Alcoa Inc. and Alumina Limited Announce Amendments to AWAC Joint Venture

September 1, 2016

Changes to AWAC JV to enhance value for Alcoa’s and Alumina’s shareholders

Parties agree to terminate litigation related to Alcoa’s separation

Alcoa Inc. (NYSE:AA) (“Alcoa”) and Alumina Limited (ASX:AWC) (“Alumina”)
today announced that they have agreed to make certain changes to the
Alcoa World Alumina and Chemicals (“AWAC”) joint venture that will
enhance value for Alcoa, Alumina, and their respective shareholders. In
conjunction with these amendments, the parties have agreed to terminate
their litigation in the Delaware Court of Chancery relating to Alcoa’s
pending separation into two independent, publicly traded companies.
Alcoa Inc. remains on track to complete its separation in the second
half of 2016.

In general, the changes to the joint venture agreements are intended to
align more closely the partners’ interests in AWAC, while establishing
greater strategic flexibility and autonomy for both partners.

Effective upon the completion of Alcoa’s separation, certain changes
will be made to the governance and financial policies of the joint
venture, intended to enhance the cooperation between the shareholders.
These changes will promote faster decision-making, joint input on
significant decisions, improved information sharing and a more
streamlined process for resolving disputes. The changes will also
simplify AWAC’s dividend and cash management policies and require that
AWAC raise a limited amount of debt to fund future mutually agreed
growth projects.

In the event of a change of control of either partner in the future,
opportunities for the AWAC partners to engage in expansion and
development projects would increase, with each partner having the right
to proceed unilaterally with an expansion or development project inside
the joint venture if the other partner chooses not to participate. A
partner that avails itself of such an opportunity would pay for the
costs related to the project, including for AWAC resources and shared
facilities used, and be entitled to that project’s resulting off-take.
In addition, upon a change of control, the exclusivity and non-compete
restrictions under the current joint venture agreements would terminate,
and be replaced by rights of first offer on expansions and other
development projects that either party may choose to undertake outside
of the joint venture.

If a change of control of Alumina were to occur in the future, off-take
rights for alumina and bauxite would be triggered. For example, if an
industrial acquirer became the new partner in AWAC it would be entitled
to buy alumina and bauxite at market prices for that partner’s internal
consumption. In addition, that future partner would also be entitled to
buy 1 million tons of alumina at market prices for resale into the
market. This could have the effect of establishing a strategic joint
venture partner and long-term customer for AWAC.

“We believe these changes create a true win-win situation and will
enhance value for our AWAC joint venture, the future Alcoa Corporation,
and its shareholders,” said Roy Harvey, President of Alcoa’s Global
Primary Products and future CEO of Alcoa Corporation. “We are
strengthening our partnership agreement and more closely aligning the
partners’ interests. We are also establishing a broader set of
value-creating options for AWAC by providing its owners with greater
strategic flexibility. Among other benefits, this opens the door for an
industrial partner to enter the joint venture, and like Alcoa, to become
a long term customer for bauxite and alumina. Alcoa looks forward to
completing our separation, launching two strong companies later this
year, and to working closely with Alumina to realize the full potential
of the AWAC partnership.”

Alumina’s Chief Executive Officer, Peter Wasow, said, “We have refreshed
the joint venture agreements to reflect the new realities of our
industry and Alcoa and Alumina’s individual circumstances. These
agreements strengthen the AWAC joint venture for Alcoa and Alumina,
giving the companies greater control over their investments and future
strategic options. We have enjoyed a successful relationship with Alcoa
for over 50 years and look forward to working together in this next

About AWAC

AWAC consists of a number of affiliated operating entities that own,
operate or have an interest in bauxite mines, alumina refineries and
aluminum smelters. Following the completion of Alcoa Inc’s separation
which is scheduled to occur in the second half of 2016, Alcoa’s 60
percent interest in AWAC will be held by Alcoa Corporation, and the
remaining 40 percent will continue to be held by Alumina Limited.

About Alcoa

A global leader in lightweight metals technology, engineering and
manufacturing, Alcoa innovates multi-material solutions that advance our
world. Our technologies enhance transportation, from automotive and
commercial transport to air and space travel, and improve industrial and
consumer electronics products. We enable smart buildings, sustainable
food and beverage packaging, high performance defense vehicles across
air, land and sea, deeper oil and gas drilling and more efficient power
generation. We pioneered the aluminum industry over 125 years ago, and
today, our approximately 58,000 people in 30 countries deliver value-add
products made of titanium, nickel and aluminum, and produce
best-in-class bauxite, alumina and primary aluminum products. For more
information, visit,
follow @Alcoa on Twitter at
and follow us on Facebook at

About Alumina

Alumina is a leading Australian resource company listed on the
Australian Stock Exchange and the US Over-the-Counter market with a
specific focus on bauxite and alumina, the feedstock for aluminium
smelting. It owns 40% of the world’s largest bauxite and alumina
business, AWAC the recognised industry leader. Its partner in AWAC is
Alcoa, who owns the remaining 60% and manages the day-to-day operations.
The AWAC joint venture was formed in 1994 and the partnership with Alcoa
dates back to 1961. For more information, visit

Dissemination of Company Information

Alcoa intends to make future announcements regarding Company
developments and financial performance through its website at

Forward-Looking Statements

This communication contains statements that relate to future events and
expectations and as such constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include those containing such words as
“anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,”
“intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,”
“should,” “targets,” “will,” “would,” or other words of similar meaning.
All statements that reflect Alcoa’s expectations, assumptions or
projections about the future, other than statements of historical fact,
are forward-looking statements, including, without limitation,
statements regarding the separation transaction. Forward-looking
statements are not guarantees of future performance and are subject to
risks, uncertainties, and changes in circumstances that are difficult to
predict. Although Alcoa believes that the expectations reflected in any
forward-looking statements are based on reasonable assumptions, it can
give no assurance that these expectations will be attained and it is
possible that actual results may differ materially from those indicated
by these forward-looking statements due to a variety of risks and
uncertainties. Such risks and uncertainties include, but are not limited
to: (a) uncertainties as to the timing of the separation and whether it
will be completed; (b) the possibility that various closing conditions
for the separation may not be satisfied; (c) the outcome of
contingencies, including legal proceedings; and (d) the other risk
factors discussed in Alcoa’s Form 10-K for the year ended December 31,
2015, and other reports filed with the SEC. Alcoa disclaims any
obligation to update publicly any forward-looking statements, whether in
response to new information, future events or otherwise, except as
required by applicable law.

Summary of Agreements

Effective as on completion of Alcoa’s separation transaction, the key
terms of the Agreements will be amended as follows:

  • Future alumina off-take rights. If at any time in the future
    there is a change of control of Alumina then, from a date nominated by
    Alumina, Alumina or its acquirer will be entitled to buy, subject to
    its 40% ownership cap:
  • its net short position (calculated as total consumption less total
    owned production per annum) of alumina at market price for its
    internal consumption; plus
  • up to 1Mtpa alumina off-take, (equal to approximately 7.5% of AWAC’s
    current total annual production) at market prices, which it may market
    and sell as it sees fit;
  • in all cases subject to AWAC third party customer contracts being
  • Future bauxite off-take rights. If there is a change of control
    of Alumina at any time in the future then, from a date nominated by
    Alumina, Alumina or its acquirer will be entitled to buy, at market
    prices, up to its net short position of bauxite for internal
    consumption, subject to its 40% ownership cap;
  • Termination of exclusivity provisions and increased opportunity for
    development projects and expansions
    . Immediately on and from a
    change of control of Alumina or Alcoa Corporation at any time in the
    future, the provisions of the AWAC joint venture agreements that
    require an acquirer of either company to sell into AWAC or divest any
    of its bauxite or alumina assets, will terminate. In addition,
    following a change of control of Alumina or Alcoa Corporation, AWAC
    will no longer be the exclusive vehicle for the bauxite and alumina
    operations of Alumina and Alcoa Corporation– if either Alumina or
    Alcoa Corporation wishes to expand an existing AWAC operation, develop
    a new project on AWAC tenements or pursue a project outside of AWAC,
    it is entitled to do so on a sole basis after providing 180 days for
    the other party to explore joint participation in the proposed
    project. A partner that avails itself of such an opportunity would pay
    for all costs related to the project, including for AWAC resources and
    shared facilities used, and would be entitled to all of the project’s
    resulting off-take;
  • Improved alignment regarding AWAC joint venture governance.
    Effective on completion of Alcoa’s separation, the matters that
    require a super-majority vote (with an 80% voting threshold) by
    members of the Strategic Council will be expanded to cover
    acquisitions, divestitures, expansions and curtailments exceeding
    2Mtpa bauxite or 0.5Mtpa alumina or which have a sale price,
    acquisition price, or project total capital cost of US$50m or greater;
    implementation of related party transactions in excess of US$50m;
    implementation of financial derivatives, hedges and other commodity
    price or interest rate protection mechanisms; and a decision to file
    for insolvency in respect of any AWAC company;
  • Enhanced debt funding and distribution policies. The AWAC joint
    venture will pay a minimum quarterly distribution of 50% of the prior
    quarter’s net profit of each company comprising the AWAC joint
    venture, instead of the current payment of an annual dividend equal to
    30% of ATOI. Furthermore, any surplus cash (as defined in the
    Agreements) within certain of the AWAC companies will be distributed
    on a quarterly basis. The AWAC joint venture will also raise a limited
    amount of debt to fund growth projects within 12 months of it becoming
    permissible under Alcoa Corporation’s revolving credit line, provided
    that the amount of debt does not trigger a credit rating downgrade for
    Alcoa Corporation.

Alumina Limited Contacts:
Investor: Chris Thiris, Chief Financial Officer: +61-3-8699-2607
Media (Australia): Nerida Mossop: 0437-361-433; Hinton: +61-3-9600-1979
Media (U.S.): Robert Rendine, Sard Verbinnen & Co: 212-687-8080
Alcoa Contacts:
Investor: Matt Garth: +1-212-836-2674;
Media (U.S.): Monica Orbe: +1-212-836-2632;
Media (Australia): Lisa Keenan, Nightingale: +61-409-150-771