New Zealand Aluminium Smelters Ltd Climate Change Approach Stewart Hamilton Business Improvement Manager

Introduction Business Improvement Manager Support Business Improvement by developing operational expertise to deliver sustainable value Move business towards strategic performance targets in Key Result Areas: Health and Safety People Commitment Environment and Communities Market Position Operational Excellence Financial Strength

NZAS Climate Change Approach World Aluminium Industry NZAS Performance in the Industry NZAS Approach – Sustainable and Technical Role of Aluminium as part of the solution NZAS Approach - Communities and Policy

NZAS Climate Change Approach World Aluminium Industry NZAS Performance in the Industry NZAS Approach – Sustainable and Technical Role of Aluminium as part of the solution NZAS Approach - Communities and Policy

How Aluminium Is Produced 2 tonnes Alumina 1 tonne Aluminium

World Aluminium Production Aluminium Smelter Alumina Refinery Bauxite Mine ~45 Million Tonne of Aluminium (Primary and Recycled) ~350 Million Tonne of CO2-e ~5x New Zealand Emissions

NZAS Climate Change Approach World Aluminium Industry NZAS Performance in the Industry NZAS Approach – Sustainable and Technical Role of Aluminium as part of the solution NZAS Approach - Communities and Policy

Sumitomo Chemical Company NZAS Rio Tinto Aluminium (79.36%) Sumitomo Chemical Company (20.64%)

NZAS Operations Summary ~20th largest Aluminium Smelter (out of 200+) Producing 350,000 tonnes aluminium/year Producing the highest purity aluminium in the world Export revenue NZ$1.4bn Using 13% of all NZ Electricity

NZAS Greenhouse Gas Emissions NZAS CO2-e Direct Site Emissions 680,000 tonne/yr

NZAS Performance Reduced absolute site CO2-e by 41% since 1990 Top 10% Carbon Intensity of World Smelters Top 20% Energy Efficiency of World Smelters

NZAS Competitive Challenges Reducing Emissions (technical risk) Technical Limit to the Process NZAS at World’s Best Practice for Cohort Group Cost of Emissions (business risk) Electricity represents 40% of NZAS costs Selling on a International Commodity Market Competitiveness at Risk Carbon Leakage Risk NZ Power Generation – high proportion of renewables Net Emissions Lower from NZ Aluminium Production

NZAS Climate Change Approach World Aluminium Industry NZAS Performance in the Industry NZAS Approach – Sustainable and Technical Role of Aluminium as part of the solution NZAS Approach - Communities and Policy

NZAS Sustainable Approach License to Operate Cost & Revenue

NZAS Sustainable Approach Sustainable Business comes from Governance in both: License to Operate Cost and Revenue Systems Developed to Support a Culture of: Attention to Detail – Procedures and Data Management Continuous Improvement Rewarding behaviour Aligned with our Goals and Values

Approach to Technical Challenge Business Improvement Projects – Six Sigma Rigor “Adapt and Adopt” $5-15 Million per year ~ 15 Full Time Project Leaders DC Power efficiency - Project 200 Process Carbon Efficiency – Froth Flotation PFC reduction (Anode Effects) – Process Control Fuel Combustion Efficiency Recycling of Extrusion Scrap

NZAS Climate Change Approach World Aluminium Industry NZAS Performance in the Industry NZAS Approach – Sustainable and Technical Role of Aluminium as part of the solution NZAS Approach - Communities and Policy

Aluminium as Part of the Solution

Aluminium Life Cycle 706 million tonnes produced (since 1888) Approx ¾ of this still used Recycling aluminium requires 95% less energy than primary aluminium smelting Recycling of aluminium today saves an estimated 84 million tonnes of CO2-e per year Recycling the metal still in use = 15 years’ primary aluminium output

NZAS Aluminium Recycling A cornerstone of Sustainable Practices RTA Partnership developed with End-User Customer in NZ 3600 tonnes of Aluminium recycled in 2006

Aluminium Offset 60-75% of vehicle fuel use is weight related Typical aluminum parts 40-50% lighter than a comparable steel part 1 kg of aluminium used as replacement = 20kg of CO2 over lifetime

NZAS Aluminium Offset For other vehicles, such as trains, ferries and aircraft the potential savings are even greater 18,000 tonnes per annum of NZAS high purity aluminium is supplied to European aerospace industry

NZAS Climate Change Approach World Aluminium Industry NZAS Performance in the Industry NZAS Approach – Sustainable and Technical Role of Aluminium as part of the solution NZAS Approach - Communities and Policy

NZAS Community Approach Energy Efficiency Extends beyond the gate… Retrofit all Bluff homes with high quality insulation products NZAS provide financial backing and support contractors in project safety and project management 200 homes complete to date

NZAS Policy Approach Business as Usual is NOT an option Short term – simple options that do not compromise long term policy Voluntary agreement leveraging off NGA framework Options to promote renewables and offsets Medium to Long term – Emissions Trading Scheme Enable lowest cost abatement - deploy low emissions technology Design complex - Allocation principles & impact on Electricity pricing Market mechanism to aid technology development..? Emissions Permit Allocation Recognition of prior action Credit for Early Action Competitiveness at Risk

Climate Change - A Business Driver NZAS will continue to target and work on Climate Change Impacts irrespective of current policy uncertainty Expectation that there will be a price on carbon Set meaningful targets to reduce Energy and GHG Incorporate in employee incentive payment scheme Deploy strategic improvement projects Invest in R&D to reduce the GHG intensity of our processes Work with industry groups and governments in policy formulation Investigate offset projects – on and off site Promote recycling and the life cycle benefits of Aluminium usage These approaches are almost always cost effective

New Zealand Aluminium Smelters Ltd Climate Change Approach Stewart Hamilton Business Improvement Manager