mt) of bauxite

produced ■ 19 mt of alumina — with 4 mt being used in Australia in the production of aluminium and 15 mt (79%) exported as alumina

produced ■ 2 mt of aluminium — with 0.4 mt being transformed into downstream products (beyond the smelter-gate) and 1.6 mt (80%) being exported

Alumina production created 14.3 mt of greenhouse emissions (CO2-e), mainly from direct consumption of energy for heat and steam and includes 1.6 mt CO2-e indirect emissions from purchased electricity

Emissions intensity for alumina production remained at the same level as 2006 at 0.75 tonnes CO2-e per tonne of alumina — down from 0.95 in 1990 — an improvement of 21%

Summary

Aluminium production contributed 31.6 mt of greenhouse emissions (CO2-e), comprising:

0.50 ■ mt CO2-e of direct PFC emissions

3.16 ■ mt CO2-e of direct carbon process emissions

0.29 ■ mt CO2-e of other site-level emissions

27.69 ■ mt CO2-e of indirect emissions from electricity consumption

Direct emissions intensity for aluminium was at 2.0 tonnes CO2-e per tonne of aluminium production — down from 2.1 in 2006 and 5.0 in 1990 — an improve ment over the 1990 level of 60 per cent.

Aluminium indirect emissions intensity from electricity consumption remained at the same level as 2006 at 14.1 tonnes CO2-e per tonne of aluminium production — down from 16.1 in 1990 — an improvement of 12%. This reflects both energy efficiency and changes in greenhouse grid factors.

2

Production in Australia

In 2007, Australian bauxite production was 67 million tonnes, up from 64 million tonnes in 2006 — maintaining Australia’s position as the world’s leading producer.

Alumina production was 19 million tonnes of metallurgical or smelter grade (up 0.6 million tonnes from 2007). Australia continues to be a leading world producer of alumina — 26 per cent of global production — a similar level to China.

Australian alumina production levels in 2008 are expected to increase further as recent expansion projects ramp up to full capacity.

Aluminium metal production was at 1.96 million tonnes in 2007, a similar level to 2005 and 2006 — essentially full production for the installed capacity. No new smelter potlines are under construction in Australia at the present time.

Australia’s share of world primary aluminium production is down to 5.2 per cent (down from 5.8% in 2006 and 6.1% in 2005) — reflecting the significant production growth occurring in the Middle East and China — and this is expected to continue, along with growth in Iceland and Russia.

Global opportunities for the supply of long term competitive electricity have changed since the 1980s and 1990s when significant investment in aluminium occurred in Australia. Australia’s coal-fired base load electricity capacity provided an economic advantage, but this is now being eroded as other countries

The downstream processing sector continues to face strong market competition from imported products from Asian producers.

Imports have grown significantly, removing the opportunity for local producers to grow their output in line with the overall market growth for extruded products; domestic extruders are seeing their market share eroded, while volumes remain relatively flat — with very tight profit margins:

Since

1990, alumina

production has

increased by

70 per cent

and aluminium

production by

58 per cent.

bAuxite : Production (mt )

30

40

50

60

70

AluminA: Production (mt )

16

20

10

12

18

14

Aluminium: Production (mt )

2.0

1.6

1.2

1.8

1.4

1991

1993

1995

1997

1999

20012003

20052007

offer more secure long term energy contracts at globally competitive prices and thus attracting the next tranche of investment in aluminium capacity. In addition, the potential for carbon penalties to be introduced in the near future has caused a halt to any Australian investment in new smelting capacity pending resolution of these matters.

Extrusion, rolled products and diecastingextrusion imports: +■■ 135% over 2000

sheet and plate imports: + ■■ 86% over 2000

total semifab imports: +■■ 104% over 2000

These growth rates for imports of aluminium processed products continue to place domestic producers under heavy competitive pressure — and will continue to force local operators to rationalise their production to specialise in product lines with higher values and provide other customer-responsive services.

3

Aluminium: export value (A$ millions)

Exports

Alumina and aluminium exports in 2007 were estimated at a$11.2 billion, down from a$11.4 billion in 2006 but up from a$8.66 billion 2005 and a$7.4 billion in 2004, highlighting the effect of variations in the exchange rate.

AluminA: export value (A$ millions)

80 per cent

of Australian

alumina and

aluminium

production is

exported.

AluminA: export volume (mt) Aluminium: export volume (mt)

10

12

8

16

14

1991

1993

1995

1997

1999

20012003

20052007

2000

3000

4000

5000

6000

1991

1993

1995

1997

1999

20012003

20052007

1000

2000

3000

4000

5000

6000

1990

1992

1994

19

96 19

98 2000

2002

2004

2005

1000

2000

3000

4000

5000

6000

1990

1992

1994

19

96 19

98 2000

2002

2004

2005

1.0

1.2

0.8

1.6

1.4

1991

1993

1995

1997

1999

20012003

20052007

Safety

The council commenced collecting safety data from bauxite/alumina/aluminium operating sites in 2005, with the aim of building a comprehensive data set to identify industry and sector specific trends.

The provisional lost time injury frequency rate (ltifr) for 2007 is 1.5 (per million hours worked), down from 2.0 in 2006, 2.7 in 2005 and 3.2 reported for 2004.

The total recordable injury frequency rate (trifr) for 2007 was 7.0 (per million hours worked) compared with 6.4 in 2006, 7.9 in 2005 and 8.5 reported for 2004.

The

goal is to

reduce workplace

injuries to zero.

All our people

are entitled

to have a safe

and healthy

workplace.

0

2

4

6

0

10

20

30

40

20002001

20022003

20042005

20062007

totAl reCordAble injury FrequenCy

los t t ime injury Frequen Cy

Aluminium scrap metal exports (reported by ABS) amounted to 174,000 tonnes in 2007, with an approximate value of $370 million — compared with 168,000 tonnes and $370 million in 2006.

Lost time injury: An injury that results in one full shift’s absence (AS1885.1–1990)

Lost time injury frequency rate (LTIFR): The number of lost-time injuries and fatal accidents per million hours worked.

Total recordable injuries: All injuries (except first aid cases).

Total recordable injury frequency rate (TRIFR): The number of total recordable injuries per million hours worked.

Note: The numbers in this year’s report vary from last year due to the inclusion of additional data sets.

4

Land use and rehabilitation

All bauxite mining areas in Australia are subject to post-mining restoration programs.

Bauxite mining continued in three regions in Australia: the Cape York Peninsula in Queensland (Weipa), Arnham Land in the Northern Territory (Gove) and in the Darling Ranges in south-west Western Australia (Boddington-Mt Saddleback, Huntly and Willowdale).

The area mined in 2007 was reported as 2451 hectares (2006: 2001; 2005: 1520; 2004: 1562 and 2003: 1793) and the area rehabilitated was 1146 hectares (2006: 1379; 2005: 842; 2004: 904 and 2003: 1379).

Rehabilitation

of our bauxite

mining areas is a

central element of

the overall mine

development.

0

1000

2000

2500

500

1500

20002001

20022003

20042005

20062007

reHAbil itAt ion

Area mined (HA) Area rehabilitated (HA)

The area rehabilitated each year varies due to seasonal conditions and operational factors. As mining spreads out from the initial area of activity, increased haul roads and haul distances as well as pit size can require additional areas to remain ‘open’ before rehabilitation is commenced.

In aggregate, Australia’s alumina refineries used 48,127 megalitres of water in 2007 compared with 53,061 in 2006 and 54,466 ml in 2005. This usage was equivalent to 2.5 kilolitres per tonne of alumina production (2006: 2.9; 2005: 3.03 and 2004: 3.00).

Of this, 75 per cent was fresh water (compared with 66% in 2006, 60% in 2005 and 57% in 2004) and 25 per cent was grey/other water (34% in 2006, 40% in 2005 and 43% in 2004).

The split between fresh and grey water will continue to fluctuate depending on regional conditions experienced by the areas where refineries are located.

Water is a

key input for

the refining of

bauxite into

alumina—it is a

water-intensive

process.

Water

20032002

20052006

20040

20

40

60

2007

16

17

18

19

2.5

3.0

3.5

AluminA: Production (mt)

AluminA: Average water use (kilolitres per tonne)

AluminA: total water usage (megalitres)

Fresh water Grey water

Energy

Australian aluminium industry—a major energy consumer Aluminium: Production (mt)

AluminA: energy consumption per tonne (Gj)

With high

energy intensity

and energy

costs around

30 per cent

of smelter

operating costs,

the industry

places energy

consumption as

a key indicator

in their regular

performance

monitoring.

Energy is a critical input for aluminium with around 22 per cent of operating costs (30% when pet coke and carbon are included; 36% with energy in alumina). The industry is dominated by continuous base load electricity demand.

The Australian aluminium smelting industry consumed 29,500 GWh of electricity in 2007 (29,000 GWh in 2006 and 28,600 in 2005).

The share of final electricity consumption represented by the aluminium smelting sector for 2006–07 was reported by the Energy Supply Association of Australia (based on ABARE projections) to be 13.1 per cent — down from 13.2 per cent in 2005–06 and 14 per cent in 2004–05.

Australia has one of the lowest energy intensity aluminium industries in the world; however, state-of-the-art operations recently built overseas are likely to have a lower energy intensity.

20032002

20042005

20062007

27

28

29

1.80

1.85

1.90

1.95

20032002

20042005

20062007

190

195

200

185

205

210

215

10.0

11.0

12.0

9.0

8.0

Aluminium: total electricity consumption (‘000 GWh)

AluminA: total energy consumption (‘000 tj)

Alumina — energy intensive, but differentAlumina production also requires significant energy consumption (over 23% of costs), but unlike aluminium (which is dependent on electricity), this is mainly in the form of gas and petroleum products/coal. The refining process requires heat and steam.

All alumina refineries and aluminium smelters are covered by the Energy Efficiency Opportunity program established by the Australian Government.

Energy consumption is large, but energy intensity is falling. Alumina refining has reduced the energy intensity per unit of output by 10 per cent since 1990. The industry continues to seek cost-effective improvements; alumina refineries will continue to establish co-generation facilities when electricity market conditions allow/justify these investments; gas-fired co-generation plant at an alumina refinery can achieve an energy efficiency of above 80 per cent.

5

As a founding member of the Greenhouse Challenge program, the AAC has a powerful greenhouse emissions data base for all Australian alumina and aluminium production since 1990 — and has provided a very strong platform for understanding and gaining experience in measuring and reporting greenhouse emissions for the sector.

With the introduction of mandatory reporting for major emitters and the commencement of a national emissions trading scheme from 2010, the involvement of our industry will take on additional intensity and management involvement. Greenhouse performance will become a critical factor in the future financial viability of many companies and the economic performance of Australia.

Aluminium smeltingThe greenhouse gas intensity of Australian aluminium again showed an improvement in 2007 over the record achievement of 2006, continuing to reflect the advances made in PFC management and from investment in smelter technology.

Direct emissions intensity is now only 40 per cent of the 1990 level.

Driving the intensity improvement has been the reduction in PFCs (perfluorocarbons), CF4 and C2F6, within the smelter pot lines. PFCs are emitted from the smelter pots during brief upset conditions, known as ‘anode effects’ when an imbalance occurs in the production process, due to the level of alumina in the pot falling too low and the electrolytic bath itself begins to undergo electrolysis.

A PFC emission reduction of over 90 per cent per tonne of aluminium produced has been achieved by the Australian industry since 1990.

However, variations can be expected in this intensity level in future periods due to operational conditions including electricity disruptions and potroom maintenance/refurbishment.

Total direct greenhouse emissions were 3.95 million tonnes CO2-e in 2007, the same as for 2006 and well down on the 4.93 million tonnes (mt) of CO2-e in 2005. This also compares very favourably with the 1990 level of 6.26 mt.

Greenhouse gas emissions

6

The Australian

Aluminium

Council and

all individual

aluminium

smelters and

alumina refineries

are members of

the Australian

Government

Greenhouse

Challenge Plus

program.

Aluminium: Change in emissions from smelting Aluminium: direct and indirect emissions

Aluminium: direct emissions per tonne

1994

1997

20002003

1996

1999

20022005

20062007

200419

9519

982001

1990 level

-20

-10

+20

+40

+60

-30

+10

+30

+50

Total emissions

Direct Alumina input

Emissions per tonne

Indirect

Production

GreenHouse GAses

The International Aluminium Institute (IAI) has reported that global PFC emissions from aluminium production have been reduced from a revised global baseline of 4.9 tonnes CO2-e per tonne of aluminium in 1990 to 0.7 tonnes in 2006, a reduction of over 80 per cent — the global voluntary objective set by the institute to be achieved by 2010. The IAI is now preparing to set a further reduction goal for PFCs for the next decade.

The 2007 Australian smelter PFC results at 0.26 tonnes CO2-e per tonne of aluminium has been achieved by sound potroom management and technology change.

19900% 100%

2007

20032000

20022005

20062007

20042001

0.0

1.0

2.0

3.0

4.0

5.0 1990 level

7

1994

1997

20002003

1996

1999

20022005

200419

9519

982001

1990 level

-20

+20

+40

+60

2006

+70

2007

-10

0

+10

+30

+50

AluminA: Change in emissions from refining

Total emissions Emissions per tonne Production

200319

9519

90 2002

20052006

20072004

20010.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

With a production increase of 58 per cent since 1990, the direct emissions per unit of production shows an even greater improvement — from 5.0 tonnes of CO2-e per tonne of metal produced down to 2.0 tonnes of CO2-e per tonne of metal.

Indirect emissions from the purchase of electricity have risen in absolute terms, but at a rate below the increase in production showing an improvement in our overall energy efficiency in the smelting/reduction activity. Aluminium production is up by 58 per cent and indirect electricity emissions up by 38 per cent; however, indirect emissions per tonne of metal produced were down by 12 per cent, reflecting energy efficiency dividends but clouded by changes in emission factors for electricity across the various supply locations.

Indirect emissions also arise from the consumption of alumina in the metal smelting process. Around two tonnes of alumina is required to produce one tonne of aluminium. At current rates, this is equivalent to 1.5 tonnes CO2-e per tonne of aluminium produced. These emissions are included in our reporting of alumina emissions and not added to the aluminium results to avoid double counting.

The Australian aluminium smelting sector performance for greenhouse emissions from the production process is world class — and energy efficiency is also better than the world average, although this latter advantage will be eroded without further investment in production capacity in future years.

Aluminium: PFC emissionsTonnes CO2-e per tonne aluminium

Alumina refiningTotal GHG emissions from the seven Australian alumina refineries were 14.3 million tonnes CO2-e in 2007, compared with 13.9 mt of CO2-e in 2006, 13.6 mt in 2005 and 12.9 in 2004.

The 2007 result was 21 per cent lower than in 1990 on a tonne per tonne basis (emission intensity), although total industry emissions were 34 per cent higher reflecting the 70 per cent increase in production over this period.

Aggregated per unit emissions were 0.75 tonnes of CO2-e per tonne of alumina in 2007, the same as for 2006, compared with 0.95 tonnes in 1990.

To put this into perspective — if the emission intensity in 2007 had remained unchanged from the emission intensity in 1990, total emissions would have been around 18 mt CO2-e compared to the reported 14.3 mt CO2-e. Therefore, the actions taken by all Australian alumina refineries, including the addition of new and more efficient capacity, have effectively resulted in avoiding around 3.7 mt of greenhouse gas emissions in 2007.

International comparative figures for alumina emissions are not available; however, data from individual company sources indicate Australia to again be a world-leading performer — and also benefiting from a higher average grade bauxite.

Aluminium

Industries Support

Asia–Pacific

Partnership Goals

to Advance

Clean Industrial

Development.

Global perspective

Asia–Pacific Partnership on Clean Development and Climate — Aluminium Task Forceongoing work, and agreed to commit resources to the work of the APP Aluminium Task Force in 2007 — and has identified further funding in 2008 to continue this activity.

At the end of 2007, APP members represented over 55 per cent of the world’s primary aluminium production of an estimated 37 million tonnes.

The aluminium industry responded quickly to the establishment of the APP, through their representative national associations.

The objectives established for the Aluminium Task Force were to:

Enhance current aluminium production processes ■

through uptake of best practice use of existing equipment

Advance the development and deployment of new ■

best practice aluminium production processes and technologies across APP economies

Enhance sector-related data, including on recycling ■

and performance.

Facilitate increased aluminium recycling rates across ■

the APP.

The AAC and member companies confirmed industry support for the APP initiative and agreed to commit financial, technical and management resources during 2007 to the ongoing work of the APP Aluminium Task Force.

The AAC co-sponsored a successful APP workshop in Beijing in March 2007 covering PFC emissions, bauxite residue management and processing of higher silica bauxites. Over 200 participants from government, industry and research organisations attended the workshops providing a clear indication of the continued support of all stakeholders.

The Beijing aluminium workshop was successful thanks to the engagement of Chalco (Aluminium Corporation of China), China Nonferrous Metals

8

The Asia–Pacific Partnership (APP) is an innovative government-industry partnership bringing together Australia, Canada, China, India, Japan, Republic of Korea and the USA to address the issues of cleaner production and reducing greenhouse gas emissions. (Canada joined as the seventh member of the APP during 2007.)

The APP seeks to promote development and deployment of existing and emerging cleaner, more efficient technologies and practices that will achieve practical results.

At the first APP Ministerial Meeting in January 2006, the aluminium industry was identified as one of eight industry sectors that can make practical, measurable contributions to clean economic development and the reduction of greenhouse gases through the partnership.

Seven projects have been approved by the APP Policy and Implementation Committee under the APP Aluminium Task Force: industry benchmarking, PFC emissions management, higher silica bauxite processing, bauxite residue management, fluoride emissions, recycling and linkages to technology providers.

The AAC Executive Committee recognises that the APP provides a unique and important opportunity for the aluminium industry to work with the Australian Government and other partners within the APP membership.

Our objective is to achieve the goals for the partnership, and to support an improved International Aluminium Institute (IAI) global reporting outcome and further enhance the industry’s sustainability credentials.

The AAC Executive Committee has acknowledged the resourcing challenge from the AP6 aluminium initiative for the AAC to effectively engage in this

© DiskArt™ 1988

9

Asia–Pacific Partnership on Clean Development and Climate — Aluminium Task Force

Case study Alcoa’s innovation set to revolutionise

With the strong support and participation of Rio Tinto Alcan, the Australian Aluminium Council (AAC), in collaboration with our Australian partners in the Asia Pacific Partnership (APP) Aluminium Task Force, arranged for a delegation from the China Nonferrous Metals Industry Association (CNIA) to participate in an Australian aluminium smelter PFC study visit in early 2008.

The CNIA delegation, under the leadership of CNIA Deputy Director Professor Tao Zunhua, included technical staff from four separate smelters: Shanxi Huasheng Aluminium, Yichuan Power Industrial Group, Shaanxi Tongchuan Aluminium and Sichuan Aostar Aluminium.

Further workshops are planned to be held in China, with experts from the USA and Australia undertaking two-day smelter training programs, and in Australia along similar lines to the successful Bell Bay study visit.

Industry Association (CNIA), IAI, AAC member companies (Alcan, Alcoa, Rio Tinto Aluminium) and industry associations of the APP participants, plus government agencies … a genuine industry–government partnership.

A very positive demonstration of the success of the APP co-operation/partnership model can be found in the Aluminium Task Force ‘Management of PFC emissions’ project.

From the APP PFC Workshop in March 2007, Chalco and CNIA now have taken leadership for Chinese industry engagement in addressing PFCs, with the Workshop endorsing a proposal from CNIA that two Chinese smelters be used to demonstrate the opportunities and benefits from reducing anode effects. The Australian Government, the US EPA and Australian and US industry associations have committed resources to ongoing work under this project.

China PFC study visit to

the Rio Tinto Alcan Bell

Bay aluminium smelter,

Tasmania.

All

aluminium

smelters

generate

SPL.

SPL — Spent pot lining

In 2007, Australian smelters generated 41,755 tonnes of SPL material (2006: 40,755 tonnes). This is equivalent to 21 kg per tonne of metal production (however, this number will show significant fluctuations depending on the timing of potline refurbishment programs).

When a reduction cell or ‘pot’ has reached the end of its useful life, normally after about 6–7 years, it is rebuilt with a new carbon lining (the cathode). At this time it is necessary to dispose of the old (spent) lining, consisting of old refractory bricks and carbon plus a number of compounds including fluoride, absorbed from the molten cryolite material in the pot, and a very low level of cyanide, formed over many years of pot operation. As a result of these two contaminants, SPL is generally considered to be a hazardous waste.

Disposal techniques vary around the globe according to local conditions, environment laws and operating licenses.

On a world-wide basis, the aluminium industry is continuing to research methods and processes

to re-use or treat SPL material prior to disposal or landfill — and a number of solutions are now available, with continuing work being undertaken to identify synergies with potential consumers for the increased utilisation of the various products available from the SPL by-product streams.

SPL material is often stored by a smelter in above ground facilities under secure, dry conditions to await recycling or final disposal — including extracting and recycling some of its useful components and using the material as a combustion source for power generation, or as raw materials in other industrial processes (e.g. cement, steel).

A number of Australian smelters have implemented strategies for the recycling and disposal of SPL material (see our 2004 report). Australian smelters recycled 20,049 tonnes of SPL material in 2007 (23,278 in 2006 and 25,699 tonnes in 2005).

SPL to landfill was reported at 4388 tonnes in 2007 down from 8182 in 2006 and 11,400 in 2005. SPL stored for future processing totalled 41,067 in 2007.

Fluoride emissions

Fluoride emissions (as gases and particulates) remain of high environmental concern for the aluminium smelting sector. For many decades fluoride emissions were considered to be the single most important pollutant from aluminium smelters.

Depending on local conditions, fluorides could have a serious environmental impact on the local flora and fauna. Fluorides accumulate in vegetation and can cause damage to coniferous trees. They also accumulate in the teeth and bones of ruminants eating fluoride-contaminated forage. Plants with modern control systems to remove and recycle the fluorides do not generate local concerns.

Optimum fume collection from the electrolytic cells, coupled with specific workplace-related training of employees has led to further improvement.

Australian aluminium smelter fluoride emissions were reported at 1387 tonnes in 2006-07 under the National Pollutant Inventory, which represents a 2 per cent increase over 2005-06 levels and still 2 per cent lower than in 2000-01.

Fluoride

is part of the

aluminium smelting

process: alumina

(aluminium oxide) is

dissolved in a molten

bath of cryolite

(sodium aluminium

fluoride) to facilitate

the electrolysis

process.

The IAI global fluoride emissions survey data from reporting companies show that fluoride emissions per tonne of aluminium produced have reduced to 0.88 kg per tonne of aluminium produced — a 64 per cent reduction over the period 1990–2004, down from 2.46 kg per tonne of aluminium produced in 1990.

1200

1400

1300

1500

20002001

20022003

20042005

20062007

0.6

0.8

0.7

0.9Aluminium: Fluoride emissions per tonne (kg)

Aluminium: total fluoride emissions (tonnes)

10

Case study

Research has also sought to identify and characterise odorous species involved in the alumina refining process, and the focus now is aimed at developing a means to remove the odour component where possible. Results to-date have been promising.

Other AIAEF project areas include the development of best practice guidance documents (Sampling and Analysis Guide and Dispersion Modelling), analysing cooling tower emissions as well as facilitating co-operation across facilities in the development of dust control for alumina conveying and ship loading.

Future areas of interest that have been identified include health and hygiene, noise emissions, alkali emissions and other visible emissions.

A key strength of the AIAEF is the participation of both research and environmental personnel, ensuring a broad range of technical and environmental expertise is applied. Another key enabling factor is the unwavering support of the senior management at all of Australia’s alumina refining operations — reducing the impact of their operations on the community and workforce is a high priority.

AIAEF projects are facilitated by ChemSearch Consulting and managed by AAC. AIAEF participants have provided over $1.1 million in funding to the work which is on-going.

The Australian Alumina Industry has a shared concern to fully understand refinery emissions and to progressively reduce or improve emission levels.

In March 2003 the industry came together with the aim of establishing a co-operative industry-wide approach to the measurement and management of air emissions, to ensure the industry can continue to meet both government standards and community expectations — thus ensuring our license to operate.

Out of this very successful first step arose the Alumina Industry Air Emissions Forum (AIAEF), representing all seven Australian alumina refineries.

The AIAEF meets regularly to review the progress of projects underway and to consider the development of new projects. All AIAEF projects are stage-gated and progress only when the results justify continued research effort.

Most AIAEF projects have focussed on odour emissions — a common issue across the refineries and one that is of particular interest to the community and regulators. One project has focussed on the development of equipment that can be used to sample emissions from high moisture sources, another has resulted in a method for the measurement of liquid odour. A position paper on area source odour assessment has also been developed to aid companies better understand these emissions.

A cooperative industry approach to understanding and improving refinery emissions

11

Case study: Alcoa and Sustainability Victoria partnering public place recycling

Employment in the upstream sectors of the aluminium industry is centred on regional areas reflecting the location of the main production facilities of the industry. In 2007, the bauxite/alumina/aluminium operations employed 13,800 direct employees (2006 13,500) and around 3500 contractors (2006 3700).

Employment

Reduce, recycle and reuse is a mantra which we should all aim to live by. At Alcoa waste minimisation is one of the greatest opportunities the company has to reduce its environmental footprint, and it is helping the wider community do it too!

In fact, aluminium itself as a product, is one of the world’s most recyclable materials — it is almost endlessly recyclable with two-thirds of all the aluminium produced since 1886 still in use today.

So it is no wonder Alcoa is a great partner when it comes to recycling, and Sustainability Victoria and the Alcoa Foundation are working together to get everyone recycling everywhere.

The Public Place Recycling Project aims to extend recycling from people’s homes and offices

to major community sporting and recreational venues by increasing recycling and waste minimisation.

At several recreation venues across Victoria, public place recycling plans have been developed and implemented. Each plan includes targets for resource recovery, public educational material and the installation of recycling infrastructure.

The project is a perfect partnership as it connects one of Alcoa’s core businesses (recycling) and our core product (aluminium) with a community education and awareness project that demonstrates how community organisations, government and private industry can collaborate to bring about positive behavioural change, leading to strong environmental outcomes.

To date the project has exposed 1.65 million people across Victoria to positive messages about recycling and resource recovery.

And at Alcoa, all the company’s employees and operations throughout Australia are walking the talk by having dedicated waste management teams. Last year Alcoa recycled 54,517 tonnes of waste materials and the company also successfully converts waste products into reusable resources.

Alcoa’s Yennora rolled products plant in New South Wales is Australia’s largest recycler of aluminium. In 2007 Alcoa recycled around 72,000 tonnes of aluminium. Recycling aluminium contributes to global sustainability by reducing energy consumption, greenhouse gas emissions and use of resources.

The regional benefits are of significant value, with a number of the industry facilities being the major source of direct employment and demand for contractor services and other local facilities at industrial and retail levels.

Public Place

Recycling with

Sustainability

Victoria is a perfect

partnership for

Alcoa, here Chris

Finlayson from Alcoa

contractors Roberts

Civil Services gets

the ball rolling in

Portland.

13

Aluminium can be recycled over and over again without loss of properties. Aluminium recycling benefits present and future generations by conserving natural resources and energy. Recycling saves up to 95 per cent of the energy required for primary aluminium production, thereby avoiding correspond ing emissions, including greenhouse gases.

Global aluminium recycling rates are high, approxi-mately 90 per cent for transport and construction applications and about 60 per cent for beverage cans.

At the global level, one-third of all aluminium metal entering the market is from recycled material. Recycled material accounted for around 15 million tonnes (IAI estimates). This comprises 7.7 million tonnes returned from customers after fabrication processes and 7.4 million tonnes of product returned from end-of-use (for example, aluminium content of used motor vehicles and used beverage cans — UBCs).The global energy saving is around 215,000 GWh, equivalent to Australia’s total annual electricity consumption.

Recycling

In Australia, around 284,000 tonnes of scrap in 2007 is estimated to have been received back from used products including UBCs and production scrap from fabrication and manufacturing activities.

Australians recycled around 34,000 tonnes of UBCs — about 2.5 billion cans, estimated to be around 70 per cent of the available UBCs. (Source: Australian Can Group.)

ABS reported aluminium scrap exports at 174,000 in 2007 valued at $370 million, with China the dominant export destination.

Around 109,900 tonnes of Australian scrap was reprocessed in Australia with metal recovery estimated to be an average 90 per cent.

In addition, 34,300 tonnes of dross reported by aluminium smelters was also provided for reprocessing; metal recovery is typically around 50 per cent.

Primaryaluminium

34.0

Alumina6 65.2Bauxite5

178.6

Bauxite residues

75.5 andwater 37.9

Remeltedaluminium 34.7

o.a. recycledaluminium 16.3

Ingots 68.8

Fabricated andmanufacturedproducts 67.4

Finishedproducts 40.4

Total productsstored in use since 1888: 583.9

Net addition 2006: 24.3

Traded new1

1.4

Fabricator scrap2

18.4

Newscrap7 8.6

Otherapplication3

1.0

Oldscrap

7.7

Not recycled in 20068 3.9 Under investigation4 3.5Metal losses 1.4

Global aluminium flow—2006 (millions of metric tonnes)

The ability to

recycle aluminium

metal is one of

its key attributes,

with far-reaching

economic,

ecological and

social benefits.

1 Aluminium in skimmings. 2 Scrap (internal) generated by foundries, rolling mills and extruders—and not included in recycling statistics. 3 Such as powder, paste and deoxidation aluminium. 4 Area of current research to identify final aluminium destination (reuse, recycling or landfill). 5 Calculated based on IAI LCI report—update 2005. Includes, depending on the ore, between 30% and 50% alumina. 6 Calculated. Includes on a global average 52% aluminium. 7 Scrap generated during the production of finished products from semis. 8 Landfilled, dissipated into other recycling streams, incinerated, incinerated with energy recovery.

Source: International Aluminium Institute (IAI).

14

Case study

Future Reef

A world first collaboration on climate change

Rio Tinto Alcan ships its products and raw materials through the reef and its main concentration of assets is located around Gladstone — the gateway to the Great Barrier Reef. The business has reduced greenhouse gas emissions from its businesses by over 1.4 million tonnes since 1990 and is working towards further reductions. While RTA is continually investing in the research and development of low emission technology it is also working closely with government and industry to find sustainable solutions to climate change issues.

The four year Future Reef partnership allows RTA and GBRF to work together on an area of critical importance to both organisations — climate change.

Future Reef involves two programmes, one focusing on employee engagement and the other focusing on climate change reef research.

The University of Queensland is the research partner and runs the Heron Island Research Station (HIRS) where the two programmes are based.

In 2005 Rio Tinto Alcan (RTA) and the Great

Barrier Reef Foundation (GBRF) launched Future

Reef, a world first collaboration on climate change

reef research between industry and science.

RTA is a member of the Rio Tinto Group and is

a fully integrated producer of bauxite, alumina

and aluminium. RTA’s footprint in Queensland is

almost exactly aligned with the Great Barrier Reef.

GBRF is Australia’s pre-eminent independent

fundraiser for coral reef research. Established

in 1999, with RTA as a founding member, its

mission is to protect and preserve the Great

Barrier Reef.

Through its Board and International Scientific

Advisory Committee (ISAC) and a portfolio

of project partnerships, GBRF directly links

reef science with business, government and

philanthropy.

“Rio Tinto Alcan was one

of the first corporations

to recognise the threat

posed by climate change

to the Great Barrier Reef.

It was also the first of

our corporate partners

to commit substantial

funds to support scientific

research as this threat

came into public view,

recognising early both

its local and global

significance.”

Judith Stewart, Managing Director, Great Barrier Reef

Foundation

Ocean acidification research programme

The Future Reef partnership funds the world’s first investigation in to the impact of ocean acidification on the Great Barrier Reef. Ocean acidification is arguably the most urgent and critical issue facing the reef and the $5 billion worth of industries that depend upon it each year.

15

What is ocean acidification?

The ‘greenhouse effect’ has been widely documented, but little is known about the impact of rising ocean CO2 levels on marine life. Atmospheric carbon dioxide is absorbed into the earth’s oceans and recent increases in the amount of carbon dioxide have been reflected in oceans. When carbon dioxide is absorbed into the water, carbonic acid (H2CO3) is produced, lowering the pH and thereby increasing the acidity of the oceans.

Conservative estimates predict that CO2 concentrations in the atmosphere could double or triple by the end of the century, reaching as much as a 1000 ppm. This would increase the acidity of the oceans significantly.

The anticipated increases in acidity have a range of implications for marine life. At the very least, ocean acidification is expected to affect the fundamental ability of marine animals to lay down skeletons and produce protective shells. Scientists also anticipate significant impacts on fish lifecycles and increases in the rates of reef erosion.

Reef Searchers Employee Programme

The Future Reef partnership provides an opportunity for employees to work alongside scientists from HIRS on the Ocean Acidification Research Programme.

Employees take part in expeditions each year where they learn about climate change and reef science from leading international marine scientists. Expeditions take place every four months with ten employees going to the research station to conduct supervised research and analysis for the Ocean Acidification Research programme.

This work involves long days collecting samples from the reef flat and analysing recruitment tiles in the research station laboratories to measure rates of growth of corals.

The Project

A team of highly experienced and respected marine scientists from The University of Queensland’s Centre for Marine Studies conduct the research. Centre Director, Professor Ove Hoegh-Guldberg, oversees the project based at the Centre’s Heron Island Research Station. Senior scientists, Drs Selina Ward, Ken Anthony, Sophie Dove and Bill Leggat, conduct the research in conjunction with full-time Postdoctoral Research Fellow David Kline. The programme aims to answer the following questions:

1 How will acidification affect the basic physiology of coral reef organisms on the southern Great Barrier Reef?

2 What are the natural rates of reef erosion at Heron Island and how will these rates vary if carbon dioxide continues to increase in the atmosphere?

3 What is the prognosis for coral reefs under increased atmospheric concentrations of carbon dioxide?

“Everything I

experienced in the

(Reef Searchers)

programme made

a big impression on

my view … and has

certainly changed my

outlook. Hopefully the

small changes I make

and the people I talk

to will get the message

through about global

warming.”

Rio Tinto Reef Searcher.

Synopsis

Alumina 2007 Variation on 1990

Australian alumina production 19 Mt + 70%

Share of world production 26%

Alumina exports — tonnage (1990 = 8.7 Mt) 14.9 Mt + 71%

Alumina exports— value (1990 = $2,940 million) $5,877 million + 100%

Total alumina GHG emissions 14.3 Mt CO2-e + 34%

Per unit GHG emissions (1990 = 0.95) (tonne of production) 0.75 tonnes CO2-e – 21%

Aluminium 2007 Variation on 1990

Australian aluminium production 1.96 Mt + 58%

Share of world aluminium production 5.2%

Aluminium exports — tonnage (1990 = 0.936 Mt) 1.65 Mt + 76%

Aluminium exports — value (1990 = $1,990 million) $5,368 million + 170%

Total aluminium GHG emissions (1990 = 26.3 Mt) 31.6 Mt CO2-e + 20%

Total Direct GHG emissions (1990 = 6.25 Mt) (within smelters) 3.95 Mt CO2-e – 37%

Per unit Direct GHG emissions (1990 = 5.0 t) (per tonne of production) 2.0 tonnes CO2-e – 60%

PFC emissions (1990 = 3.96 Mt) (included in smelter direct emissions above) 0.5 Mt CO2-e – 87%

Per unit PFC emissions (1990 = 3.2 t) (per tonne of production) 0.26 tonnes CO2-e – 92%

Total Indirect GHG emissions (1990 = 20.0 Mt) (from electricity consumption) 27.7 Mt CO2-e + 38%

Per unit Indirect GHG emissions (1990 = 16.1 t) (per tonne of production) 14.1 tonnes CO2-e – 12%

Australian

alumina and

aluminium

industry

production and

greenhouse

data.

16

17The Australian Industry

WA

SA

NT QLD

NSW

VIC

TAS

ACT

Brisbane

Newcastle

Sydney

Melbourne

Geelong

Adelaide

Darwin

Extrusion operation

Rolling mill

Bauxite mines

Alumina refineries

Aluminium smelters

Perth

Kwinana Pinjarra Wagerup Worsley

BoddingtonHuntlyWillowdale

Portland

Bell Bay

Gladstone

Weipa Gove

Industry images in this publication courtesy of Alcoa of Australia, Rio Tinto Alcan and Worsley Alumina.

the Australian alumina and aluminium industries:

n a major investor in Australia over 50 years

n adding value to Australia’s mineral and energy resources

n an important part of Australia’s industrial base

n one of Australia’s major exports, with annual export earnings over A$11 billion

n a capital replacement value over A$30 billion

n employs around 17,000 people — mostly regional

n underpins local communities and regional economies such as Arnhem Land, Cape York, South West of WA, Gladstone, Geelong and Portland.

Future for the Australian industry

Australia’s resource base and current industry participation provides us with the opportunity to benefit from the growing global demand for aluminium — providing further growth potential for both alumina refining and aluminium smelting.

Major investment is currently underway in Australian alumina refining capacity; production set to pass the 20 million tonnes level during 2008, with significant additional investment in progress.

Aluminium smelting investment projects are also under active consideration for Australia, but decisions on hold pending outcome of government policy initiatives relating to emissions trading and renewable energy targets.

Critical for future projects, the sector needs a long term nationally-responsible and globally-competitive investment environment that allows long term investments to be undertaken. With the global industry structure and global market focus, international competitiveness is paramount.

Aluminium growth requires long-term competitive energy: without it, existing operations are starved of capital for upgrading and prematurely phased-out; and, greenfields developments do not occur.

The impact of future electricity prices will determine the opportunities for aluminium industry in Australia; all existing long-term smelter electricity contracts are required to be renewed over the next five to ten years.

Australian Aluminium Council ACn 000 611 781

PO Box 63 Dickson ACT 2602 Australia

Telephone 02 6267 1800 Facsimile 02 6267 1888

email aac@aluminium.org.au web www.aluminium.org.au