NEW ZEALAND ALUMINIUM

SMELTERS LIMITED

2013 SUSTAINABLE DEVELOPMENT REVIEW

NEW ZEALAND ALUMINIUM SMELTERS

LIMITED

During the year, NZ$28 million was delivered through improvement initiatives.

Significant value contributors included the restructure of site maintenance activities, copper inserts in cathode bars, integrated visualisation and scheduling tools to improve efficiencies in the casthouse, carbon anode purity improvements, daily visual cost tracking and a number of procurement initiatives.

Two significant health and safety projects were completed to improve muscular skeletal injury rates and to improve safety during metal load out activities at the Tiwai wharf.

At the end of 2013, a Building Full Potential (BFP) workshop was held to identify savings for 2014 over and above plan. This process identified potential savings of NZ$32.5 million. Since completion of BFP, NZAS has engaged McKinsey & Company, a global management consultant firm, to improve the smelter’s execution practices and processes in order to maximise the value delivered in 2014.

If you have any questions or would like to provide feedback on the

NZAS 2013 Sustainable Development Review, please contact:

ANDREA CARSONCOMMUNITY RELATIONS

Phone: +64 3 218-5440Email: Andrea.Carson@pacificaluminium.com.au

Website: www.nzas.co.nz

2013 NZAS Market

2013 Product Profile

JapanNew Zealand

Korea

Other

USA & Canada

Europe

Rolling Block

Foundry Ingot

High Purity Ingot

Standard Purity Ingot

Other Value Added

Billet

NZAS Production 2013 Actual

High purity ingot 103,727 tonnes

Billet 80,178 tonnes

Rolling block 23,447 tonnes

Foundry ingot 3,536 tonnes

Other value added 44,277 tonnes

Standard purity ingot 69,670 tonnes

Saleable metal 324,835 tonnes

Per cent value added 79 per cent

Extrusion scrap reprocessed 3,035 tonnes

Market Position

NZAS produces the highest purity aluminium in the world. Our high purity aluminium is used in the high end electronics industry and made into products such as memory discs and capacitors. The wing structures of the Airbus A380 aircraft are also made of NZAS high purity aluminium, as well as the skin of the Japanese N700 series bullet train.

During 2013, no major customer claims were received.

Major Customer Claims

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ims

Environment

Community

One major community contribution is included above:n ‘Environment’ - $200,000 Kakapo Recovery sponsorship

No community complaints rated moderate or above were received in 2013.

Plans for Community in 2014:n Zero moderate or above rated community complaintsn Continue participation in NZAS key stakeholder programmen Continue to support active partnerships including Kakapo Recovery,

Southland Girls’ High School Educational partnership and Southland Science and Technology Fair

n Conduct a review of NZAS’ community support and funding programmes

n Raise the profile of NZAS at both a local and national level

0.00

0.25

0.50

0.75

1.00

1.25

1.50

20132012201120102009200820072006200520042003200220012000

Total Plant Discharge Fluoride per tonne Aluminium

Disc

harg

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gF/t

Al)

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Two category 2 incidents were recorded in 2013, both being regulatory non-conformances at the NZAS wharf:n Due to the failure of a hose fitting, approximately 5 litres of hydraulic

oil was released from the ship unloader into the sea when discharging alumina. Oil was also spilt on the wharf, ship unloader, the ship’s deck and side

n Alumina was discharged into the sea and air when a hatch was removed to repair a scraper chain on the alumina conveyor belt. The belt had not been cleaned prior to opening up the hatch for repair

In 2013, the fluoride emission rate was in the normal range but slightly higher than 2012 due to Reduction Line 4 not operating during the year, which resulted in an average rate of 0.67kgF/t Al, well under the plan of 0.75kg/t Al. Fluoride performance is related to the efficiency of the dry scrubbers and the performance of cells in the reduction lines. The dry scrubbers are the smelter’s main emission control equipment, where dust particles and fluoride gases are removed from reduction cell emissions.

Environmental Incident definitionsCategory 1 – MinorNear source confined and promptly reversible impact

Category 2 – MediumNear source confined and short-term reversible impact

Category 3 – SeriousNear source confined and medium-term recovery impact

Category 4 – MajorImpact that is unconfined and requiring long-term recovery, leaving residual damage

Category 5 – CatastrophicImpact that is widespread, unconfined and requiring long-term recovery, leaving major residual damage

2013 Community Contributions (NZ$)

Education $50,700

Environment $201,000

Health $10,000

Recreation $1,350

Other $1,997

Total $265,047

Operational Excellence

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2013

3

0.75 0.72

0.61

0.68 0.730.77 0.81

21%

0.770.91

1.36

0.88

0.660.56

0.67

1 1

3

2

1 1

3 3

1 1 1 1

2

2013201220110

1

2

3

20102009

Category 4

Category 2 Category 3

4

2013201220110

1

2

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20102009

Category 4

Category 2 Category 3

4

25%

14%

32%

7%

1%

55%

16%

8%

3%

13%5%

4

3

2

1

0

Environmental Incidents

OverviewThis report contains a summary of NZAS’ 2013 results in key performance areas and plans for 2014.

It was another challenging year for NZAS in 2013. The most significant milestone was successfully resetting the smelter’s power contract to a more affordable level, following 13 months of negotiations. With the metal price remaining very low it will take a considerable amount of work to return to profitability and 2014 continues to be another challenging year.

Unfortunately NZAS’ safety performance in 2013 was disappointing with eight recordable injuries. I sincerely believe we can reach our ‘goal of zero’ as there are many examples of teams and individuals on site, both employees and contractors, who have already achieved this. Congratulations to the Mobile Equipment Workshop team who reached 3,000 consecutive safe days during the year. This is a fantastic achievement and clearly demonstrates that the goal of zero is achievable.

NZAS produced 324,835 tonnes of saleable aluminium in 2013, which was 22,000 tonnes below plan. This was due to Reduction Line 4 remaining off-line and five months of load reduction due to low hydro lake levels. Line 4 was removed from circuit in April 2012 and was not restarted in 2013 due to low metal prices, a high exchange rate and the impact on 2014 transmission costs. Market conditions continue to be closely monitored and restart options will be considered when economically viable. The aluminium price is currently the lowest in $NZ nominal terms since October 1996.

In March, the smelter’s electricity load was reduced to 540MW due to extremely low hydro lake levels. NZAS worked closely with Meridian Energy to help conserve storage in the South Island hydro lakes. In September, production was restored on Lines 1-3 when our contracted power load returned to 572MW.

I would like to reflect on some of the other moments that have shaped NZAS this year.

In August, Rio Tinto announced that because market conditions remained poor, Pacific Aluminium would be reintegrated back into Rio Tinto Alcan.

A review of NZAS maintenance services was carried out in 2013, resulting in the reduction of 31 roles. Many employees were placed into other vacant roles on site, with some opting for voluntary redundancy. The new structure is currently being implemented.

The difficult business conditions faced by NZAS are forecast to continue. There is no doubt that 2014 will be another year of considerable change for our business, however I am confident we have the right team in place to embrace the challenges ahead.

We welcome your feedback on this report. If you have any comments please email Andrea.Carson@pacificaluminium.com.au or phone +64 3 218-5440.

2013 Sustainable Development Review

2013 Target 2013 Actual

All injuries (including first aid) N/A 48

Recordable injuries (number of LTIs and MTIs) 4 8

All Injury Frequency Rate (AIFR) 0.41 1.02

Recordable Occupational illnesses* 3 12

Plans for Health in 2014: n Focus on musculoskeletal risk reduction projects such as tool design,

identification of workplace changes and increased education

n Support projects aimed at reducing vibration exposure of high risk tasks

n Embed the ‘Return to Work Recovery’ programme, which prevents aggravation of injury and illness when returning to work

n Continue focus on stress management by providing support to individuals

n Ergonomic assessments with increased focus on manual handling

Plans for Safety in 2014:n ‘Leaders Routines’ programme consolidated across site including

safety coaching, workplace standards and safety controls

n Review Critical Control Monitoring Plans (CCMP) to specifically pinpoint audit protocols for our life saving controls

n Expand the use of the ‘Brother’s Keeper’ safety interaction process across site

n Development of a Heath Safety Environment (HSE) Leaders handbook to assist leaders in understanding legal requirements of incident management and other HSE obligations

Safety definitions

Lost Time Injury (LTI) and Restricted Work Days (RWD)

An LTI/RWD occurs when a person, as a result of injury, is unable to attend their next working shift, or is unable to fulfil the requirements of their role

Medical Treatment Case (MTC)

A MTC is an injury or occupational illness which is not classified as lost time, but which results in referral for medical treatment other than first aid

First Aid Injury (FAI)

A FAI is limited to a one-time treatment and subsequent observation and involves treatment for only minor injuries, not emergency treatment of serious injuries

All Injury Frequency Rate (AIFR)

Rate of occurrence of all recordable injuries (LTIs, RWDs and MTCs) per 200,000 hours worked

* An illness or disease that results from a work place related exposure of more than one shift

NZAS Historical Safety Data - All Injuries

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FAIsMTIsLTIs

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Health & Safety

Plans for People Commitment in 2013:n Continue to improve employee engagement by:

n Utilising the Employee Engagement Group to increase opportunities for social interaction between employees

n Establishing an Employee Consultation Group consisting of a cross-section of employees from different areas of site to provide input into some of the ideas, policies and changes that are being considered

People Commitment2013 Employment Facts

Number of permanent Full Time Equivalent (FTE) 673.7 * employees (as at 31 December)

Number of FTE contractors (as at 31 December) 115.9 **

Employee turnover (includes redundant employees) 11.8%

Diversity 93.1% males 6.9% females

Wages and benefits paid $81 million

* Excludes 2013 summer vacation students ** Excludes capital contractors

Energy and Power

Financial Strength2013 Payments to Suppliers (excluding capital project expenditure)

Local NZ$42 million

National NZ$352 million

* Includes purchased electricity and onsite energy consumption (electricity, gas and heavy fuel oil)

Economic Contribution

GDP benefit to Southland region* NZ$525 million or 10.5%

Southland jobs supported by NZAS* 3,200 jobs

Percentage of New Zealand’s exports NZAS accounts for 2.2%

Percentage of New Zealand’s exports to Japan NZAS accounts for 15%

2013 Electricity Consumption

Electricity consumed 17,776,901 gigajoules

Electricity intensity 54.7 gigajoules / tonne saleable Aluminium

Energy* intensity 72.6 gigajoules / tonne saleable Aluminium

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London Metal Exchange Price - December 2009 to December 20133

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The aluminium price is currently the lowest in $NZ nominal terms since October 1996.

* Venture Southland and Infometrics conducted an economic and social impacts study of NZAS on the Southland economy in 2012

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NZ$ per tonne equivalentUS$ per tonne

In 2013, capital investment in NZAS was sharply reduced due to the poor economic situation. NZAS invested NZ$4 million into infrastructure improvement projects during the year. The 2009 to 2012 period included the replacement of a number of significant assets including new transformers, the ship unloader and a carbon bake furnace.

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NZAS Capital Project Expenditure

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Greenhouse Gas Emissions and Energy Efficiency

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2013201220112010200920081.75

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C02 Emissions 2008 - 2013

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The rate at which NZAS emits greenhouse gases (GHG) remained in the normal range in 2013 but a little higher than 2012 due to the process instability caused by electricity load reduction to 540MW. Increased instability experienced in cell operation during the latter part of the year saw perfluorocarbon (PFC) emissions increase, which affected the overall emission rate.

Global Warming Potential (GWP) factors for PFCs were revised in 2013 through the New Zealand Emissions Trading Scheme. These fixed factors have increased the total reported PFC emissions from NZAS by approximately 18 per cent.

72.5

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2009 2010 2011 2012 20132008

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Energy Efficiency

Total energy efficiency is made up of power consumption and fuel usage, and is affected by the number of reduction cells in circuit

Total CO2-e emissions (t) Hot Metal (t) CO-e / t hot AI

and also the cell technology used.

In 2013, 70 cells were removed from circuit due to low hydro lake levels and the deterioration of market conditions and high power prices. Fuel consumption throughout 2013 was proportional to 2012 production figures.

2006

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2013

Gretta StephensNZAS Chief Executive & GM

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