##### Table of Contents

LOGO

---



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



FORM 20-F



(Mark One)



| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------



OR



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



Commission file number: 1-10375



ALUMINA LIMITED

Australian Business
Number 85 004 820 419

(Exact name of Registrant as specified in its charter)



COMMONWEALTH OF AUSTRALIA

(Jurisdiction of incorporation or organisation)



Level 12, IBM Centre, 60 City Road, Southbank, Victoria 3006, Australia

(Address of principal executive offices)



Securities registered or to be registered pursuant to Section 12(b) of the Act.



|                               |  |                                          
|------------------------------ |  | -----------------------------------------
|Title of each Class            |  | Name of each exchange on which registered
|Ordinary Shares (1)            |  | New York Stock Exchange                  
|American Depositary Shares (2) |  | New York Stock Exchange                  



Securities
registered or to be registered pursuant to Section 12(g) of the Act.

None



Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act.

None



Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the Annual Report.



|                            |  |              
|--------------------------- |  | -------------
|Shares outstanding :        |  |              
|Fully Paid Ordinary Shares. |  | 1,159,778,548



Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.



Yes x     No ̈



Indicate by check mark which financial statement item the registrant has elected to follow.



Item 17 ̈Item 18 x



|(1) | Not for trading but only in connection with the listing of the American Depositary Shares.
|--- | ------------------------------------------------------------------------------------------



|(2) | Evidenced by American Depositary Receipts, each American Depositary Share representing four fully paid Ordinary Shares.
|--- | -----------------------------------------------------------------------------------------------------------------------



---



---

##### Table of Contents

LOGO



2003 FORM 20-F



CONTENTS



|                           |  |                                                                              |  |     
|-------------------------- |  | ---------------------------------------------------------------------------- |  | ----
|                           |  |                                                                              |  | Page
|                           | 
|THE DEMERGER               |  | 1                                                                           
|                           | 
|FORWARD LOOKING STATEMENTS |  | 1                                                                           
|                           |  |                                                                             
|DEFINITIONS                |  |                                                                              |  | 2   
|                           |  |                                                                             
|ITEM 1.                    |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS                        |  | 5   
|                           |  |                                                                             
|ITEM 2.                    |  | OFFER STATISTICS AND EXPECTED TIMETABLE                                      |  | 6   
|                           |  |                                                                             
|ITEM 3.                    |  | KEY INFORMATION                                                              |  | 7   
|                           |  |                                                                             
|ITEM 4.                    |  | INFORMATION ON THE COMPANY                                                   |  | 15  
|                           |  |                                                                             
|ITEM 5.                    |  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 |  | 28  
|                           |  |                                                                             
|ITEM 6.                    |  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   |  | 42  
|                           |  |                                                                             
|ITEM 7.                    |  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            |  | 51  
|                           |  |                                                                             
|ITEM 8.                    |  | FINANCIAL INFORMATION                                                        |  | 56  
|                           |  |                                                                             
|ITEM 9.                    |  | THE OFFER AND LISTING                                                        |  | 59  
|                           |  |                                                                             
|ITEM 10.                   |  | ADDITIONAL INFORMATION                                                       |  | 61  
|                           |  |                                                                             
|ITEM 11.                   |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |  | 77  
|                           |  |                                                                             
|ITEM 12.                   |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  | 85  
|                           |  |                                                                             
|ITEM 13.                   |  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  | 85  
|                           |  |                                                                             
|ITEM 14.                   |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  | 85  
|                           |  |                                                                             
|ITEM 15.                   |  | CONTROLS AND PROCEDURES                                                      |  | 85  
|                           |  |                                                                             
|ITEM 16A.                  |  | AUDIT COMMITTEE FINANCIAL EXPERT                                             |  | 85  
|                           |  |                                                                             
|ITEM 16B.                  |  | CODE OF ETHICS                                                               |  | 86  
|                           |  |                                                                             
|ITEM 16C.                  |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                       |  | 87  
|                           |  |                                                                             
|ITEM 16D.                  |  | EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES                       |  | 88  
|                           |  |                                                                             
|ITEM 17.                   |  | FINANCIAL STATEMENTS                                                         |  | 89  
|                           |  |                                                                             
|ITEM 18.                   |  | FINANCIAL STATEMENTS                                                         |  | 90  
|                           |  |                                                                             
|ITEM 19.                   |  | EXHIBITS                                                                     |  | 91  





---

##### Table of Contents

LOGO



2003 FORM 20-F



THE DEMERGER



On December 11,
2002, Alumina Limited (formerly known as WMC Limited) demerged its interest in the Alcoa World Alumina and Chemicals joint venture (AWAC) from its nickel, copper/uranium and fertilizer businesses and exploration and development
interests. The demerger was effected through an Australian court-approved scheme of arrangement and associated capital reduction and dividend distribution. As a result of the demerger, Alumina Limited (Alumina) holds the interest in AWAC
and WMC Resources Ltd, which prior to the demerger was a wholly owned subsidiary of WMC Limited, holds the nickel, copper/uranium and fertilizer businesses and exploration and development interests previously held within the WMC Limited group.



FORWARD LOOKING STATEMENTS



This
Annual Report contains certain forward-looking statements, including statements regarding (i) certain plans, strategies and objectives of management, (ii) scheduled closure of certain operations or facilities, (iii) anticipated production or
construction commencement dates, (iv) expected costs or production output, (v) the anticipated productive lives of projects and mines and (vi) estimates of expected dividends to be received from AWAC. Such forward-looking statements are not
guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Alumina, which may cause actual results to differ materially from those expressed in the statements
contained in this Annual Report.



For example, the amount of
any future dividends received from the AWAC joint venture will be dependent in part on the future revenues from AWACs operations, described in this Annual Report which in turn are based in part on the market price of the products and metals
produced, which may vary significantly from current levels. Such variations, if materially adverse, may impact the timing or feasibility of the development of a particular project or the expansion of certain facilities. Other factors that may affect
actual construction or production commencement dates, costs or production output and anticipated lives of operations or facilities of AWAC include the ability of AWAC to profitably produce and transport its products or metals to applicable markets,
the impact of foreign currency exchange rates on the market prices of the products or metals produced and activities of governmental authorities in certain countries where such facilities are being operated including increases in taxes, changes in
environmental and other regulations, and political uncertainty. Alumina can give no assurances that the actual production or commencement dates, cost or production output, revenue, or anticipated lives of the facilities discussed herein will not
differ materially from the statements contained in this Annual Report.



- 1 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



DEFINITIONS



ADR means an
American Depositing Receipt evidencing one or more ADSs.



ADS means an American Depository Share.



Alumina Limited is the registrant, formerly named WMC Limited.



ASX means the Australian Stock Exchange.



AWAC refers to the Alcoa World Alumina and Chemicals venture in which Alumina Limited holds a 40% interest.



Bauxite is an aluminium rich rock, the principal ore of aluminium.



Cash Flow Hedge means a contract which hedges an exposure to changes in cash flows from an expected future transaction
related to a forecast purchase or sale or an existing asset or liability.



Commissioned means the bringing into operation of plant and/or equipment at a rate approximating its design capacity.



Company means Alumina Limited at level 12, IBM Centre, 60 City Road, Southbank, Victoria 3006, Australia.



Consolidated means the consolidation of entities controlled by Alumina
Limited together with the equity method consolidation of jointly controlled corporate entities or of corporate entities over which it exerts significant influence but not control. Unincorporated joint ventures are accounted for using the equity
method.



Counterparty Credit Risk means the risk of
financial loss arising out of holding a particular contract or portfolio of contracts as a result of one or more parties to the relevant contract(s) failing to fulfil its financial obligations under the contract.



Cross-Currency Swap means the exchange of cash flows in one currency for
those in another, often requiring an exchange of principal.



Currency
Forward means an agreement to exchange a specified amount of one currency for another at a future date at a certain rate.



Demerger means the demerger of WMC Limiteds (Alumina Limiteds) interest in non-AWAC operating businesses pursuant to an Australian scheme
of arrangement and associated capital reduction and dividend distribution.



Depositary means The Bank of New York Company, Inc., 101 Barclay Street, New York, NY 10286.



Derivative means an instrument or product whose value changes with changes in one or more underlying market variables such as equity or commodity
prices, interest rates or foreign exchange rates. Basic derivatives include forwards, futures, swaps, options, warrants and convertible bonds.



Fair Value means, in the context of commodity, currency and interest rates, the current market value (mark-to-market) of financial positions.



Fair Value Hedge means a contract which hedges an exposure
to the change in fair value of a recognized asset, liability or an unrecognized firm commitment (or a part thereof) attributable to a particular risk.



Foreign Currency Hedge means a contract which hedges the foreign exchange exposure of:



| |  | an unrecognized firm commitment (fair value hedge);
| | - | ---------------------------------------------------



| |  | an available for sale security (fair value hedge);
| | - | --------------------------------------------------



| |  | a forecast transaction (cash flow hedge); or
| | - | --------------------------------------------



| |  | a net investment in a foreign operation
| | - | ---------------------------------------



Grass Roots Exploration is exploration undertaken at new sites not related to existing operations (also known as green fields exploration).



Hedge means to reduce risk by making transactions that
reduce exposure to market fluctuations. A hedge is also the term for the transactions made to effect this reduction.



Hedge Accounting means the practice of deferring accounting recognition of gains and losses on financial market hedges until the corresponding gain or
loss of the underlying exposure is recognized.



- 2 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



HSRA means the Australian/US dollar Hedge Settlement Rate quoted on Reuters Screen HSRA.



Interest Rate Swap means an agreement to exchange net
future cash flows. Interest rate swaps most commonly change the basis on which liabilities are paid on a specified principal. They are also used to transform the interest basis of assets. In its commonest form, the fixed-floating swap, one
counterparty pays a fixed rate and the other pays a floating rate based on a reference rate such as LIBOR. There is no exchange of principal  the interest rate payments are made on a notional amount.



LME means the London Metal Exchange.



NYSE means the New York Stock Exchange.



Open-cut or Open-pit means a mine at the earths
surface as distinct from an underground mine.



Option means
a contract that gives the purchaser the right, but not the obligation, to buy or sell an underlying security or instrument at a certain price (the exercise or strike price) on or before an agreed date (the exercise period). For this right, the
purchaser pays a premium to the seller. The seller (writer) of an option has a duty to buy or sell at the strike price should the purchaser exercise his right.



Ore means a naturally occurring solid resource (often rock) from which a mineral, or minerals, can be extracted.



SCH means a transfer of securities on the Clearing House Electronic
Subregister System operated by ASX Settlement and Transfer Corporation Pty Ltd.



WMC Limited is the former name of Alumina Limited prior to demerger.



WMC Resources means WMC Resources Ltd, together with its subsidiaries.



- 3 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



Weights and Measures



|                 |  |   |  |                                   
|---------------- |  | - |  | ----------------------------------
|1 troy ounce     |  | = |  | 31.103 grams                      
|1 kilogram       |  | = |  | 32.15 troy ounces                 
|1 kilogram       |  | = |  | 2.205 pounds                      
|1 tonne          |  | = |  | 1,000 kilograms                   
|1 tonne          |  | = |  | 2,205 pounds                      
|1 gram per tonne |  | = |  | 0.0292 troy ounces per (short) ton
|1 kilometre      |  | = |  | 0.6214 miles                      



- 4 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS



|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
|------- | -----------------------------------------------------



|A. | Directors and Senior Management
|-- | -------------------------------



Not applicable.



|B. | Advisers
|-- | --------



Not applicable.



|C. | Auditors
|-- | --------



Not applicable.



- 5 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OFFER STATISTICS AND EXPECTED TIMETABLE



|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE
|------- | ---------------------------------------



|A. | Offer Statistics
|-- | ----------------



Not applicable.



|B. | Method and Expected Timetable
|-- | -----------------------------



Not applicable.



- 6 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



KEY INFORMATION



|ITEM 3. | KEY INFORMATION
|------- | ---------------



|A. | Selected Financial Data
|-- | -----------------------



The selected financial data appearing below as at December 31, 2003 and 2002 and for the fiscal years ended December 31, 2003, 2002 and 2001 are set forth
in Australian dollars (except as otherwise indicated), and are extracted from the audited Consolidated Financial Statements of Alumina Limited (the Company or Alumina , which, unless the context otherwise requires, includes
Alumina Limited and its subsidiaries) which appear elsewhere herein. The Consolidated Financial Statements for the fiscal year 2001 and the first eleven months of fiscal 2002 include the financial position, results of operations and cash flows of
the discontinued operations of the incumbent nickel, copper/uranium and fertilizer businesses that were transferred to WMC Resources in the demerger. Also reported are the discontinued gold and talc operations of WMC Limited sold during 2001. These
Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in Australia (Australian GAAP), which differ in certain respects from accounting principles generally accepted in the United
States (US GAAP). Note 35 to the Consolidated Financial Statements provides an explanation of these differences as they affect Alumina, and reconciliations from Australian GAAP to United States GAAP of net income, comprehensive income,
certain balance sheet items, shareholders equity and cash flows. The selected financial data appearing below as at December 31, 2001, 2000 and 1999 and for the fiscal years ended December 31, 2000 and 1999 are derived from Alumina audited
consolidated financial data that is not included herein.



Aluminas net profit under Australian GAAP was A$236.9 million for the year ended December 31, 2003 (A$174.5 million for the year ended December 31, 2002). Under US GAAP, Alumina would have reported net income of A$248.2 million for
the year ended December 31, 2003 (2002: A$306.7 million). Comprehensive income under US GAAP for the year ended December 31, 2003 was A$298.6 million (2002: A$601.8 million loss).



Equity accounting is used where the consolidated entity exercises significant influence, but not control, over an investee
company (the associate). Under this method, the consolidated entitys share of the post-acquisition profits or losses of associates is recognized in the consolidated statement of financial performance, and its share of post-acquisition
movements in reserves is recognized in consolidated reserves. The cumulative post acquisition movements are adjusted against the cost of the investment. Aluminas Consolidated Financial Statements are prepared in accordance with Australian
GAAP. The financial statements of Alcoa World Alumina and Chemicals (AWAC), of which Alumina owns 40% of the assets, are prepared in accordance with US GAAP. The equity share of profit from the non-Australian assets is based on these US
GAAP financial statements and adjustments are made for accounting policies not allowed under Australian GAAP (refer to Note 35 to the Consolidated Financial Statements). The equity share of profits of AWACs Australian entity, Alcoa of
Australia Ltd, is based on its Australian domestic financial statements. The principal differences between Australian GAAP and US GAAP which affected Aluminas net income and comprehensive income, as well as its shareholders equity,
either directly or through its share of associates, for 2001, the discontinuing operations for 2002 and 2003 fiscal periods, relate to the treatment of the following items:



| | 1) | demerger accounting;
| | -- | --------------------



| | 2) | research and development costs;
| | -- | -------------------------------



| | 3) | pension funds;
| | -- | --------------



| | 4) | exploration expenditure;
| | -- | ------------------------



| | 5) | start-up costs;
| | -- | ---------------



| | 6) | recognition of profit on real estate disposal;
| | -- | ----------------------------------------------



| | 7) | deferral of cost of option payments;
| | -- | ------------------------------------



| | 8) | fair value of accounting for derivatives;
| | -- | -----------------------------------------



| | 9) | amortization of mine development and deferred post-production waste removal costs;
| | -- | ----------------------------------------------------------------------------------



- 7 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



KEY INFORMATION



The principal differences between Australian GAAP and US GAAP which affect Aluminas net income
for continuing operations and comprehensive income, as well as its shareholders equity, either directly or through its share of associates on a continuing basis, relate to the treatment of the following items.



|(1) | inventory valuation;
|--- | --------------------



|(2) | employee share loans and partly paid shares;
|--- | --------------------------------------------



|(3) | compensation expense of employee share plans;
|--- | ---------------------------------------------



|(4) | fair value of accounting for derivatives;
|--- | -----------------------------------------



|(5) | goodwill amortisation; and
|--- | --------------------------



|(6) | pension liabilities.
|--- | --------------------



Differences which affect the Consolidated Statement of Cash Flows are, that under US GAAP, bank overdrafts are not considered to be part of net cash
equivalents and any changes in bank overdrafts are included in cash flow from financing activities, and expenditure incurred on post-production waste removal costs would be classified as part of cash flow from operating activities rather than
investing activities.



- 8 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



KEY INFORMATION



The following selected financial data should be read in conjunction with, and is qualified in its
entirety by reference to, the Consolidated Financial Statements, including the Notes thereto.



SELECTED FINANCIAL DATA UNDER AUSTRALIAN GAAP



|                                                                   |  |                                     |  |                            |  |                            |  |                            |  |                           
|------------------------------------------------------------------ |  | ----------------------------------- |  | -------------------------- |  | -------------------------- |  | -------------------------- |  | --------------------------
|                                                                   |  | Year EndedDecember 31,2003          |  | Year EndedDecember 31,2002 |  | Year EndedDecember 31,2001 |  | Year EndedDecember 31,2000 |  | Year EndedDecember 31,1999
|                                                                   |  | (A$ million except where indicated)
|Net Sales Revenue from Continuing Operations                       |  |                                    |  |                           |  |                           |  |                           |  |                          
|Net Income from Continuing Operations                              |  | 236.9                               |  | 209.7                      |  | 281.4                      |  | 366.9                      |  | 191.7                     
|Net Income(6)                                                      |  | 236.9                               |  | 174.5                      |  | 401.7                      |  | 764.9                      |  | 275.8                     
|Comprehensive Income(6)                                            |  | 265.3                               |  | 209.9                      |  | 421.5                      |  | 798.0                      |  | 198.4                     
|Net Income from Operations per Ordinary Share (A$/share)           |  | 0.21                                |  | 0.16                       |  | 0.36                       |  | 0.68                       |  | 0.24                      
|Income from Continuing Operations per Ordinary Share (A$/share)(4) |  | 0.21                                |  | 0.19                       |  | 0.11                       |  | 0.61                       |  | 0.17                      
|Diluted Net Income per Ordinary Share (A$/share)(5)                |  | 0.21                                |  | 0.16                       |  | 0.36                       |  | 0.68                       |  | 0.24                      
|Cash Dividends paid per Ordinary Share(1)(A$/share)                |  | 0.23                                |  | 0.18                       |  | 0.36                       |  | 0.31                       |  | 0.06                      
|(US$/share)(2)                                                     |  | 0.14                                |  | 0.09                       |  | 0.18                       |  | 0.18                       |  | 0.04                      



|                         |  |                                     |  |                    |  |                    |  |                    |  |                   
|------------------------ |  | ----------------------------------- |  | ------------------ |  | ------------------ |  | ------------------ |  | ------------------
|                         |  | AtDecember 31,2003                  |  | AtDecember 31,2002 |  | AtDecember 31,2001 |  | AtDecember 31,2000 |  | AtDecember 31,1999
|                         |  | (A$ million except where indicated)
|Total assets             |  | 1,799.1                             |  | 1,695.1            |  | 10,012.3           |  | 10,371.2           |  | 8,906.6           
|Long-term obligations(3) |  | 0.2                                 |  | 2.4                |  | 3,476.6            |  | 4,304.2            |  | 3,053.1           
|Net assets               |  | 1,323.8                             |  | 1,153.5            |  | 4,844.4            |  | 4,676.2            |  | 4,729.4           
|                         |  |                                     |  |                    |  |                    |  |                    |  |                   
|Shareholders equity     |  | 1,323.8                             |  | 1,153.5            |  | 4,844.4            |  | 4,676.2            |  | 4,729.4           
|                         |  |                                     |  |                    |  |                    |  |                    |  |                   
|Capital stock            |  | 384.8                               |  | 220.2              |  | 3,190.9            |  | 3,123.3            |  | 3,519.5           
|                         |  |                                     |  |                    |  |                    |  |                    |  |                   
|                         | 
|                         |  | Millions of shares                 
|Number of shares         |  | 1,159.8                             |  | 1,128.3            |  | 1,108.8            |  | 1,098.0            |  | 1,149.9           
|                         |  |                                     |  |                    |  |                    |  |                    |  |                   



|(1) | Fully franked. See Dividends in Item 8A.
|--- | ------------------------------------------



|(2) | These conversions were made using exchange rates applicable at the dates of the dividend payments.
|--- | --------------------------------------------------------------------------------------------------



|(3) | As part of the demerger of December 11, 2002 Alumina Limited retained net debt of A$534.8
million. The debt is a 364 day facility and therefore classified as a short term obligation at December 31, 2003.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Basic earnings per share was determined on the basis of the weighted average number of outstanding Alumina (formerly WMC Limited) shares for the periods indicated.
Refer also to Notes 1(s) and 6 to the Consolidated Financial Statements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Diluted earnings per share was determined on the basis of the weighted average number of outstanding Alumina (formerly WMC Limited) shares for the periods indicated
including potential shares from the conversion of partly paid shares and options into shares of WMC Limited. Refer also to Notes 1(s) and 6 to the Consolidated Financial Statements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | Includes income from continuing and discontinuing operations
|--- | ------------------------------------------------------------



- 9 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



KEY INFORMATION



SELECTED FINANCIAL DATA UNDER US GAAP



|                                                              |  |                                     |  |                            |  |                            |   |  |                            |  |                           
|------------------------------------------------------------- |  | ----------------------------------- |  | -------------------------- |  | -------------------------- | - |  | -------------------------- |  | --------------------------
|                                                              |  | Year EndedDecember 31,2003          |  | Year EndedDecember 31,2002 |  | Year EndedDecember 31,2001 |   |  | Year EndedDecember 31,2000 |  | Year EndedDecember 31,1999
|                                                              |  | (A$ million except where indicated)
|Net Sales Revenue from Continuing Operations                  |  |                                    |  |                           |  |                           |   |  |                           |  |                          
|Income from Continuing Operations                             |  | 237.1                               |  | 244.3                      |  | 294.8                      |   |  | 396.7                      |  | 216.6                     
|Net Income(7)                                                 |  | 248.2                               |  | 306.7                      |  | 326.5                      |   |  | 702.4                      |  | 249.6                     
|Comprehensive Income/(Loss)(7)                                |  | 298.6                               |  | 601.8                      |  | (588.5                     | ) |  | 735.5                      |  | 172.2                     
|Income from Continuing Operations per                         |  | 0.21                                |  | 0.22                       |  | 0.05                       |   |  | 0.56                       |  | 0.19                      
|Ordinary Share (A$/share)                                     |  |                                     |  |                            |  |                            |   |  |                            |  |                           
|Net Income from Operations per Ordinary Share(3)(A$/share)(5) |  | 0.22                                |  | 0.28                       |  | 0.30                       |   |  | 0.62                       |  | 0.22                      
|Diluted Net Income per Ordinary Share (A$/share)(6)           |  | 0.22                                |  | 0.27                       |  | 0.30                       |   |  | 0.62                       |  | 0.23                      
|Cash Dividends per Ordinary Share paid(1)(A$/share)           |  | 0.23                                |  | 0.18                       |  | 0.36                       |   |  | 0.31                       |  | 0.06                      
|(US$/share)(2)                                                |  | 0.14                                |  | 0.09                       |  | 0.18                       |   |  | 0.18                       |  | 0.04                      



|                         |  |                                     |  |                    |  |                    |  |                    |  |                   
|------------------------ |  | ----------------------------------- |  | ------------------ |  | ------------------ |  | ------------------ |  | ------------------
|                         |  | AtDecember 31,2003                  |  | AtDecember 31,2002 |  | AtDecember 31,2001 |  | AtDecember 31,2000 |  | AtDecember 31,1999
|                         |  | (A$ million except where indicated)
|Total assets             |  | 1,881.3                             |  | 1,744.0            |  | 8,402.3            |  | 10,175.7           |  | 8,810.4           
|Long-term obligations(4) |  | 0.2                                 |  | 2.4                |  | 3,476.6            |  | 4,304.2            |  | 3,053.1           
|Net assets               |  | 1,406.0                             |  | 1,202.4            |  | 3,778.5            |  | 4,694.2            |  | 4,734.8           
|                         |  |                                     |  |                    |  |                    |  |                    |  |                   
|Shareholders equity     |  | 1,406.0                             |  | 1,202.4            |  | 3,778.5            |  | 4,694.2            |  | 4,734.8           
|                         |  |                                     |  |                    |  |                    |  |                    |  |                   
|Capital Stock            |  | 384.8                               |  | 220.2              |  | 3,190.9            |  | 3,123.3            |  | 3,519.5           
|                         |  |                                     |  |                    |  |                    |  |                    |  |                   
|                         | 
|                         |  | Millions of shares                 
|Number of Shares         |  | 1,159.8                             |  | 1,128.3            |  | 1,108.8            |  | 1,098.0            |  | 1,149.9           
|                         |  |                                     |  |                    |  |                    |  |                    |  |                   



|(1) | Fully franked. See Dividends in Item 8A.
|--- | ------------------------------------------



|(2) | These conversions were made using exchange rates applicable at the dates of dividend payment.
|--- | ---------------------------------------------------------------------------------------------



|(3) | In 1999, net income per share was A$0.23 before the cumulative effect of an accounting change
in policy for start-up costs. In 2002, net profit per share was A$0.31 before the cumulative effect of an accounting change in policy for amortization of mine development and post-production waste removal costs. In 2003, net profit per share was
A$0.20 before the cumulative effect of an accounting change in policy for asset retirement obligations and policy for Associates employee stock options..
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | As part of the demerger of December 11, 2002 Alumina Limited retained net debt of A$534.8
million. The debt is a 364 day facility and therefore classified as a short term obligation at December 31, 2003.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Basic earnings per share was determined on the basis of the weighted average number of
outstanding Alumina (formerly WMC Limited) shares for the periods indicated. Refer also to Notes 1(s) and 6 to the Consolidated Financial Statements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | Diluted earnings per share was determined on the basis of the weighted average number of
outstanding Alumina (formerly WMC Limited) shares for the periods indicated including potential shares from the conversion of partly paid shares and options into shares of WMC Limited. Refer also to Notes 1(s) and 6 to the Consolidated Financial
Statements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | Includes income from continuing and discontinuing operations.
|--- | -------------------------------------------------------------



- 10 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



KEY INFORMATION



Exchange Rates



Alumina publishes its consolidated financial statements in Australian dollars (A$ or $). In this Annual Report, reference to
US$ are to United States dollars.



The following
table sets forth, for the periods and dates indicated, certain information concerning the rates of exchange of A$1.00 into US$ based on the noon buying rate in New York City for cable transfers in Australian dollars as certified for customs purposes
by the Federal Reserve Bank of New York (the Noon Buying Rate).



|                             |  |                                 |  |                 |  |        |  |       
|---------------------------- |  | ------------------------------- |  | --------------- |  | ------ |  | ------
|Period                       |  | At Period End                   |  | Average Rate(1) |  | High   |  | Low   
|                             |  | (all figures in US$ per A$1.00)
|December 2003                |  |                                 |  |                 |  | 0.7520 |  | 0.7265
|January 2004                 |  |                                 |  |                 |  | 0.7805 |  | 0.7576
|February 2004                |  |                                 |  |                 |  | 0.7979 |  | 0.7566
|March 2004                   |  |                                 |  |                 |  | 0.7725 |  | 0.7325
|April 2004                   |  |                                 |  |                 |  | 0.7677 |  | 0.7198
|May 2004                     |  |                                 |  |                 |  | 0.7337 |  | 0.6866
|                             |  |                                 |  |                
|Year Ended December 31, 1999 |  | 0.6560                          |  | 0.6300          |  | 0.6719 |  | 0.6123
|Year Ended December 31, 2000 |  | 0.5560                          |  | 0.5757          |  | 0.6687 |  | 0.5112
|Year Ended December 31, 2001 |  | 0.5114                          |  | 0.5178          |  | 0.5714 |  | 0.4812
|Year Ended December 31, 2002 |  | 0.5625                          |  | 0.5447          |  | 0.5748 |  | 0.5060
|Year Ended December 31, 2003 |  | 0.7520                          |  | 0.6524          |  | 0.7520 |  | 0.5629



|(1) | The average of the exchange rates on the last day of each month during the financial period.
|--- | --------------------------------------------------------------------------------------------



On 2 June, 2004, the Noon Buying Rate was A$1.00
= US$0.6970



|B. | Capitalization and Indebtedness
|-- | -------------------------------



Not applicable.



|C. | Reasons for the Offer and Use of Proceeds
|-- | -----------------------------------------



Not applicable.



- 11 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



KEY INFORMATION



|D. | Risk Factors
|-- | ------------



Alumina Limiteds net income is affected by movements in the prices of aluminium and alumina



AWACs revenue is derived from sales of alumina, alumina-based chemicals and aluminium. The price that can be obtained for these commodities is
influenced by the price of aluminium in the world market, and in particular, the LME price of primary aluminium. World aluminium prices are affected by numerous factors outside Alumina Limiteds control, including the overall performance of
world economies and the related cyclicality in particular industries that are significant consumers of aluminium.



The development of new alumina refineries and aluminium smelters, and increased production by new or existing alumina and aluminium producers may create
overcapacity, which could reduce future prices of alumina, alumina-based chemicals and aluminium, thereby adversely affecting AWACs, and hence Alumina Limiteds, profitability.



AWACs, and hence Alumina Limiteds, financial performance and ability to service liabilities, pay dividends,
undertake capital expenditure and finance further acquisitions would be adversely affected by a sustained material fall in the prices of alumina and aluminium.



Alumina has not sought to separately hedge its exposure to aluminium prices. The Company expects that volatility in prices and demand for AWACs
products will continue for the foreseeable future. For a statement of current hedging, and movements in the selling price of aluminium over the last five years, see Item 11 Quantitative and Qualitative Disclosure about Market Risk.



Fluctuations in the A$/US$ exchange rate can have a significant effect on
earnings and profitability.



Alcoa of Australia
contributes the majority of AWACs earnings. While a significant proportion of Alcoa of Australias costs are incurred in A$, sales are denominated in US$. The US$/A$ exchange rate rose during 2003 and continued to rise into 2004 from the
historic lows experienced in 2001 and 2002. AWACs future profitability, as expressed in A$, and hence that of Alumina Limited may be adversely affected by a strengthening of the A$ against the US$. AWACs profitability may also be
adversely affected by a strengthening against the US$ of other currencies in which costs are incurred by AWACs refineries outside Australia.



In the past, AWAC entered foreign exchange hedging contracts to manage its exposure to the US$/A$ exchange rate with those hedging contracts closing in
2003. At present, AWAC has not entered into any foreign exchange hedging contracts.



In addition, certain of the Companys liabilities and assets are denominated in US$, particularly much of the borrowings and certain equity accounted assets. The accounts of certain self-sustaining foreign
subsidiaries are also maintained in US$. Thus a change in the A$/US$ exchange rate may have an effect on the net asset value of the Company.



Fluctuations in the A$/US$ exchange rate will affect the US$ equivalent of the A$ price of the Companys ordinary shares on the Australian Stock
Exchange (ASX) and, as a result, are likely to affect the market price of the Companys American Depositary Receipts (ADRs) in the United States. Such fluctuations would also affect the US$ amounts received by holders of
ADRs on conversion of cash dividends paid in A$ on the Ordinary Shares underlying the ADRs. Alumina is not currently hedging its currency exposures. See Item 11 Quantitative and Qualitative Disclosure about Market Risk.



An increase in AWACs production costs could reduce Aluminas profitability.



Changes in AWACs costs have a major impact on the
Companys profitability. AWACs mining, refining and smelting operations are subject to conditions beyond its or Alumina Limiteds control that can delay deliveries or increase costs for varying lengths of time. These conditions
include weather and natural disasters, unexpected maintenance or technical problems, key equipment failures, disruptions to or other problems with infrastructure, variations in geological conditions and increases in the cost of key inputs or the
non-availability of key inputs. In addition, industrial disruptions, work stoppages, refurbishments and accidents at operations can result in production losses and delays in the delivery of product, which may adversely affect profitability. A key
risk in the cost of



- 12 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



KEY INFORMATION



production of alumina is the volatile price of caustic soda. Approximately 1 tonne of caustic soda is used for every 13 tonnes of alumina produced.
Accordingly, an increase in caustic soda prices has the potential to affect profitability. A further key risk in the cost of production of alumina and aluminium is the cost of energy. Increases in world oil prices will increase the cost of
production of alumina.



Certain costs are also affected by
government imposts and regulations in the countries in which AWAC operates. AWACs costs depend upon the efficient design and construction of mining, refining and smelting facilities and competent operation of those facilities.



Changes to sales agreements could adversely affect Aluminas results.



AWACs revenue from existing sales agreements depends on a variety
of factors, such as price adjustments and other contract provisions. The modification or termination of a substantial portion of AWACs sales agreements could adversely affect its results and financial performance, to the extent that AWAC is
unable to renew contracts or find alternate buyers for production at the same level of profitability.



Alumina is exposed to regulatory and court action, each of which could adversely affect Aluminas results.



Governments extensively regulate AWACs mining operations. National, state and local authorities in Australia and other countries in which AWAC
operates regulate the mining industry with respect to matters such as employee health and safety, permitting and licensing requirements and environmental compliance, plant and wildlife protection, reclamation and restoration of mining properties
after mining is completed, and the effects that mining has on groundwater quality and availability. Numerous governmental permits and approvals and leases are required for AWACs mining operations. AWAC is required to prepare and present to
national, state or local authorities data pertaining to the effect or impact that any proposed exploration or production activities may have upon the environment. The costs, liabilities and requirements associated with these regulations may be
costly and time-consuming and may delay commencement or continuation of exploration, expansion or production operations. Failure to comply with the laws regulating AWACs businesses may result in sanctions such as fines or orders requiring
positive action by AWAC which may involve capital expenditure or the curtailment of operations. This relates particularly to environmental regulations.



The possibility exists that new legislation or regulations may be adopted which may materially adversely affect AWACs mining operations or
AWACs cost structure. New legislation or regulations or more stringent interpretations or enforcement of existing laws and regulations may also require AWACs customers to change operations or incur increased costs. These factors and
legislation, if enacted, could have a material adverse effect on AWACs, and hence Alumina Limiteds, financial condition and results of operations.



Political risks exist in some of the countries in which Alumina operates.



AWAC operates in a number of countries, some of which have a higher political risk than Australia. Political activities in
these countries may be destabilising and disruptive to AWACs operations. The impact of any such disruption could range from a minor increase in operating costs or taxes to a material adverse impact, such as the closure of an operation.



Uncertainty of development projects and production performance could
adversely affect Aluminas ability to sustain production and profitability levels.



AWACs ability to sustain or increase its current level of production, and therefore its (and hence Alumina Limiteds) potential revenues and profits, in the medium to long-term is partly dependent on
efficient operation of its facilities, the development of new projects and on the expansion of existing operations. No assurance can be given that the planned development and expansion projects will result in the entire anticipated additional
production or that operation of existing facilities will be at desired rates of production. The economics of any project are based upon, among other factors, estimates of reserves, recovery rates, production rates, capital and operating costs and
future commodity prices.



Alumina is now a separate entity with no benefits
of diversification among products.



As a result of the
demerger, Alumina Limited is now exposed to alumina and aluminium markets, without the diversification provided by exposure to the markets of the operations now residing in WMC Resources Ltd. Previously the Company had investments in nickel, copper,
fertilizer and alumina and this spread of assets in various commodities



- 13 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



KEY INFORMATION



gave a diversified exposure to different commodities. The Companys performance is now substantially dependent upon the alumina and aluminium markets.



Native title in Australia poses risks to the status of some of AWACs
properties



Native title describes the rights
and interests of Aboriginal and Torres Strait Islander people in land and waters according to their traditional laws and customs that are recognised under Australian law. There are current claimant applications for native title determinations in the
Federal Court of Australia over areas that include Alcoa of Australias operations. Court decisions and various pieces of legislation make it evident that there are complex legal and factual issues affecting existing and future Alcoa of
Australia interests. At this stage, we cannot make any assessment of the impact of the recent and pending court cases on AWACs operations or the current claimant applications for native title over AWACs operations. See Item 8A
Legal Proceedings  Native Title in Australia.



Alumina Limited
cash flows depend on the availability of dividends from AWAC



Alumina Limiteds cash flows will be generated, at least initially, primarily from distributions made by AWAC, by way of dividend or capital return. The Strategic Council determines the timing and magnitude of AWAC dividends and
capital returns, subject to the relevant provisions of the AWAC Agreements. Alumina Limited cannot unilaterally determine AWACs dividend policy or the quantum or timing of dividends to be paid by AWAC. AWAC must distribute by way of dividends,
in each financial year, at least 30% of the net income of the prior year of the entities comprising AWAC, unless the Strategic Council agrees by a super majority vote to pay a smaller dividend. However, the practice of AWAC, confirmed by the
Strategic Council in September 2002, has been to distribute 100% of free cash flow from the AWAC entities. Alumina expects AWAC to continue this practice while it is consistent with the prudent financial management of AWAC.



Alumina is liable for further capital calls under the AWAC arrangements.



AWAC may make an annual capital request of up to US$1 billion following
approval by a majority vote of AWACs Strategic Council. Alcoa Inc. has a majority of the votes on the AWAC Strategic Council. Alumina Limited is required to fund its share of the request subject to the provisions of the agreement. If Alumina
Limited is unable to obtain equity or debt funding to make this contribution, it may ultimately run the risk of its interest in AWAC being diluted. There is a risk that Alumina Limited will be unable to fund a capital request which is not presently
contemplated but which may be made in the future and that its interest in AWAC will be diluted accordingly.



Employees



AWAC manages
its business with a number of key personnel, the loss of whom could have a material adverse effect on its business. AWACs, and hence Alumina Limiteds, future success will depend on AWACs continued ability to attract and retain
highly skilled and qualified personnel. There can be no assurance that key personnel will continue to be employed by AWAC or that AWAC will be able to attract and retain qualified personnel in the future. Failure to retain or attract key personnel
could have a material adverse effect on AWACs, and hence Alumina Limiteds, business. These same issues exist with respect to Alumina Limiteds key personnel, the loss of whom could have a material adverse effect on Alumina
Limiteds business and its ability to manage its joint venture interests in AWAC.



- 14 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



|ITEM 4. | INFORMATION ON THE COMPANY
|------- | --------------------------



|A. | History and Development of the Company
|-- | --------------------------------------



Alumina Limited, previously called WMC Limited until its name change in December 2002 as part of the demerger, was incorporated in 1970. In 1979 it became
the holding company of the WMC Group which commenced operations in 1933. The Company is listed on the Australian Stock Exchange. At December 31, 2003, Alumina had total consolidated assets of A$1.8 billion. Aluminas income from continuing
operations was A$236.9 million in the year ended December 31, 2003 and A$209.7 million in the year ended December 31, 2002.



Alumina Limited, incorporated under the laws of the Commonwealth of Australia, has its registered office and principal executive offices at Level 12, 60
City Road, Southbank, Victoria, 3006, Australia. Its telephone number is +61 3 8699 2600 and facsimile number is +61 3 8699 2699. Enquiries about Aluminas ADRs should be addressed to its depositary, The Bank of New York, telephone +1
(212) 815 2293 or facsimile +1 (212) 571 3050, located at 101 Barclay Street, New York, NY 10286.



Demerger



The demerger
was effected through an Australian court-approved scheme of arrangement and associated capital reduction and dividend distribution. As a result of the demerger, Alumina Limited has retained its interest in AWAC while WMC Resources Ltd holds the
nickel, copper/uranium and fertilizer businesses and exploration and development interests previously held within the WMC Limited group.



Immediately prior to effecting the demerger, through a series of share sale transactions internal to the WMC Limited group, WMC Resources Ltd acquired the
WMC Limited subsidiaries that held its copper/uranium and fertilizer businesses and exploration and development interests (other than those relating to AWAC), together with those subsidiaries which provide administrative or financial support to, or
otherwise relate to activities conducted by, the WMC Resources group.



Following the demerger, WMC Limiteds primary assets comprised the interests in the AWAC joint venture with Alcoa, Inc. AWAC has interests in bauxite mining, alumina refining and two operating aluminium smelters. Coincident with the
demerger, WMC Limited changed its name to Alumina Limited and has maintained its listings on the ASX and the NYSE.



- 15 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



Capital and Investment Expenditures



Since January 1, 2003 the continuing operations of Alumina made the following principal capital and investment expenditures:



| |  | In December 2003, Alumina increased its interest in Alcoa of Australia to 40% through purchasing QBE Limiteds 0.75% interest by issuing 18,372,881 shares in Alumina. The
acquisition was accounted for based on Aluminas closing price on December 12, 2003 of $5.90 (the closing price on the trading day prior to the date when the purchase was agreed)
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



AWACs Global Interests



LOGO



|* | All Alumina Chemical Assets were sold 27 February 2004 except for chemical grade alumina refining at kwinana, San Ciprian and Point Comfort.
|- | --------------------------------------------------------------------------------------------------------------------------------------------



- 16 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



|B. | Business Overview
|-- | -----------------



Aluminas sole continuing business is alumina refining, alumina based chemicals (the specialty chemicals business was sold in February 2004),
aluminium smelting and the marketing of those products through its 40 per cent investment in AWAC. A discussion of AWACs business is set forth below.



Following the demerger, WMC continued to operate and maintain its listing on the ASX, but the company was renamed Alumina Limited and now has
a significantly different profile. Aluminas primary asset is its 40% interest in Alcoa World Alumina and Chemicals.



Alcoa World Alumina and Chemicals (AWAC) was formed on January 1, 1995 by Alumina and Alcoa Inc. (Alcoa) combining their
respective bauxite, alumina and alumina-based chemicals businesses and investments and some selected smelting operations. AWAC is the worlds largest producer of alumina. As a result of the joint venture transaction, Alumina and Alcoa initially
owned 39.25% and 60% respectively of Alcoa of Australia Ltd (AofA). However, Alumina increased it share in AofA to 40% in December 2003 by purchasing QBE Limiteds 0.75% interest funded by issuing an additional 18,372,881 shares in
Alumina. All other AWAC entities are 40% and 60% owned by Alumina and Alcoa, respectively.



The Strategic Council is the principal forum for Alcoa and Alumina to provide direction and counsel to the AWAC entities in respect of strategic and policy matters. The Alcoa and Alumina representatives on the Boards
of the AWAC entities are required, subject to their general fiduciary duties, to carry out the directions and the decisions of the Strategic Council. The Strategic Council has five members, three appointed by Alcoa (of which one is Chairman) and two
by Alumina (of which one is the Deputy Chairman). Decisions are made by majority vote except for matters which require a super majority vote, which is a vote of 80% of the members appointed to the Strategic Council.



The following decisions require a super majority vote:



| |  | change of scope of AWAC;
| | - | ------------------------



| |  | change in the minimum 30% dividend policy;
| | - | ------------------------------------------



| |  | sale of all or a majority of the assets of AWAC;
| | - | ------------------------------------------------



| |  | equity calls on behalf of AWAC totalling, in any one year, in excess of US$1 billion; and
| | - | -----------------------------------------------------------------------------------------



| |  | loans to Alcoa, Alumina or their affiliates by AWAC.
| | - | ----------------------------------------------------



The Strategic Council meets as frequently as the Chairman (after consultation with the Deputy Chairman) determines, but meetings of the Council must be
held at least twice a year. The Deputy Chairman may require additional meetings to be held.



Under the general direction of the Strategic Council, Alcoa is the industrial leader and provides the operating management of AWAC and of all affiliated operating entities within AWAC, unless Alcoa
requests Alumina to manage a particular operation.



Alumina is
entitled to representation in proportion to its ownership interest on the Board of each entity in the AWAC structure, including Alcoa of Australia. Alumina has proportional representation on the Boards of the following strategic AWAC companies:
Alcoa of Australia and Alcoa World Alumina LLC. In addition to the Strategic Council meetings, Operations meetings (with representatives from Alcoa and Alumina) are held typically up to four times per year (usually two in Australia and
two at operations/offices outside Australia).



Subject to the
provisions of the AWAC agreements, AWAC is the exclusive vehicle for the pursuit of Aluminas and Alcoas (and their related corporations as defined) interests in the bauxite, alumina and inorganic industrial chemicals businesses, and
neither party can compete with AWAC so long as they maintain an ownership interest in AWAC.



- 17 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



If either party acquires a new business which has as a secondary component a bauxite, alumina or
inorganic industrial chemicals business, that component must be offered to AWAC for purchase at its acquisition cost or, if not separately valued, at an independently determined value. If the companies within AWAC and the Strategic Council decide
not to accept the offer, the component must be divested by Alcoa or Alumina (as the case may be) to a third party that is not an affiliate.



Smelting is not subject to these exclusivity provisions, although there are certain smelting assets in AWAC, being those in Alcoa of Australia, in which
Alumina already had an interest at the time AWAC was formed.



As a result of acquiring Reynolds Metal Company in 2000, Alcoa also acquired 100% of Juruti, a greenfield bauxite deposit in Brazil. It is Aluminas position that the exclusive vehicle and new business sections
of the AWAC Agreements apply to the Juruti deposit and that Juruti should, therefore, be integrated into AWAC.



However, Alcoa indicated to Alumina for the first time in January 2002 that they believe the scope of AWAC, as defined in the AWAC Agreements, may be
interpreted to exclude Brazilian bauxite, alumina and alumina chemical operations producing for use in the domestic Brazilian market, such that the exclusive vehicle and new business sections of the AWAC Agreements do not
apply to Juruti. Alumina maintains that its interpretation of the AWAC Agreements is correct and that Juruti should be included in AWAC. Discussions with Alcoa concerning this issue are ongoing.



Alcoa announced in May 2003 that it reached an agreement in principle with
Camargo Correa Group to acquire their 40.9% shareholding in Alcoas South American operations, issuing US$410 million of Alcoa stock as consideration. The shareholding in Alcoas South American operations involves a number of mining,
refining, smelting and fabrication businesses in Brazil and a number of other different businesses. It is Alumina Limiteds view that the principles above relating to Juruti would equally apply to the Brazilian bauxite and alumina assets
acquired from the Camargo Correa Group.



In November 2001,
Alcoa announced that it had finalized agreements for a strategic alliance with the Aluminium Company of China Limited (Chalco). Under the strategic alliance, it was proposed that Alcoa and Chalco would form a 50/50 joint venture in respect to
Chalcos operations at Pingguo, which includes bauxite, alumina and aluminium facilities. In April 2004, approval was received from the China National Development and Reform Commission (NDRC) to proceed with formation of their proposed joint
venture. Alcoa and Chalco expect to receive final regulatory approvals within China by the end of 2004 The Pingguo joint venture includes an 850,000 tonne alumina refinery and bauxite mining operations. Alcoa and Alumina are currently reviewing the
mechanisms for AWACs participation in this investment.



In September 2003, Alcoa announced the signing of a memorandum of understanding (MOU) with the Kingdom of Bahrain to acquire up to a 26 percent equity stake in Alba, a Bahrain company that owns and operates a 512,000 tonne aluminium smelter
and which is currently adding a fifth pot line which, when completed in 2005, will bring its capacity to 819,000 tonnes per year. The MOU is designed to accelerate plans for an additional expansion, a sixth line with an additional 307,000 tonnes
capacity. Alba has been a major AWAC customer for more than 30 years and the Alba investment by Alcoa would secure for AWAC sales of 2.2 million tonnes of alumina. Alcoa and Alumina are evaluating whether AWAC should participate in the acquisition
of the equity stake.



The current alumina production capacity
of AWAC is approximately 13.4 million tonnes per annum, comprised of Australian operations - 7.9 million tonnes; Point Comfort - 2.3 million tonnes; San Ciprian - 1.3 million tonnes; Suriname - 1.0 million tonnes; Jamaica - 0.6 million tonnes and
Brazil - 0.3 million tonnes. In the year ended December 31, 2003, AWAC produced approximately 13.1 million tonnes of alumina, compared with approximately 12.3 million tonnes of alumina the previous year, an increase of 6% predominately achieved by
returning Point Comfort to full capacity and capacity creep at other refineries. Record alumina production was achieved at Pinjarra, Wagerup, Sao Luis, Suralco and Jamalco refineries.



Aluminium production increased by approximately 1.5% in 2002 to 384,000 tonnes, after record production was achieved from
both Point Henry and Portland.



- 18 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



ALCOA WORLD ALUMINA AND CHEMICALS - SELECTED FINANCIAL DATA(1)

(Total of AWAC Entities - Figures
reflect 100% of AWAC)(2)



|                              |  |                            |  |                            |  |                            |  |                            |  |                           
|----------------------------- |  | -------------------------- |  | -------------------------- |  | -------------------------- |  | -------------------------- |  | --------------------------
|                              |  | Year EndedDecember 31,2003 |  | Year EndedDecember 31,2002 |  | Year EndedDecember 31,2001 |  | Year EndedDecember 31,2000 |  | Year EndedDecember 31,1999
|                              |  |                            |  |                            |  | (A$ million)               |  |                            |  |                           
|Financial Results             |  |                            |  |                            |  |                            |  |                            |  |                           
|Net Sales Revenue             |  | 5,089.8                    |  | 5,281.3                    |  | 6,088.4                    |  | 6,294.8                    |  | 4,876.7                   
|Depreciation and Amortization |  | 261.6                      |  | 287.3                      |  | 319.7                      |  | 303.8                      |  | 268.8                     
|Profit before Tax             |  | 957.5                      |  | 1,017.8                    |  | 1,329.2                    |  | 1,629.3                    |  | 875.6                     
|Profit after Tax              |  | 683.3                      |  | 667.5                      |  | 795.6                      |  | 1,074.9                    |  | 637.9                     



|                      |  |                       |  |                       |  |                        |  |                         |  |                       
|--------------------- |  | --------------------- |  | --------------------- |  | ---------------------- |  | ----------------------- |  | ----------------------
|                      |  | As atDecember 31,2003 |  | As atDecember 31,2002 |  | As at December 31,2001 |  | As at December 31, 2000 |  | As at December 31,1999
|                      |  |                       |  |                       |  | (A$ million)           |  |                         |  |                       
|Balance Sheet Summary |  |                       |  |                       |  |                        |  |                         |  |                       
|Current Assets        |  | 1,142.6               |  | 1,441.2               |  | 1,739.3                |  | 1,694.9                 |  | 1,444.2               
|Current Liabilities   |  | 1,020.2               |  | 1,093.2               |  | 1,493.5                |  | 1,125.7                 |  | 791.3                 
|Total Assets          |  | 5,349.9               |  | 5,964.4               |  | 6,164.4                |  | 6,099.3                 |  | 5,393.3               
|Net Assets            |  | 3,379.4               |  | 3,718.2               |  | 3,429.2                |  | 3,764.4                 |  | 3,206.7               



|                                |  |                            |  |                            |  |                            |  |                            |  |                           
|------------------------------- |  | -------------------------- |  | -------------------------- |  | -------------------------- |  | -------------------------- |  | --------------------------
|                                |  | Year EndedDecember 31,2003 |  | Year EndedDecember 31,2002 |  | Year EndedDecember 31,2001 |  | Year EndedDecember 31,2000 |  | Year EndedDecember 31,1999
|Production                      |  |                            |  |                            |  |                            |  |                            |  |                           
|Alumina (thousands of tonnes)   |  | 13,074                     |  | 12,312                     |  | 11,905                     |  | 13,252                     |  | 12,615                    
|Aluminium (thousands of tonnes) |  | 384.4                      |  | 378.2                      |  | 374.2                      |  | 344.0                      |  | 311.5                     



|(1) | Based upon audited financial statements prepared in accordance with US GAAP.
|--- | ----------------------------------------------------------------------------



|(2) | Alumina Limited holds 40% of AWAC.
|--- | ----------------------------------



AWAC OPERATIONS



|i) | Smelter-Grade Alumina and Primary Aluminium
|-- | -------------------------------------------



Australia



In Australia, AWAC partners own 100% (2002: 99.25%) of Alcoa of Australia which operates integrated aluminium facilities, including mining, refining and
smelting facilities. In calendar year 2003, the Australian operations produced 7.9 million tonnes of alumina (2002 7.8 million tonnes) and 384,000 tonnes of aluminium (2002: 378,000 tonnes).



Alumina produced in Australia by AWAC is shipped either to its smelters at
Point Henry and Portland in Victoria, Australia or to overseas customers, principally in South Africa, the Middle East, South East Asia, Russia, China, South America and North America. Bauxite is sourced from its 100% owned Huntly and Willowdale
bauxite mines, each located in the Darling Ranges south of Perth, which supply AWACs three alumina refineries in Western Australia. Bauxite is transported by rail to the refinery at Kwinana, or by overland conveyor to the Pinjarra and Wagerup
refineries. The Kwinana, Pinjarra and Wagerup refineries have capacities of 2.0 million tonnes, 3.5 million



- 19 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



tonnes and 2.3 million tonnes, respectively. On February 6, 2004, AWAC announced that environmental approval has been received for a A$440 million efficiency
upgrade to the Pinjarra Refinery that would increase production to 4.2 million tonnes. Work on the project, began in early 2004, with the construction phase expected to be completed by the end of 2005. In May 2004, AWAC announced that it will
undertake comprehensive public consultation about a third production unit of over 2 million tonnes at its Wagerup refinery. The cost is estimated to be approximately A$1.5 billion (US$1.1 billion). AWAC has not yet determined how this potential
project might be funded.



A storage and loading facility which
handles the majority of shipping for the Pinjarra and Wagerup refineries is located at the port of Bunbury near Wagerup. Some Pinjarra production is also shipped through the shipping facility at Kwinana, south of Perth.



The rights to operate bauxite mining and alumina refining operations in
Western Australia are provided under agreements with the State Government of Western Australia. The mining leases granted by the Western Australian Government expire in 2044.



AWACs present sources of bauxite are sufficient to meet the expected requirements of its alumina refining operations
for the foreseeable future, based on current production rates and refining capacity.



The bauxite from the Darling Ranges, while low in alumina grade, is also low in reactive silica. This results in low consumption of caustic soda which in turn contributes to lowering costs of production.



Alumina refining is energy intensive and AWACs refineries in
Australia use natural gas as their energy source. The natural gas requirements of the refineries are supplied primarily under a contract with parties comprising the North West Shelf Gas Joint Venture. The initial contract was scheduled to expire in
2005 and imposed minimum purchase requirements. In December 1997, these arrangements were extended through a renegotiation of the initial contract and the signing of a new contract running from 2005 through to 2020.



Alcoa of Australia transmits the gas for its alumina refinery power needs
through Epic Energy, the owner of the Dampier to Bunbury Natural Gas Pipeline. The pipeline was placed into the hands of receivers on 28 April 2004 after Epic Energy failed to meet a deadline on the repayment of $1.85 billion debt. Before the
pipeline was put into receivership, EPIC Energy had been attempting to sell the pipeline after a decision of the Western Australian Economic Regulation Authority: Gas Division to impose a limit on the gas transmission tariff that EPIC Energy was
able to charge. Alcoa of Australias contract is not subject to the tariff rates set by the Regulator.



AWAC also produces primary aluminium in Victoria, Australia. The aluminium assets include an aluminium smelter at Point Henry, near Geelong, and a 55%
controlling interest in an aluminium smelter at Portland. AWACs interest in the Portland smelter increased from 45% to 55% in 2000 following the acquisition of Eastern Aluminiums 10% interest in the smelter. The Portland smelter has an
annual production capacity of 352,000 tonnes of aluminium and is approximately 240 kilometres west of Geelong. Point Henry has an annual capacity of some 185,000 tonnes.



Electricity for the Portland smelter is purchased under a 30 year electricity supply agreement that expires in 2016. The
tariff applicable under the agreement has both a base component, which reflects the cost of power generation and transmission, and a flexible or adjustable component, which provides for adjustments to the base tariff rate based on the LME price for
aluminium. The agreement provides a discount for interruption and a demand charge equal to about two thirds of the total tariff which may be payable whether or not energy is taken.



Most electricity for the Point Henry smelter is supplied by Alcoa of Australias generating station at Anglesea, with
the balance required available under a 30 year electricity supply agreement that expires in 2014. The rates under that agreement change with the LME price of aluminium (similar to the Portland power arrangement described above). The contract
includes a standby demand charge for the purchase of electricity for periods when the Anglesea generating station is not operating. An additional energy charge is payable when this power is actually used.



- 20 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



United States



Point Comfort Refinery



AWAC owns 100% of an alumina refinery at Point Comfort in Texas. The facility is located approximately 210 kilometres south of Houston on Port Lavaca Bay.
Point Comforts port facilities are linked with the Gulf of Mexico via a 35 kilometre channel. The Point Comfort refinery, which was completed in 1960 and expanded in 1997, has a nominal capacity of 2.3 million tonnes per annum. In February
2001, AWAC announced the immediate reduction of the operating rate of Point Comfort to between 1.6 to 1.9 million tonnes per year. This rate was further reduced in the second half of 2001, to an operating rate of 0.7 to 0.8 million tonnes per year,
in response to weak markets and high costs. During 2002 the production rate returned to a rate of 1.8 million tonnes per annum. In March 2003, AWAC announced that Point Comfort would return to producing at full capacity (2.3 million tonnes per
annum).



Bauxite for the refinery is sourced from an AWAC
affiliate in Guinea and is also purchased in the spot market from Jamaica and French Guiana. Point Comfort uses gas-fired cogeneration facilities to supply process heat and power to the refinery, and gas is purchased from local suppliers using a
mixture of short and medium-term contracts.



The Point Comfort
refinery produces both smelter-grade alumina and alumina hydrates (chemical-grade alumina). Most of the refinerys smelter-grade alumina is sold to Alcoas smelters in the United States.



The Point Comfort refinery is part of an area which has been declared a US
national superfund site. Alcoa has agreed to undertake a remedial investigation and feasibility study at the site in conjunction with the US Environmental Protection Agency to determine rehabilitation requirements. Alumina is indemnified
by Alcoa against environmental liabilities in relation to activities undertaken at Point Comfort prior to January 1, 1995. This indemnity is specifically extended to the contamination that gave rise to the Point Comfort sites
superfund status. Alcoa has also agreed that it will be 100% responsible for remediating the contamination, as well as natural resource damages, which gave rise to the placement of the site on the National Priorities List and the entry
of the Administrative Order on Consent issued on March 31, 1994, and any subsequent Order issued relating to this contamination.



Republic Of Guinea



Halco Mining Bauxite Operation



AWAC has a 43% interest in a bauxite company, Halco (Mining) Inc. (Halco) after incorporating Reynolds Metals Companys 6% interest in Halco into AWAC in December 2002. Halco is an international consortium that owns 51% of
Compagnie des Bauxites de Guinée (Compagnie Guinée), the manager of a number of bauxite mines at Boké in Guinea, West Africa. The Republic of Guinea owns the remaining 49% of Compagnie Guinee.



The Boké bauxite mines are located north-west of Conakry in Guinea.



The shareholders of Halco initially take bauxite in proportion
to their equity positions under take-or-pay contracts. Long-term agreements to purchase bauxite mined by Compagnie Guinee expire after 2011. AWAC also purchases bauxite from other Halco equity holders.



In May 2004, AWAC announced the signing of a memorandum of understanding
(MOU) with Alcan to assess the feasibility of developing jointly a 1.5 million metric tonne per year (mtpy) alumina refinery in the Republic of Guinea, West Africa



- 21 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



Suriname



Suralco



In Suriname, AWAC owns the Suriname Aluminum Company (Suralco). Suralco began operations in 1916 and currently has interests in an alumina refinery at Paranam, bauxite mines in north east Suriname and
south of Paranam and hydro-electric facilities at Afobaka Lake.



The 1.9 million tonnes-per-annum alumina refinery at Paranam, in the north of Suriname, was constructed in 1968 and sources bauxite from mines in Suriname. The refinery is owned by a joint venture held 55% by Suralco and the remainder by an
affiliate of BHP Billiton plc (BHP Billiton). Suralco acts as manager of the joint venture and operates the refinery. The joint venture parties share alumina production from the refinery in proportion to their shareholdings and are
separately responsible for the marketing of their share of this production.



The Moengo mine in north east Suriname is 100% owned by Suralco. Approximately 1.5 million tonnes of bauxite are sourced each year from the Moengo mine. Bauxite is barged approximately 200 kilometres to the refinery
at Paranam. Bauxite reserves at the Moengo mine are sufficient, at least until 2006, at current production levels.



The Accaribo mine joint venture is located south of Paranam in Suriname. Suralco owns a 26% minority interest in the Accaribo mine. BHP Billiton is the
majority owner and manages the mine on behalf of the joint venture. Bauxite is trucked to the refinery at Paranam. When the Accaribo and Moengo mines are depleted, the joint venturers expect to begin bauxite mining at a site adjacent to the Accaribo
mine and from the Nassau Mountains.



In January 2003, AWAC and
BHP Billiton signed a Memorandum of Understanding (MOU) with the government of Suriname providing for (i) continuation and expansion of mining and refining activities in eastern Suriname and (ii) various exploration and other activities over the
next two years relating to the feasibility of bauxite and alumina investments in western Suriname. Under the MOU, AWAC and BHP Billiton have exclusive rights in western Suriname and have committed to spend up to US$8.5 million over 21-25 months to
explore this opportunity, shared 55% (AWAC) and 45% (BHP Billiton). The MOU provides that AWAC and BHP Billiton will negotiate an investment agreement with the Suriname government.



AWACs share of alumina produced for 2003 was more than 1.1 million tonnes. In August 2003, AWAC announced a 250,000
tonne expansion at the Paranam refinery (AWACs share 55%). The expansion will lift annual production by 12% to 2.2 million tonnes. The US$65 million expansion is expected to be completed by the first quarter 2005.



AWAC and BHP Billiton have also signed an agreement extending the terms of
their existing joint venture agreement on bauxite mining and alumina refining in eastern Suriname to 2025.



Hydro-electric facilities at Afobaka Lake in Suriname are also operated by Suralco. The plant was constructed pursuant to the Brokopondo Agreement between
Suralco and the Suriname Government which was signed in 1958. The facilities supply electricity to the alumina refinery at Paranam and sell electricity to the Suriname Government.



Jamaica



Jamalco Refinery



AWAC owns Alcoa Minerals of Jamaica LLC, a US based company which holds a joint venture interest in Jamaica. The investment comprises a joint venture
called Jamalco which is owned 50% by AWAC and 50% by Clarendon Alumina Production Limited (Clarendon), which is a Jamaican Government company. The joint venture is governed by agreements with the Jamaican Government which were finalized in 1988.
Jamalco owns and manages bauxite mines, an alumina refinery and port facilities. Each joint venturer is responsible for marketing its share of production



- 22 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



The bauxite mines that feed the refinery are located 40 kilometres to the north of the refinery in
the Mocho Mountains. The bauxite mining rights are owned by Jamalco. The bauxite mined in the Mocho Mountains is transported to the refinery on a railway owned by the joint venture. Jamalco also manages a port at Rocky Point, located south of the
alumina refinery. The port is connected to the refinery by rail. The bauxite is sourced from leases in Harmons Valley and the Manchester Plateau. The mining operations on those leases are being undertaken jointly by AWAC and Alpart, a Jamaican
bauxite mining joint venture owned by Kaiser Aluminium (65%) and Hydro Aluminium of Norway (35%) with mining activity carried out by a contractor on behalf of the joint venture.



Jamalcos alumina refinery, completed in 1972, is located 72 kilometres west of Kingston. The refinerys nominal
capacity is 1.25 million tonnes per annum after completion of the 250,000 tonne expansion in November 2003. The completion of the expansion, was part of an agreement to invest US$115 million to expand the refinery and remove the nearly 30-year-old
levy on bauxite from Jamalco. The removal of the levy, along with the expansion, is expected to lower costs at Jamalco by approximately 30%.



The refinery produces smelter grade alumina, with AWACs share of production for 2003 in line with production for 2002. Energy for the refinery is
provided by oil powered turbines. Any surplus power produced is sold into the Jamaican public electricity grid and the refinery can draw power from the grid if necessary. AWAC is currently investigating the opportunity for a further 1.4 million
annual tonne expansion of Jamalco



Brazil



Abalco



Abalco SA (Abalco), an AWAC entity in Brazil, is a participant (18.9%) in a consortium that owns the Alumar alumina refinery
at São Luis in north eastern Brazil. The other consortium participants are Alcoa Aluminio S.A. (35.1%), BHP Billiton Metais SA (36%) and an affiliate of Alcan Aluminio Do Brazil SA (10%). Alcoa Aluminio is the operator of the consortium which
is managed on a production and cost sharing basis. Abalco has special rights in any expansion of the Alumar refinery.



The refinery has a nominal production capacity of 1.3 million tonnes of smelter grade alumina per annum. Investigation is currently underway to expand the
refinery by 2.0 million tonnes per annum. Approximately half of the output is consumed at an adjacent smelter, with the remainder exported to third party customers. The major source of energy for the refinery is low sulphur steaming coal purchased
from Colombia and Venezuela.



The consortium has long term
bauxite purchase contracts with MRN which has mines located at Trombetas within the State of Para in northern Brazil. Abalco holds a 9.6% interest in MRN after incorporating Reynolds Metals Companys 5% interest in MRN into AWAC in December
2002. The remaining interest in MRN is jointly owned by affiliates of Alcan, Companhia Brasileira de Aluminio, Companhia Vale do Rio Doce, BHP Billiton Plc and RC Norsk Hydro. MRNs mines produce approximately 14.0 million tonnes of bauxite
each year. Bauxite is transported approximately 1,400 kilometres by ship to the refinery.



A maritime terminal owned by the consortium and equipped with an alumina ship loader and bulk materials ship unloader is situated adjacent to the refinery. These facilities are used to ship both bauxite and steaming
coal into the refinery and alumina out.



There was an increase
in AWACs share of alumina produced for 2003. Production in 2001 was affected by energy rationing caused by drought conditions affecting hydro-electric power generation.



Spain



San Ciprian Refinery



AWAC owns and operates the San Ciprian alumina refinery, which is located on the eastern coast of Spain. AWAC acquired the refinery in February 1998 from
Alcoa for US$113 million following Alcoas acquisition of the



- 23 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



principal alumina and aluminium assets of Spains state owned aluminium producer, Industria Espanola del Aluminio (Inespal).



The San Ciprian refinery was commissioned in 1980. It has an annual
production capacity of 1.3 million tonnes, having completed a 0.2 million tonne expansion at a cost of US$22.2 million in March 2001. Unlike AWACs other refineries, San Ciprian employs a high temperature and pressure technology. Bauxite for
the refinery is shipped from the Boké mine in Guinea. Steam for the refinery is generated by the plants own oil fired boiler, with electrical power coming from the national grid.



Approximately 70% of alumina produced at the San Ciprian refinery is
metallurgical grade, which is supplied primarily to Alcoas smelters in Spain. The balance of production is non-metallurgical grade alumina that is largely sold as commodity hydrated alumina to chemical manufacturers. A small portion of the
non-metallurgical grade alumina is also sold as calcined aluminas. The location of San Ciprian within the European Union allows commodity grade alumina to be sold within Europe without attracting the relatively high tariffs imposed on non-European
suppliers.



|ii) | Alumina Specialty Chemicals
|--- | ---------------------------



AWAC announced on 27 February 2004 that it had completed the sale of its specialty chemicals to two private equity firms led by Rhone Capital LLC for
approximately US$342 million, which includes the assumption of debt and other unfunded obligations resulting in a profit after tax to Alumina of approximately A$15 milllion. The sale process was previously announced by AWAC in January 2003 as part
of its continual review of its operations to ensure they meet performance targets and fit within long term strategy.



The Specialty Chemicals business consists of 11 operating facilities in six countries around the world. In addition to facilities in North America,
Europe, Japan, and an equity stake in Australia, Specialty Chemicals operates production and processing centers in China and India. Products are sold into a wide range of end markets including the steel, cement, petrochemical, plastics, automotive,
non-ferrous metal production, ceramics, carpet manufacturing and electronics industries. Specialty Chemicals had annual revenues of approximately US$360 million in 2003, and employed approximately 800 people.



|iii) | Shipping
|---- | --------



Alcoa Steamship Inc.



AWAC owns and operates a shipping operation that provides transportation services to AWACs alumina business and to third parties, including Alcoa. Operating both owned and chartered vessels, the shipping business transports dry and
liquid bulk cargoes, including bauxite, alumina, caustic soda, fuel oil, petroleum coke and limestone.



AWAC owns seven combination carriers. AWAC operates two large carriers between Australia and the United States carrying alumina to smelters on the west
coast of the United States and backfilling with raw materials such as petroleum coke and caustic soda for the Australian operations. AWAC operates three smaller vessels in the Caribbean carrying alumina from Suriname and Jamaica to New Orleans, on
the south coast of the United States or Baltimore on the north coast of the United States. These ships are also back filled with raw materials for the Suriname and Jamaican operations. AWAC also charters carriers for the transport of bauxite,
alumina and aluminium (for both AWAC and Alcoa) between its various global operations. AWAC also operates two 30,000 tonne vessels which transport alumina from the West Australian refineries to the Victorian smelters



|iv) | Markets and Competition
|--- | -----------------------



The alumina market is competitive, with many active suppliers and commodity traders, although in recent times there has been significant industry
rationalisation due to the mergers of Alcoa/Inespal, Alcoa/Reynolds Metal



- 24 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



Company. Alcan/Algroup and Alcan/Pechiney. The majority of products are sold in the form of smelter grade alumina with about 10% of total alumina production
being used to make alumina based chemicals.



Alumina supply is
critical to aluminium smelter operations and, although price is important, reliability of supply, quality and delivery are key factors in contract negotiations. Contracts for smelter grade alumina are usually for a multi-year time period. Pricing
mechanisms have changed over time from primarily fixed amounts and terms to where a substantial portion of present day contracts are related wholly or in part to the price of aluminium traded on the LME. Nonetheless, the average price for alumina is
less volatile than that for aluminium metal.



Markets



AWAC sells approximately 40% of its alumina production to Alcoas
primary smelting group, with remaining sales usually under long term contracts which are referenced to the LME aluminium price. A small percentage of production is sold into the spot alumina market.



Approximately 90% of world production of alumina is sold under long-term
contracts which typically have alumina prices based on a percentage of the recent aluminium metal prices. The spot market for alumina is limited, with prices tending to be volatile. The spot alumina market has a limited impact on the average
realised alumina prices for AWAC.



The price paid for the AWAC
production by Alcoa smelters (excluding the Alumax smelters acquired by Alcoa in 1998) is determined by applying the weighted average of:



| |  | the prices received by AWAC from the sale of alumina to unrelated third parties; and
| | - | ------------------------------------------------------------------------------------



| |  | the contract price paid by the Alumax smelters which has been determined as if the Alumax smelters were still unrelated to Alcoa.
| | - | ---------------------------------------------------------------------------------------------------------------------------------



Alumina produced in Australia by AWAC is shipped to its primary aluminium
smelters at Point Henry and Portland in Victoria, or to overseas customers, principally in South Africa, the Middle East, South East Asia, Russia, China, South America and North America.



Employees



At the end of 2003, AWAC had approximately 8,140 employees in its locations compared with approximately 8,480 in 2002 and 9,200 in 2001. The number of
employees by segment was



|                  |  |       |  |       |  |      
|----------------- |  | ----- |  | ----- |  | -----
|                  |  | 2003  |  | 2002  |  | 2001 
|Alumina           |  | 5,950 |  | 6,300 |  | 7,000
|Aluminium         |  | 1,130 |  | 1,150 |  | 1,100
|Chemicals & Other |  | 1,060 |  | 1,030 |  | 1,100



Regulatory and Environment



The possibility exists that new legislation or
regulations may be adopted that may materially adversely affect AWACs mining operations or AWACs cost structure. New legislation or regulations, or more stringent interpretations or enforcement of existing laws and regulations, may also
require AWACs customers to change operations or incur increased costs. These factors and legislation, if enacted, could have a material adverse effect on AWACs, and hence Alumina Limiteds, financial condition and results of
operations.



Governments extensively regulate AWACs
mining operations. National, state and local authorities in Australia and other countries in which AWAC operates regulate the mining industry with respect to matters such as employee health and safety, permitting and licensing requirements and
environmental compliance, plant and wildlife protection, reclamation and restoration of mining properties after mining is completed, and the effects that mining has on surface and groundwater quality and availability. Numerous governmental permits
and approvals and leases are required for



- 25 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



AWACs mining operations. The costs, liabilities and requirements associated with these regulations may be costly and time-consuming and may delay
commencement or continuation of exploration, expansion or production operations. Failure to comply with the laws regulating AWACs businesses may result in sanctions, such as fines or orders requiring positive action by AWAC which may involve
capital expenditure or the curtailment of operations. This relates particularly to environmental regulations.



At present, Australia does not have in place regulatory requirements to reduce greenhouse gas emissions. However, it is possible Australia will ratify the
Kyoto Protocol, which would require Australia to limit greenhouse gas emissions to 8% over 1990 levels by 2008-2012. Even if the Kyoto Protocol is not ratified, the Australian Government may still introduce regulations to reduce greenhouse gas
emissions to pursue achievement of the Kyoto Protocol targets. To date, the Government has, however, given no indications as to the nature or timing of any such regulations.



At present, it is not possible to predict the impact that future government regulation may have on Alumina Limited. It is
possible, however, that it may increase AWACs capital expenditure and production costs, or may impact on methods of production, depending on the nature of the regulatory requirements introduced. Alumina Limited cannot assess the nature,
magnitude or timing of such costs, including whether these costs would have a material impact on the financial performance of AWAC and consequently, Alumina.



In February 2002, Dr Mark Cullen, Chief Medical Officer of Alcoa and Professor of Medicine and Public Health at Yale University, produced a report on the
health issues associated with the Wagerup refinery. Dr Cullen concluded that, based on the known effects of plant emissions and existing data and patterns of existing data, the threat of serious injury from the refinery is negligible. Dr Cullen
further stated that there has been no long-term health risk to the vast majority of Wagerup employees and, when emissions have been reduced as per Alcoa of Australias emission reduction programmes, short-term irritation and other chemical
sensitivities should also be negligible. Concerns have been expressed by employees and nearby residents of the Wagerup and Kwinana refineries regarding the effects of emissions from the refineries on their health and the local environment.



Alcoa of Australia has stated publicly that there has been
extensive monitoring and analysis of emissions from the Wagerup liquor burner, which has confirmed that it operates below the emission levels prescribed by established health and safety and environmental limits. The results of emissions monitoring
are independently audited.



Alcoa of Australia has also
publicly advised that emissions from the liquor burner at Wagerup have been reduced by more than 95% since it was installed in 1996. In response to community concern, Alcoa of Australia proposed and agreed with the Western Australian Government to
lower emission levels as a condition of its licence to operate. These lower levels were applicable from the end of June 2002. A capital expenditure programme was substantially completed in June 2002 in connection with achieving these reduced
emission levels, and Alcoa of Australia has also embarked on a detailed emission study.



In 2001, an independent forum of medical practitioners, convened by the Western Australian Department of Health and headed by Professor DArcy Holman, considered the health issues associated with the emissions at
the Wagerup refinery. Its report concluded that although a medical problem existed and there appeared to be an association with the refinery, the exact cause of the problem could not be identified. It noted that the refinery operated within all the
regulated safety limits of emissions and the conditions of its licence at the time.



Alcoa of Australia has acknowledged that the emissions from the Wagerup refinery have short-term health effects, such as nasal irritation. Nine current and former employees have reported suffering continuing longer
term health impacts, including five with a condition known as multiple chemical sensitivity. No other long-term health effects have been reported by employees or nearby residents of Wagerup.



A programme to rehabilitate Alcoa of Australia employees who feel they have
been impacted by odours or emissions from the Wagerup refinery has been implemented. Alcoa of Australia has also commenced a programme of acquiring property surrounding the Wagerup refinery from those who feel they may be affected by the
refinerys operations and has established a community consultation programme to serve as a forum for closer liaison between Alcoa of Australia and the local community.



- 26 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



In April 2002, the Healthwise Cancer and Mortality Study Interim Report (the Interim Healthwise
Report) was released. The Interim Healthwise Report contains the interim findings of a long-term health study of Alcoa of Australia employees jointly conducted by Monash University and The University of Western Australia. Preliminary results
of the study found that overall mortality rates were significantly lower amongst Alcoa of Australia employees than the general population, although the incidence of respiratory cancer and melanoma was slightly higher than the general population.
However, the Interim Healthwise Report emphasised the preliminary nature of its findings and the small number of employees involved in the study, and noted that the study is ongoing. The independent investigators and the advisory board conducting
the Healthwise study have publicly expressed concern that the preliminary results of the study have been misinterpreted by third parties and stated that further research is required before strong conclusions can be reached.



|C. | Organisational Structure
|-- | ------------------------



The Alumina Group consists of the parent company, Alumina Limited and its subsidiaries. Alumina is incorporated and listed in Australia. Aluminas sole
continuing businesses which are operated through AWAC include bauxite mining, alumina refining and aluminium smelting operated through the AWAC joint venture with Alcoa, Inc (Alcoa). While not in itself a legal entity, AWAC is the
reference term given to an unincorporated joint venture commenced on January 1, 1995 by Alumina and Alcoa Inc (Alcoa) in combining their respective bauxite, alumina and alumina-based chemicals businesses and interests. The assets of the
joint venture are held 40% by the Alumina Group and 60% by Alcoa, with the Alumina Groups interests held through Alumina International Holdings Pty Ltd and Alcoa of Australia Ltd as described below.



| |  | Alumina International Holdings Pty Ltd  Incorporated in Australia this company holds all entities in the Alumina Groups AWAC joint venture (except for Alcoa of
Australia Ltd, see below) through its indirect 40% interest in each of Alcoa World Alumina LLC, Alcoa Caribbean Holdings LLC, Alumina Espanola SA, Abalco SA and Alcoa Chemie Nederland BV (sold in February 2004 as part of the Alumina Specialty
Chemical Sale- refer Item 4B(ii)) and Alcoa Chemie GMBH (sold in February 2004 as part of the Alumina Specialty Chemical Sale- refer Item 4B(ii)). It is wholly owned by Alumina.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Alcoa of Australia Ltd  Incorporated in Australia, and 40% (2002: 39.25%) owned by Alumina, this company is a significant entity in the Alumina Groups AWAC joint
venture, with integrated bauxite mining, alumina refining and aluminium smelting facilities in Australia.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The AWAC entities assets include the following interests:



| |  | 100% (2002: 99.25%) of the bauxite mining, alumina refining, and aluminium smelting operations of Alcoa of Australia;
| | - | ---------------------------------------------------------------------------------------------------------------------



| |  | 100% of the refinery assets at Point Comfort, Texas, United States (Point Comfort);
| | - | -------------------------------------------------------------------------------------



| |  | various interests in mining, refining and smelting assets in Suriname ;
| | - | -----------------------------------------------------------------------



| |  | a 50% interest in mining and refining assets in Jamaica;
| | - | --------------------------------------------------------



| |  | an 18.9% interest in the São Luis refinery in Brazil and its 9.6% interest in the bauxite mining operations of Mineracao Rio Do Norte, an international mining consortium.
AWAC also owns disproportionate expansion rights to the São Luis alumina refinery;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | 100% of the alumina-based chemicals businesses in the United States, the Netherlands, Germany, and major interests in businesses in Japan and India which were divested on 27
February 2004.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | 100% of the refinery and alumina-based chemicals assets at San Ciprian, Spain;
| | - | ------------------------------------------------------------------------------



| |  | A 43% interest in Halco, a bauxite consortium that owns a 51% interest in Compagnie Guinée; and
| | - | -----------------------------------------------------------------------------------------------



| |  | 100% of the bauxite and alumina shipping operations (Alcoa Steamship).
| | - | ------------------------------------------------------------------------



- 27 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



In December 2003, Alumina increased its interest in Alcoa of Australia to 40% (and AWACs
interest to 100%) through purchasing QBE Limiteds 0.75% interest by issuing 18,372,881 shares in Alumina.



|D. | Property, plant and equipment
|-- | -----------------------------



Aluminas property, plant & equipment consist of various pieces of office furniture and equipment.



|ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|------- | --------------------------------------------



|A. | Operating Results
|-- | -----------------



The following discussion of Company performance uses financial data prepared using Australian GAAP. The differences between US GAAP and Australian GAAP
are discussed in Item 3A and outlined in Note 35 to the Consolidated Financial Statements. The critical accounting policies adopted by Alumina are described below.



Demerger



In November 2001, WMC Limited announced its proposal to demerge into two separate resource companies, Alumina Limited and WMC Resources Ltd. The decision
to demerge followed Alcoas conditional proposal to acquire WMC Limiteds shares, which required Board recommendation. As this proposal could not be reconciled with independent valuations, the Board could not recommend Alcoas
proposal to shareholders. Pursuant to the demerger, the Company distributed to its shareholders all the outstanding ordinary shares in WMC Resources Ltd that it previously held. Through a series of internal transactions prior to the consummation of
the demerger, WMC Resources Ltd acquired the Companys copper-uranium and fertilizer businesses, two wholly-owned finance vehicles, WMC Finance Limited and WMC Finance (USA) Limited, and exploration and development interests other than those
relating to AWAC. These transfers occurred at the fair value of the assets and businesses transferred. WMC Resources Ltd also held the nickel businesses directly prior to the demerger and these businesses are now part of its group. As a result, upon
consummation of the demerger, the principal assets and businesses that the Company holds consist of its interests in AWAC, including exploration and development interests associated with AWAC.



The discussion below of operating results and financial review for the
comparative 2003 year has been prepared based on the Companys continuing operations relating to the AWAC venture, as in conjunction with the demerger, WMC Resources Ltd has generally assumed all the assets and liabilities associated with the
businesses that it now holds following the demerger. The asset transfers as part of the demerger will not have an impact on Aluminas Financial Statements from the end of 2002 or beyond, as the assets transferred to WMC Resources Ltd were
transferred at fair market value and the net gain or loss was recognised in Aluminas results in 2002 as part of the discontinuing operations financial performance.



Also in conjunction with the demerger, the Companys debt facilities and borrowings were replaced with new short-term
debt facilities and borrowings, most of which were assumed by WMC Resources Ltd. Alumina retained, however, A$600 million of indebtedness which by December 31, 2003 had reduced to $467 million. The indebtedness is in the form of bilateral short-term
credit facilities with several banks that mature in December, 2004. It is intended that this debt be refinanced during 2004.



Refer further to Section 4A for details in relation to the demerger.



- 28 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



Critical Accounting Policies



Alumina



Given the nature of Aluminas operations, management does not believe there are any critical accounting policies which require the application of
significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. Aluminas significant accounting policies are described in Note 1 to its consolidated financial statements.



AWAC



AWACs significant accounting policies are summarized on pages 5 to 8 in the AWAC Combined Financial Statements. Some
of AWACs accounting policies require the application of significant judgement by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of
uncertainty and are based on AWACs historical experience, terms of existing contracts, managements view on trends in the alumina/aluminium industry and information from outside sources.



Management believes the following critical accounting policies, among others,
affect AWACs more significant judgments and estimates used in the preparation of AWACs consolidated financial statements and could potentially impact AWACs financial results and future financial performance.



AWACs critical accounting policies include those discussed below.



Property, Plant and Equipment  Property, plant
and equipment are recorded at cost. Depreciation is recorded principally on the straight-line method at rates based on the estimated useful lives of the assets, averaging 33 years for structures, and between 5 and 25 years for machinery and
equipment. Gains or losses from the sale of assets are included in other income. Repairs and maintenance are charged to expense as incurred. Interest related to construction of qualifying assets is capitalized as part of construction costs.
Depletion is taken over the periods the estimated mineral reserves are extracted.



Amortization ofIntangibles - Intangible assets with finite useful lives are amortized generally on a straight-line basis over the periods benefited, with a weighted average useful life of 10 years.
Goodwill and intangible assets with indefinite useful lives are not amortized. Prior to 2002, goodwill and indefinite-lived intangible assets were amortized over periods not exceeding 40 years. The carrying values of goodwill and other intangible
assets with indefinite useful lives are tested at least annually for impairment. If it is determined that the carrying value exceeds the fair value, an impairment loss is recognized. While management believes that these estimated asset lives are
reasonable, different assumptions regarding projected commodity prices, production costs and foreign currency exchange rates could materially affect the anticipated cash flows to be generated by the economic lives of the long-life assets, thereby
affecting the rates of amortization.



Environmental
Expenditures - Expenditures for current operations are expensed or capitalized, as appropriate. Expenditures relating to existing conditions caused by past operations, and which do not contribute to future revenues, are expensed. Liabilities are
recorded when remedial efforts are probable and the costs can be reasonably estimated. The liability may include elements of costs such as site investigations, consultant fees, feasibility studies, outside contractor expenses and monitoring
expenses. Estimates are not discounted or reduced by potential claims for recovery. Claims for recovery are recognized when received. The estimates also include costs related to other potentially responsible parties to the extent AWAC has reason to
believe such parties will not fully pay their proportional share. The liability is periodically reviewed and adjusted to reflect current remediation progress, prospective estimates of required activity, and other factors that may be relevant,
including changes in technology or regulations.



Recoverable
value of long-life assets- Long life mining assets are reviewed for impairment annually and when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an asset is deemed impaired, an
impairment loss is measured and recorded based on the fair value of the asset, which generally will be computed using discounted expected future cash flows. While management believes that these



- 29 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



estimates of future cash flow are reasonable, different assumptions regarding projected commodity prices, production costs and foreign currency exchange
rates could materially affect the anticipated cash flows to be generated by the long lived assets, thereby affecting the evaluation of the carrying values of the long-life assets.



General Factors



Aluminas financial and operational performance and prospects are influenced by a number of factors which predominantly result from its 40% interest
in AWAC and the level of debt carried by Alumina Limited.



Alumina Limited currently carries modest debt which is via US dollar denominated 364 day facilities. The amount of interest charged will impact the profitability of Alumina. The level of interest incurred will accordingly be based on the
level of debt carried, interest rates and the impact of A$/US$ exchange rates movements.



Alumina Limiteds 40% share of AWACs continuing operations during the three year period to December 31, 2003 was characterized by a focus upon:



| |  | continuing to match production to market conditions
| | - | ---------------------------------------------------



| |  | expansion of existing operations through brownfield expansions and increasing capacity through operational improvements gained by de-bottlenecking operations and improving
efficiencies;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | continued cost reductions at operations
| | - | ---------------------------------------



The following is a discussion of the key factors which affect AWAC and Aluminas business and financial performance.



Commodity prices



AWAC sells products which are commodities and its financial performance is
significantly influenced by the prices it obtains for these products and, in particular, the LME price of primary aluminium. The price of a commodity is generally determined by, or linked to, the price for the product in question in the world
markets. World commodity prices are subject to changes in supply and demand, and characterized by significant fluctuations. The volatility of commodity prices means that the sales revenues (and absent mitigating factors, profit) generated by sales
of AWAC products, can vary considerably from period to period, even where production levels and costs remain constant.



Fluctuations in the A$/US$ Exchange Rate



The world commodity prices for the products AWAC sells are denominated in, or linked to, US$. By contrast, a significant portion of AWACs costs are
denominated in A$ and Aluminas accounts are prepared in A$. As a consequence, fluctuations in the rate of exchange between the US$ and A$ may have an effect on the financial results of Alumina. Absent mitigating factors such as foreign
currency hedging, an appreciation of the US$ relative to the A$ increases the value of sales revenues in A$ as compared to costs and has a positive impact on profit. A depreciation in the US$ as compared to the A$ decreases the value of sales
revenue in A$ as compared to A$ costs and exerts negative pressure on profit. Alcoa of Australia does contribute the majority of AWACs earnings. However, for those refineries outside Australia, a portion of their costs are denominated in the
local currency and movements in those currencies relative to the US$ will have an effect on the financial results of Alumina.



Production Costs



Changes in AWACs costs have a major impact on its profitability. AWACs mining, refining and smelting operations are subject to conditions
beyond its, or Alumina Limiteds, control that can delay deliveries or increase costs for varying lengths of time.



Certain costs are also affected by government imposts and regulations in countries in which AWAC operates. AWACs costs depend upon efficient design
and construction of mining, refining and smelting facilities and competent operation of those facilities.



- 30 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



Changes to Sales Agreements



Long term supply agreements are in place for varying volumes and tenors. As such, AWACs revenue from existing sales
agreements depends on the outcome of periodic renegotiation of these agreements. The modification or termination of a substantial portion of AWACs sales agreements could change its results and financial performance.



Regulatory Environment



The costs, liabilities and requirements associated with the regulations may
be costly and time-consuming and may delay commencement or continuation of exploration, expansion or production operations. Of particular importance in Australia is the impact of environmental regulations and carbon tax/greenhouse gas regulations.
The possibility exists that new legislation or regulations may be adopted that may materially adversely affect AWACs operations or cost structure.



Political Risk



AWAC operates in a number of countries, some of which have a higher political risk than Australia. Political activities in these countries may be
destabilising and disruptive to AWACs operations. The impact of any such disruption could range from a minor increase in operating costs or taxes to material adverse impact, such as the closure of an operation.



Development of Projects and Production Performance



AWACs ability to sustain or increase its current level of production,
and therefore its (and hence Alumina Limiteds) profits in the medium to long-term, is partially dependent on the development of new projects and on the expansion of existing operations.



Alumina Limiteds Cash Flows



Alumina Limiteds cash flows will be generated primarily from
distributions made by AWAC, by way of dividend or capital return. The Strategic Council determines the timing and magnitude of AWAC dividends and capital returns, subject to the relevant provisions of the AWAC Agreements. Alumina Limited cannot
unilaterally determine AWACs dividend policy or the quantum or timing of dividends to be paid by AWAC. AWAC must distribute by way of dividends, in each financial year, at least 30% of the net income of the prior year of each of the entities
comprising AWAC, unless the Strategic Council agrees by a super majority vote to pay a smaller divided. However, the practice of AWAC, confirmed by the Strategic Council in September 2002, has been to distribute 100% of free cash flow from the AWAC
entities. Alumina expects AWAC to continue this practice while it is consistent with the prudent financial management of AWAC. The distributions made by AWAC to Alumina will be used to fund Aluminas cash outflows. These outflows includes
Alumina corporate costs, borrowings costs and dividend payments.



2003
Performance Compared to 2002



Overview  Alumina
Limited



Aluminas consolidated net profit after tax
from continuing operations was A$236.9 million for the year ended December 31, 2003 compared with A$209.7 million for the year ended December 31, 2002. The higher result is discussed as follows:



Share of net profits of associates using the equity method



Share of net profit of associates increased by $27.8 million
to $244.1 million. Higher US$            sales revenue from the effects of a stronger aluminium market (average LME aluminium price in 2003 of US65 cents per pound versus 2002 average of
US61 cents per pound) coupled with increased sales volumes from increased production (alumina production was up 6.2% from 2002) was partially offset by the impact of stronger A$



- 31 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



(2003 averaged 0.6531 compared with 0.5437 in 2002), higher energy prices and raw material costs on unit cost of production



Revenue from ordinary activities



Revenue from ordinary activities increased by $3.5 million to $4.8 million.
The key points to note are:



| |  | The one-off receipt of $2.4 million guarantee fee in 2003 from WMC Resources Limited in relation to foreign currency and gold hedging transactions undertaken by WMC Resources Ltd
subsidiary WMC Finance Limited with the Union Bank of Switzerland.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $1.1 million higher interest in 2003 as a result of Alumina Limited earning interest on cash held between receipt of dividends and payment of dividends.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------



Expenses from ordinary activities



Expenses from ordinary activities increased by $6.3 million to $12.6
million. The key points to note are:



| |  | Higher costs from the first full year of operating as a stand alone entity.
| | - | ---------------------------------------------------------------------------



| |  | Inclusion of $2.6 million in 2003 in relation to WMC Resources employee stock appreciation plan.
| | - | ------------------------------------------------------------------------------------------------



Borrowing Costs



Borrowing costs increased by $8.1 million to $8.7 million due to interest costs on US$303.0 million borrowings drawdown in December 2002 and the
subsequent further drawdown of US$48.0 million in April 2003.



Income tax credit on ordinary activities



Income tax credit increased by $9.0 million to $9.3 million. The key points to note are:



| |  | tax payments of $3.6 million expensed in 2002 are expected to be recovered following a change in tax legislation and were credited against tax in 2003.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | an overpayment of $0.3 million of tax for the 2002 year was refunded in 2003.
| | - | -----------------------------------------------------------------------------



| |  | deferred tax assets associated with taxable losses of $4.1 million previously not brought to account were accrued in 2003 in anticipation that these losses would offset tax
otherwise payable as a result of the sale of the Specialty Chemical business.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Aluminas net cash inflow from operating activities from continuing operations for 2003 was A$268.5 million, compared to A$272.6 million in 2002. An increase in dividends received from associates was partly
offset by higher payments to suppliers and employees and increases in net borrowing costs and income taxes paid.



Aluminas cash outflow relating to investing activities from continuing operations was A$0.3 million, compared to A$72.9 million in 2002. No
significant cash flows from investing activities occurred during the year. 2002 included payment for the purchase of 6% interest in Halco (A$24.2 million) and for 5% interest in MRN (A$48.7 million).



Aluminas net cash outflow from financing activities for continuing
operations decreased to A$124.2 million, compared to A$223.3 million in 2002. Key changes were:



| |  | dividends paid to the Companys shareholders increased to A$259.6 million from A$199.7 million in 2002; and
| | - | -----------------------------------------------------------------------------------------------------------



| |  | proceeds from the issue of shares increased to A$56.2 million from A$38.5 million in 2002. The shrares were issued on connection with the WMC employee option plan discussed below in
Section 6.E.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | debt drawdown of A$79.2 million (USD48.0 million) compared to net drawdown in 2002 of A$62.1 million
| | - | ----------------------------------------------------------------------------------------------------



- 32 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



Aluminas net assets increased by $170.3M to $1,323.8M. The key points to note are:



| |  | Cash increased by $142.1 million to $165.3 million, for the reasons noted above in the discussion on Aluminas cashflow from operating, investing and financing activities.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Investment in associates decreased by $43.7 million to $1,625.0 million. The reduction in investment is due to the negative impact of $112.0 million from the revaluation of the US
dollar denominated investments in AWAC and the impact of dividends received exceeding Aluminas equity share of profits by $40.1 million offset by the purchase of an additional interest in Alcoa of Australia ($108.4 million). The 0.75% interest
in Alcoa of Australia was acquired by issuing 18,372,881 new shares in Alumina. The acquisition was accounted for based on Aluminas closing price on 12 December of $5.90 (the closing price on the trading day prior to the date when the purchase
was agreed).
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Interest Bearing Liabilities reduced by $67.8 million to $467.0 million. Alumina Limited borrows in US dollars and increased its debt in April 2003 by drawing down a further
US$48million ($79.2 million) of debt. This increase was offset by the impact of the exchange rate movement which reduced debt in Australian dollar terms by $147.0 million.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Aluminas equity increased by $170.3M to $1,323.8M. The key points to note are:



| |  | Issuing of 18,372,881 new shares in Alumina to purchase an additional 0.75% interest in Alcoa of Australia. The acquisition was accounted for based on Aluminas closing price
on 12 December 2003 of $5.90 (the closing price on the trading day prior to the date when the purchase was agreed).
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Exercising of 13,071,920 options (increase in equity by $56.2 million).
| | - | -----------------------------------------------------------------------



| |  | $236.9 million of net profits for 2003
| | - | --------------------------------------



| |  | $28.4 million net exchange difference recognised in equity.
| | - | -----------------------------------------------------------



| |  | Offset by payment of 23.0 cents per share of dividends ($259.6 million).
| | - | ------------------------------------------------------------------------



Overview - AWAC



2003 Performance Compared to 2002 Performance

US GAAP (US$
million)



|                       |  |                |  |               
|---------------------- |  | -------------- |  | --------------
|                       |  | 2002 Full Year |  | 2003 Full Year
|Total Sales            |  |                |  |               
|Third-party sales      |  | 1,940.0        |  | 2,424.8       
|Related party sales    |  | 936.7          |  | 895.8         
|                       |  |                |  |               
|Total Sales            |  | 2,876.7        |  | 3,320.6       
|                       |  |                |  |               
|Net Income (after tax) |  | 363.6          |  | 445.8         
|                       |  |                |  |               



AWACs 2003 sales
revenue of US$3,320.6 million (including sales to parties related to AWAC of US$895.8 million) was 15.4% higher than 2002 sales revenue of US$2,876.7 million (including sales to related parties of US$936.7 million). The principal reasons for the
increase in sales revenue in 2003 was due to a stronger aluminium market (average LME aluminium price in 2003 of US65 cents per pound versus 2002 average of US61 cents per pound) coupled with increased sales volumes from increased production
(alumina production up 6.2% from 2002). Alumina production increased to 13.1 million tonnes (2002: 12.3 million tonnes) due to returning Point Comfort to full capacity in June and capacity creep at other refineries. Record alumina production was
achieved at Pinjarra, Wagerup,



- 33 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



São Luis and Jamalco. Aluminium production increased by 1.7% from 374,000 tonnes in 2002 to 384,000 tonnes in 2003 with record production at both
Point Henry and Portland. The following table shows AWACs production information for the 2002 and 2003 years.



AWAC Historical Production (100%) and LME Aluminium Price



|                                    |  |                |  |               
|----------------------------------- |  | -------------- |  | --------------
|AWAC Production Performance         |  | 2002 Full Year |  | 2003 Full Year
|Alumina Production (million tonnes) |  | 12.3           |  | 13.1          
|Aluminium Production (000 tonnes)  |  | 378            |  | 384           
|LME Aluminium Price (US$/lb)        |  | 0.61           |  | 0.65          



AWACs net income
of US$445.8 million in 2003 represented an increase of 22.6% compared to 2002. The improvement in 2003 was due largely to the price factors discussed above and increased alumina sales volumes. The total costs of sales for 2003 was 16% higher than
2002. This was due to the increased production, increase in the A$/US$ exchange rate, higher raw material, gas and oil prices, and costs incurred to start up additional capacity at Point Comfort.



Aluminium prices rose on the London Metal Exchange (LME) to a 31-month high
of US$0.725/lb in December 2003 and averaged $0.65/lb for the year, an increase of 7% over 2002. The higher aluminium prices reflect an increased demand and a lower US dollar and confidence in global economic growth. LME inventories increased to 1.4
million tonnes at year end. The aluminium price improved in the second half of 2003, averaging US$66.8/lb. The price of alumina for long-term contracts also rose during 2003 due to higher aluminium prices and a tightening in the world-wide balance
between supply and demand. Spot alumina prices rose significantly due to increasing demand, particularly in China, with spot prices at the end of 2003 more than double those of 2002.



Global demand for aluminium (and therefore alumina) continues to be strong. During 2003, the two largest markets for
aluminium  China and the US  both increased aluminium consumption. Chinas economy recorded strong activity in the key areas of building, manufacturing and automotive manufacturing. The outlook for commodity markets is improving for
those metal-consuming sectors which are key markets for aluminium.



External forecasters suggest the world-wide supply demand balance for aluminium will move to a slight deficit in 2004. Consistent with the improving outlook for metal consumption, external forecasters generally expect the alumina supply and
demand balance to remain tight, at least through to 2006. Aluminium prices in 2004 continued to be strong. The alumina market has continued to remain tight in 2004, with spot prices currently in excess of long-term contract prices. Most producers,
including AWAC, sell the bulk of production under long-term contracts. In response to the growth in market demand, AWAC will increase its alumina production in 2004. Increased production will come from the recently completed expansion at the Jamalco
refinery, production at full capacity at Pt Comfort and efficiency gains. However, AWAC will have reduced tonnage available for sale into the spot market this year due to the expiry of an alumina purchase contract which related to the Reynolds
acquisition and divestiture by Alcoa in the year 2000.



AWACs profit will continue to be most sensitive to changes in the aluminium price and the A$/US$ exchange rate.



AWACs net cash inflow from operating activities increased to US$586.0 million, compared to US$516.4 million in 2002. The 13.5% increase in 2003 was
primarily due to higher aluminium and alumina realised prices coupled with increased alumina sale volumes:



Net cash outflow from financing operations increased to US$429.8 million, compared to US$419.5 million in 2002. Key changes were:



| |  | Increase in the amount of dividends paid to partners of US$90.5 million to US$481.5 million resulting from increased profits in 2003.
| | - | -------------------------------------------------------------------------------------------------------------------------------------



- 34 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



| |  | Contribution by partners of capital contribution of US$41.0 million in 2002 from the incorporation into AWAC of a further 5% interest in MRN and a further 6 per cent interest in
Halco. The US$41.0 million is the cash contributed by Alumina Limited for its share of these assets whilst Alcoa contributed the assets.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | These were offset by an increase in the amount of debt by US$51.7 million compared to a decrease in 2002 of US$68.9 million.
| | - | ----------------------------------------------------------------------------------------------------------------------------



Net cash outflow from investing activities increased to US$168.1 million,
compared to US$102.4 million. The increase is due to increased capital expenditure due to the Jamalco expansion in 2003.



2002 Performance Compared to 2001



Overview  Alumina Limited



Aluminas consolidated net profit after tax from continuing operations was A$209.7 million for the year ended December 31, 2002 compared with A$281.4
million for the year ended December 31, 2001. Weakening alumina and aluminium prices were the major contributor to the reduced profits in 2002 offset by the impact in 2001 from AWACs non-recurring write offs and provisions associated with the
refining and chemicals assets of A$88.0 million before tax.



The contribution to profit before tax from AWAC was A$352.9 million, compared to A$476.5 million in 2001. Aluminas net profit after tax included $6.9 million of general administrative costs, being interest ($0.6 million) and overhead
costs ($6.3 million). The interest expense reflects the borrowing costs for Alumina for the period subsequent to the Demerger date of December 11, 2002 to balance date. A substantial portion of the Companys debt that existed prior to the
Demerger was assumed by WMC Resources.



Net cash inflow from
operating activities from continuing operations for 2002 was A$272.6 million, compared to A$373.6 million in 2001. Key factors impacting the net cash flow from operations was the decrease of A$96.0 million in dividends from AWAC to Alumina to
A$281.0 million.



Cash outflow relating to investing activities
from continuing operations was A$72.9 million, compared to no outflow in 2001. Alumina contributed cash for its share of the 6% interest in Halco of A$24.2 million and for the 5% interest in MRN contributed A$48.7 million.



Net cash flow outflow from financing activities for continuing operations
decreased to A$223.3 million, compared to A$328.8 million in 2001. Key changes were:



| |  | dividends paid to the Companys shareholders decreased to A$199.7 million in 2002 from A$396.4 million in 2001; and
| | - | -------------------------------------------------------------------------------------------------------------------



| |  | proceeds from the issue of shares decreased to $38.6 million in 2002 from A$67.6 million in 2001.
| | - | -------------------------------------------------------------------------------------------------



With the demerger of WMC Limited in December 2002, the net assets of Alumina had decreased to A$1,153.5 million from
A$4,844.4 million in 2001. Following the demerger, Alumina Limiteds principal asset is its investment in AWAC offset in part by interest bearing liabilities.



Shareholders equity in 2002 also decreased as a result of the demerger of WMC Limited which involved a return of
capital on demerger of $3.1 billion.



- 35 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



Overview - AWAC



2002 Performance Compared to 2001 Performance

US GAAP (US$ million)



|                       |  |                |  |               
|---------------------- |  | -------------- |  | --------------
|                       |  | 2001 Full Year |  | 2002 Full Year
|Total Sales            |  |                |  |               
|Third-party sales      |  | 2,050.8        |  | 1,940.0       
|Related party sales    |  | 1,070.7        |  | 936.7         
|                       |  |                |  |               
|Total Sales            |  | 3,121.5        |  | 2,876.7       
|                       |  |                |  |               
|Net Income (after tax) |  | 407.9          |  | 363.6         
|                       |  |                |  |               



AWACs 2002 sales revenue of
US$2,876.7 million (including sales to parties related to AWAC of US$936.7 million) was 7.8% lower than 2001 sale revenue of US$3,121.5 million (including sales to related parties of US$1,070.7 million). The principal reason for this decrease in
sales revenue in 2002 was the deterioration in the average aluminium LME price of US$0.61/lb compared to an average LME aluminium price of $US$0.65/lb in 2001. The pricing of alumina sales is linked to LME price of aluminium. Offsetting this, in
part, was higher alumina and aluminium production volumes and some long-term alumina sales contracts that mitigated the effect of the falling LME prices. Alumina production increased by 3.4% to 12.3 million tonnes resulting from the first full year
of expanded production at San Ciprian (220,000 tonnes of extra capacity) and returning to normal production levels at Jamalco after a strike in the fourth quarter of 2001. Aluminium production increased from 373,000 tonnes in 2001 to 378,000 tonnes
in 2002 with record production achieved at Portland in the second half of 2002. The following table shows AWACs production information for the 2001 and 2002 years.



AWAC Historical Production (100%) and LME Aluminium Price



|                                    |  |                |  |               
|----------------------------------- |  | -------------- |  | --------------
|AWAC Production Performance         |  | 2001 Full Year |  | 2002 Full Year
|Alumina Production (million tonnes) |  | 11.9           |  | 12.3          
|Aluminium Production (000 tonnes)  |  | 373            |  | 378           
|LME Aluminium Price (US$/lb)        |  | 0.65           |  | 0.61          



AWACs net income
of US$363.6 million in 2002 represented a decrease of 10.1% compared to its net income of US$407.9 million in 2001. The 2001 result was impacted by the write downs of AWAC refining and chemical assets and associated provisions net of tax of US$64.2
million. Eliminating the effect of these write downs, AWACs operating profit would have decreased by US$108.5 million, or 23.0% in 2002 compared to 2001. The decline in 2002 was due largely to the price factors discussed above offset partially
by increased alumina sales volumes. The total costs of sales for 2002 was similar to 2001 as a result increased production from Jamalco after resolution of the labour dispute offset by increased production from the higher cost facility at Point
Comfort.



Although the aluminium price recovered from the low
of US$0.56/lb achieved in November 2001, factors such as poor market sentiment resulting from sluggish US and European economic growth, a downturn in equity markets, anticipation of higher exports of aluminium production from China and the
increasing level of aluminium stocks prevented the aluminium price breaking through the US$0.66/lb level in 2002. The aluminium market showed



- 36 -



---

##### Table of Contents

LOGO

2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



an improving trend in early 2002, but weakened in response to deterioration in the global economic outlook. This weakness was reflected in lower aluminium
prices in the second half of 2002.



The alumina price received
in 2002 was also lower than 2001 as most of AWACs long term contracts include terms with pricing components linked to LME aluminium prices. Net cash inflow from operating activities for 2002 was US$516.2 million, compared to US$574.7 million
in 2001. The 10% decrease in 2002 was primarily due to lower aluminium prices realized and the resulting impact on alumina prices.



Net cash outflow from financing operations decreased to US$419.3 million, compared to US$481.6 million in 2001. Key changes were:



| |  | Decrease in the amount of dividends paid to partners of US$150.8 million to US$391.0 million resulting from lower profits in 2002 and the inclusion in 2001 of a delayed dividend
from 2000.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Decrease in the amount of debt by US$68.9 million compared to an increase in 2001 of US$60.1 million.
| | - | -----------------------------------------------------------------------------------------------------



| |  | Contribution by partners of capital contribution of US$41.0 million in 2002 from the incorporation into AWAC of a further 5% interest in MRN and a further 6 per cent interest in
Halco. The US$41.0 million is the cash contributed by Alumina Limited for its share of these assets whilst Alcoa contributed the assets.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Net cash outflow from investing activities decreased to US$102.4 million, compared to US$111.5 million. The US$9.1 million lower outflows is due to the
inclusion in 2002 of US$11.0 million of subsidiaries sales of which the main item was the sale of St Croix refinery.



|B. | Liquidity and Capital Resources
|-- | -------------------------------



The ability of Alumina and its subsidiaries to generate cash internally is influenced by the following major factors:



| | (i) | the level of world commodity prices and exchange rates to which AWACs revenue is substantially exposed;
| | --- | --------------------------------------------------------------------------------------------------------



| | (ii) | the level of sales and cost performance by AWAC;
| | ---- | ------------------------------------------------



| | (iii) | the level of dividends received from AWAC; and
| | ----- | ----------------------------------------------



| | (iv) | the level of capital expenditure required by AWAC to develop new projects or maintain or expand existing operations, (refer Item 4 Section B for discussions on the
upgrade/expansions of Pinjarra and Suriname refineries, potential expansions of Wagerup, Sao Luis and Jamalco refineries, potential investment in a refinery in Guinea, and potential acquisition of an interest in the Pingguo bauxite/alumina and
Juruti bauxite assets and the Alba smelter).
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



These factors will continue to influence Aluminas liquidity and capital resources in future years.



In addition, because Alumina is a holding company that does not conduct any material operating businesses, its ability to pay dividends and meet other
obligations is dependent in large part on, and may be limited by, the level of dividends received from its subsidiaries and investments.



AWACs preference is to finance its activities from cash flow of the affiliated operating entities and from borrowings. The AWAC Agreements limit
leveraging to a maximum ratio of debt (net of cash) to total capital of 30% (a super majority vote of the Strategic Council is required to exceed this limit). Alumina expects that AWAC would use its borrowing capacity or available cash flow to meet
its financing needs, such as funds needed for expansion commitments. Should the aggregate annual capital budget of AWAC require an additional contribution from Alumina Limited and Alcoa, the parties contribute their proportionate share subject to
the provisions set out in the AWAC Agreements.



The
upgrade/expansions of Pinjarra and Suriname refineries will be funded from operating cashflows. The use of operating cashflows for the Pinjarra expansion may result in a lower payout of Alcoa of Australia dividends in the



- 37 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



short term. Notwithstanding that, in 2004 Alumina Limited intends that the dividend payout ratio, as a percentage of profits, will be similar to that of last
year, subject to the overall business performance of AWAC and the level of dividends paid to the AWAC partners.



The Companys policy is to distribute to shareholders, to the extent practicable, all fully franked dividends received from AWAC. The Companys
intends utilising dividends received from AWAC entities other than Alcoa of Australia to fund its corporate and financing costs and capital requirements, with any surplus to be returned to shareholders.



Aluminas gross debt at December 31, 2003 was A$467.0 million offset by
cash assets of A$165.3 million. Subsequent to year end Alumina received proceeds from the sale of specialty chemicals and paid a final 2003 dividend of A$115.9 million. AWACs net debt at December 31 , 2003 was US$24.3 million. AWAC operating
cashflow for 2003 was US$586 million.



In relation to the
potential expansions of Wagerup, Sao Luis and Jamalco refineries, AWAC has yet to determine the manner in which they could be funded



Aluminas capital structure is such that it was planned, as part of the demerger, to have $600 million of debt. $600 million of debt, which is
currently in the form of short term bank debt (364 day facilities) that has been extended to December 2004.



Funds generated from continuing operating activities were A$268.5 million for the year ended December 31, 2003, compared with funds generated from
discontinuing and continuing operating activities of A$602.6 million in 2002. This decrease was due to inclusion of 11 months of operations of the previously wholly owned WMC Resources Group.



Working capital was negative A$301.4 million at December 31, 2003, compared
to negative working capital of A$512.8 million in 2002. The improved working capital is attributable to Alumina Limited borrowing in US dollars and the impact of the exchange rate movement which reduced debt in Australian dollar terms by $147.0
million and receipt of an Alcoa of Australia dividend in December 2003 of A$78.5 million



Gross debt was A$467.0 million at December 31, 2003 and A$534.8 million at December 31, 2002. During 2003, Alumina Limited increased its debt in April by
drawing down a further US$48million (A$79.2 million) of debt. This increase was offset by the impact of the exchange rate movement which reduced debt in Australian dollar terms by $147.0 million. Alumina believes this amount of debt is appropriate
for its current requirements.



The maturity of debt is outlined
in Note 16 in the Consolidated Financial Statements. Aluminas current debt facilities are short term US dollar borrowings, reflecting the modest debt level and low short term interest rates. The key funding principles inherent in
Aluminas Treasury policies are:



| |  | Conservative levels of debt should be maintained over the longer term to ensure that the Companys activities and growth are not debt constrained.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Debt should be sourced from the most competitively priced source, although this needs to be balanced against having a diversity of sources and a managed maturity profile.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Debt tenor and currency should reflect asset life, currency exposure and overall level of debt. A core amount of long-term debt would generally be retained with the balance in
short-term and medium-term debt due to its lower cost and repayment flexibility.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Project finance should be utilised where warranted by risk management considerations (country or project specific).
| | - | -------------------------------------------------------------------------------------------------------------------



| |  | Where foreign currency assets are acquired, raising debt in that currency should be examined to achieve a balance sheet hedge and reduce foreign exchange translation exposures.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Interest costs should be minimised if Alumina does not have assessable income for tax purposes.
| | - | -----------------------------------------------------------------------------------------------



- 38 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



Cash and current investments was A$165.3 million at December 31, 2003 compared with A$23.2 million at
December 31, 2002.



Available sources of liquidity were
represented by unused bank facilities at December 31, 2003 of A$233.0 million, as compared to A$165.2 million at December 31, 2002. The increase is due to Alumina Limited borrowing in US dollars. Alumina considers the level of unused bank facilities
to be appropriate to meet the Companys requirements.



Capital expenditure for continuing operations was A$0.3 million for the year ended December 31, 2003, and A$72.9 million for the year ended December 31, 2002. The capital expenditure in 2002 was Aluminas contribution to AWAC for the
acquisition of Halco and MRN shares.



The AWAC agreements
provide that the cash flow of AWAC and borrowings by AWAC are the preferred source of funding for the needs of AWAC and have, since AWACs formation, been the source of funding it has used. There is the potential to expand production at several
of AWACs operations and the source of funding for any such expansions is yet to be determined. AWAC may make an annual capital request of up to US$1 billion following a decision by a majority vote of the Strategic Council  of which Alcoa
Inc. has the majority of votes.



Alumina Limited provided a
guarantee in 1998 for foreign exchange transactions and in 2000 for gold derivative transactions undertaken by its wholly owned subsidiary at that time, WMC Finance Limited (WMCF). WMCF was sold to WMC Resources Ltd as part of the
demerger and is no longer a subsidiary of Alumina Limited. On December 4, 2003, WMC Resources announced that it had closedout its currency hedge book for the period 2005 to 2008 eliminating that portion of Aluminas contingent liability.
The guarantee remains applicable for foreign exchange transactions entered by WMCF and Union Bank of Switzerland with 2004 maturity dates and gold derivative transactions with maturity dates in 2005. The outstanding transactions have a negative mark
to market value of $0.6 million at December 31, 2003. Alumina Limited has rights to obtain additional credit support if WMC Resources Ltds credit rating is lower than BBB (and it would not cause a breach of WMC Resources Ltds debt
obligations). Alumina Limited is also indemnified by WMC Resources in relation to the guarantee.



Prior to the demerger, WMC Finance (USA) Limited (Finance USA) (a wholly-owned subsidiary of WMC Resources) had approximately US$800 million
of long dated bonds issued in four separate tranches (having maturities in 2003, 2006, 2013 and 2026), on issue (the US Bonds)



The obligations of Finance (USA) under the US Bonds were guaranteed by Alumina. In connection with the demerger, Finance USA tendered to repurchase the US
Bonds remaining outstanding. The aggregate amount of outstanding bonds not repurchased was comprised as follows of:



| |  | US Bond due December 1, 2006  US$750,000
| | - | -----------------------------------------



| |  | US Bonds due November 15 2013  US$3,658,000
| | - | --------------------------------------------



| |  | US Bonds due December 1, 2026  US$115,000
| | - | ------------------------------------------



These outstanding US Bonds continue to be guaranteed by Alumina. The duration of the guarantee is unlimited, and continues as long as amounts are outstanding under the US
Bonds.



Under the demerger deed, Alumina and WMC Resources
indemnify each other in respect for certain liabilities. Alumina would be entitled to reimbursement from WMC Resources for amounts paid by Alumina under the guarantee in respect of the US Bonds.



Pursuant to a Power Purchase Agreement dated 27 November 1998 between WMC
Resources, WMC Limited (as it then was) and Southern Cross Energy, Alumina has undertaken to provide Southern Cross Energy with a guarantee or letter of credit for WMCRs payment for power in the event that WMCRs gross assets fall below
$250 million in any year.



- 39 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



New Accounting Pronouncements



New accounting pronouncements discussed below may impact the financial statements of Alumina, including the
equity accounted results of the AWAC investment.



Australian Accounting
Standards Board



The Australian Accounting Standards Board
(AASB) has issued or revised certain Accounting Standards which are not effective for the fiscal periods reported upon in the consolidated financial statements. The impact or potential impact for Alumina is discussed below.



AASB 1020, Income Taxes was issued in December 1999. It will
be effective for Alumina in 2005. Alumina is currently assessing the impact of adopting this standard on its financial report.



AASB 1046 Director and Executive Disclosures by Disclosing Entities was issued in January 2004. It will be effective for Alumina in 2005.
Adoption of this standard is not expected to have a significant impact on the Companys financial position.



Financial Accounting Standards Board



The Financial Accounting Standards Board has issued certain Statements of Financial Accounting Standards which are not effective with respect to AWAC and
therefore Alumina for the fiscal years presented in the consolidated financial statements. The impact or potential impact for both AWAC and Alumina is discussed below.



In December, 2003, the FASB issued FIN 46R, Consolidation of Certain Variable Interest Entitiesan interpretation
of ARB No.51, which further clarifies FIN46 issued on January 17, 2003. FIN46R addresses consolidation and disclosure by business enterprises of variable interest entities. FIN46R is effective for newly created variable interest entities beginning
December 31, 2003 and for existing variable interest entities as of the first annual period beginning after December 15, 2004. This standard has no impact on Alumina Limited.



In December 2003, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 104 (SAB 104). Revenue
Recognition, which supersedes SAB 101, Revenue Recognition in Financial Statements and SAB 101 FAQ. SAB 104s primary purpose is to rescind accounting guidance contained in SAB 101 and SAB 101 FAQ related to multiple element arrangements, which
was superseded as a result of the issuance of EITF 00-21, Accounting for Revenue Arrangements with Multiple deliverables. EITF 00-21 was effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The
adoption of SAB 104 and EITF 00-21 is not expected to have an impact on the Company financial statements as it receives no revenue from multiple element arrangements.



- 40 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



OPERATING AND FINANCIAL REVIEW AND PROSPECTS



|C. | Research and Development, Patents and Licenses
|-- | ----------------------------------------------



Not applicable.



|D. | Trend Information
|-- | -----------------



Relevant industry and market trends are discussed for Alumina and AWAC as a whole in Item 5A Operating Results.



|E. | Off-Balance Sheet Arrangements
|-- | ------------------------------



Not applicable.



|F. | Tabular Disclosure of Contractual Obligations
|-- | ---------------------------------------------



An analysis of Aluminas contractual and commercial commitments is set out in the table below.



|                                               |  |                                          |  |                 |  |           |  |           |  |                 
|---------------------------------------------- |  | ---------------------------------------- |  | --------------- |  | --------- |  | --------- |  | ----------------
|                                               |  | Amount of Commitment  December 31, 2003
|Contractual Obligations                        |  | Total                                    |  | Less than1 year |  | 1-3 years |  | 4-5 years |  | More than5 years
|                                               |  | (A$ million)                            
|Short term debt                                |  | 467.0                                    |  | 467.0           |  |          |  |          |  |                
|Total on-balance sheet contractual obligations |  | 467.0                                    |  | 467.0           |  |          |  |          |  |                



|                             |  |                                          |  |                 |  |           |  |           |  |                 
|---------------------------- |  | ---------------------------------------- |  | --------------- |  | --------- |  | --------- |  | ----------------
|                             |  | Amount of Commitment  December 31, 2003
|Other Commercial Commitments |  | Total                                    |  | Less than1 year |  | 1-3 years |  | 4-5 years |  | More than5 years
|                             |  | (A$ million)                            
|Operating lease commitments  |  | 0.1                                      |  | 0.1             |  |          |  |          |  |                



Operating lease
commitments relate to the corporate office facilities in Australia.



- 41 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



|ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|------- | ------------------------------------------



|A. | Directors and Senior Management
|-- | -------------------------------



The business of Alumina is managed by a Board of Directors which, in accordance with Aluminas Constitution, may have not fewer than three nor more
than 12 members.



Directors of Alumina are classified as either
executive or non-executive Directors, with the former being those Directors engaged in full-time employment by Alumina.



As at December 31, 2003, the Directors of Alumina were:



|                            |  |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                         |  |     |  |                     
|--------------------------- |  | ----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- |  | --- |  | --------------------
|Name                        |  | Position                |  | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Initially Elected orAppointed aDirector |  | Age |  | Expiry ofCurrentTerm
|Executive Directors         |  |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                         |  |     |  |                     
|                            |  |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
|John Marlay                 |  | Chief Executive Officer |  | Joined WMC in August 2002, following role as Head of Strategy for RMC Group plc in London. Mr Marlay was previously Executive General Manager Business Integration, Hanson plc from 2000-2001,
and Executive General Manager, Europe for Pioneer International Ltd from 1997-2000. He has held senior management roles with James Hardie Industries Limited and Esso Australia Ltd.                                                                 |  | December 2002                           |  | 55  |  | (5)                 
|                            |  |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
|Non-Executive Directors     |  |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                         |  |     |  |                     
|                            |  |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
|Donald M. Morley(1)(2)(3)   |  | Chairman                |  | Former Director of WMC as the Director of Finance from 1983 until April 2001, Chief Financial Officer from April 2001-April 2002 and an Executive Officer of WMC from May 2002 to October 2002.
Mr Morley retired from his executive duties on October 31, 2002.                                                                                                                                                                                    |  | December 2002                           |  | 63  |  | (5)                 
|                            |  |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
|Peter A.F. Hay(1)(2)(3)     |  | Director                |  | Chief Executive Officer and member of the Board, and former National Executive Chairman, of the national law firm Freehills; Director of Pacifica Group Limited; and former Chairman of the
Board of Freehill Hollingdale & Page (Melbourne).                                                                                                                                                                                                       |  | December 2002                           |  | 53  |  | (5)                 
|                            |  |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
|Ronald J. McNeilly(1)(2)(3) |  | Director                |  | Deputy Chairman Bluescope Steel Limited; Director of Ausmelt Limited and Chairman; Director G.H. Michell Holdings Pty Ltd; Deputy Chairman of Worley Limited; Chairman of Melbourne Business
School Limited; Past Director of BHP Billiton Limited, QCT Resources Limited and Tubemakers of Australia Limited. Executive Director Global Markets BHP Billiton Limited from 2001-2002; Executive Director and President BHP Minerals from
1999-2001. |  | December 2002                           |  | 60  |  | (5)                 



- 42 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



|                        |  |                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                         |  |     |  |                     
|----------------------- |  | ------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- |  | --- |  | --------------------
|Name                    |  | Position                                    |  | Summary                                                                                                                                                                                                                                                                                                                                                                                                    |  | Initially Electedor Appointed aDirector |  | Age |  | Expiry ofCurrentTerm
|Mark R. Rayner(1)(2)(3) |  | Director                                    |  | Director and CEO of Comalco Limited from 1978-1989, Deputy Chairman of Comalco Limited from 1989 to 1997, Executive Director of CRA Ltd from 1989 to 1995, Chairman of National Australia Bank
1997 to 2001, Chairman of Mayne Nickless 1997 to 2002, Chairman of Pasminco Limited 1992 to 2001, Director of Boral Ltd since 1996;                                                                         |  | December 2002                           |  | 66  |  | (5)                 
|                        |  |                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                            | 
|Robert D.J. Davies(4)   |  | Alternate Director/ Chief Financial Officer |  | Mr Davies joined Alumina Limited as Chief Financial Officer on 1 December, 2002, after 6 1⁄2 years with WMC responsible for Treasury, Tax, Investor Relations and Risk Management. Mr Davies
previously held the position of Treasurer at WMC and has held various corporate and operations finance roles over a 20 year period with Utah International and then BHP in Canada, the US, Chile and Australia. |  | December 2002                           |  | 54  |  |                     



|(1) | Member of Audit Committee
|--- | -------------------------



|(2) | Member of Compensation Committee
|--- | --------------------------------



|(3) | Member of Nomination Committee
|--- | ------------------------------



|(4) | Mr Davies is an alternate director for Mr Rayner
|--- | ------------------------------------------------



|(5) | As explained in Section C, Directors are subject to retirement by rotation. Donald M. Morley
was re-elected as a director at the Companys annual general meeting on May 2, 2003, Peter A.F Hay was re-elected as a director at the Companys annual general meeting on April 21, 2004 The remaining 2 non-executive directors would be
subject to retirement by rotation at the 2005 annual general meeting.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition to the Chief Executive Officer, there are two executive officers appointed by and reporting to the Chief Executive Officer are responsible for the day to day running of the business. As at December 31,
2003, the executive officers were:



|                   |  |                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                               
|------------------ |  | ----------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------
|Executive Officer  |  | Position in2002                     |  | Summary of Experience                                                                                                                                                                                                                                                                                                                                                                                                                        |  | Appointed as Executive officer
|Robert D.J. Davies |  | Chief Financial Officer             |  | Refer above. Responsible for finance and treasury, investor relations and tax.                                                                                                                                                                                                                                                                                                                                                               |  | December 2002                 
|                   |  |                                     | 
|Stephen Foster     |  | General Counsel & Company Secretary |  | Responsible for legal, company secretarial, shareholder services, insurance and human resources. Mr Foster joined WMC Limited in November 2002 following more than three years with Village
Roadshow Ltd as Business Affairs Manager (Projects). Mr Foster previously held legal positions with WMCs Legal and Treasury department from 1990 to 1999 and with Arthur Robinson & Hedderwicks (now Allens Arthur Robinson) from 1987 to
1990. |  | December 2002                 



- 43 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



|B. | Compensation
|-- | ------------



For the year ended December 31, 2003, the aggregate amount of compensation paid and accrued to the Alumina directors and executives of Alumina was
A$3,311,507 (compared to A$21,402,850 in 2002 and A$11,382,538 in 2001). The aggregate amount of compensation paid in 2002 and 2001 included payments made to former directors and executives of WMC Limited. There are no other contingent or deferred
compensation arrangements accrued for our executives or directors. The remuneration of individual directors and executives is presented in the tables below.



|                                                              |  |                       |  |              |  |          |  |                              
|------------------------------------------------------------- |  | --------------------- |  | ------------ |  | -------- |  | -----------------------------
|Non-executive directors remuneration January to December 2003 |  | Directors fee (1) A$ |  | Other (2) A$ |  | Total A$ |  | Stock AppreciationPlan (3) A$
|Current Non-executive directors                               |  |                       |  |              |  |          |  |                              
|Donald M. Morley (from 11/12/02)                              |  | 212,500               |  | 19,802       |  | 232,302  |  | 387,263                      
|Peter A. F. Hay (from 11/12/02)                               |  | 85,000                |  | 8,327        |  | 93,327   |  |                              
|Ronald J. McNeilly (from 11/12/02)                            |  | 85,000                |  | 8,327        |  | 93,327   |  |                              
|Mark R. Rayner (from 11/12/02)                                |  | 85,000                |  | 8,327        |  | 93,327   |  |                              



|(1) | Includes board and committee fees.
|--- | ----------------------------------



|(2) | Includes Aluminas contribution to superannuation. All employees of Alumina Limited are
members of an accumulation category plan which offers a minimum contribution (subject to certain cashing out options and legislation) of 9 per cent of basic salary to each members account.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | In May 2002, Mr Morley received an allocation of 250,000 units under WMC Limiteds stock
appreciation plan (SAP) that expires on October 31, 2004. The allotment had a notional price of $9.35 per share as they were issued on terms equivalent to the 2001 WMC Option Plan. On demerger, Mr Morleys WMC Limited SAPs converted
into units of Aluminas SAPs and WMC Resources SAPs at the proportionate market value of each company share value on demerger, resulting in a notional price of $5.02 for the Alumina SAP units. Upon redemption of an Alumina SAP units
before its expiry, Mr Morley is entitled to a payment equal to the difference between the closing price of Alumina shares on the ASX on the trading day immediately before the redemption, and the notional allotment price of the Alumina SAP units.
Based on Aluminas closing share price on December 31, 2003 of $6.57, Alumina has provided $387,263 for Mr Morleys SAP units for the year end December 31, 2003
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                    |  |                        |  |                        |  |                    
|----------------------------------------------------------------------------------- |  | ---------------------- |  | ---------------------- |  | -------------------
|Executive director remuneration and executive remuneration January to December 2003 |  | Fixedremuneration(1) $ |  | Othercompensation(2) $ |  | Totalremuneration $
|Current executive directors                                                         |  |                        |  |                        |  |                    
|John Marlay, Chief Executive Officer                                                |  | 700,000                |  | 594,701                |  | 1,294,701          
|Current senior executives                                                           |  |                        |  |                        |  |                    
|Robert D.J. Davies, Chief Financial Officer                                         |  | 360,000                |  | 288,137                |  | 648,137            
|Stephen Foster, General Counsel and Company Secretary                               |  | 260,000                |  | 209,123                |  | 469,123            



|(1) | Includes companys contribution to superannuation. All employees of Alumina Limited are
members of an accumulated category plan which offers a minimum company contribution (subject to certain cashing out options and legislation) of 9 per cent of basic salary to each members account.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Other compensation includes incentive, relocation allowances, parking, health management and
executive indemnity insurance.
|--- | ---------------------------------------------------------------------------------------------------------------------------



Prior to
Aluminas demerger, non-executive directors with more than five years service were entitled to retirement benefits equalling the total fees paid in the three years before retirement while directors with three to five years service receive
pro-rata benefits. Current non-executive directors do not receive any retirement benefits.



In November 1987, shareholders authorised the establishment and maintenance of the WMC Employee Share Scheme. The Partly Paid Share Plan (the Partly Paid Share Plan), a part of the WMC Employee Share Plan
Scheme, was introduced in December 1987. In April 1995, the Employee Option Plan (the Option Plan) was introduced. Executive Directors, officers and senior staff members were, prior to the demerger, entitled to participate in the two
plans.



For the purposes of the US GAAP FAS 123 disclosures in
the financial statements included in this Annual Report, Alumina applies the Black-Scholes Model for valuation of WMC options issued to all employees. No options



- 44 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



were granted in 2003, the option value determined for options granted during the years ending December 31, 2002, 2001, 2000 and 1999 was A$4.33, A$4.00,
A$1.65 and A$3.83 respectively. In accordance with Accounting Principles Board Opinion No. 25, the Company does not recognize a compensation cost for share options because the exercise price equals the market price at the date of measurement on the
date of grant. For options that are attached to performance hurdles, a compensation charge will only be required where the market price up to the measurement date exceeds the grant price.



There will be no further issues of shares or options under the abovementioned Partly Paid Share Plan and Option Plan
subsequent to the demerger of Alumina. In February 2003, a share plan for Alumina employees was introduced. The plan provides rewards for employees based on Aluminas performance against two peer indices. Actual rewards depend upon the
performance of Alumina exceeding the performance of a percentage of companies in an index on a total shareholder return basis. All rewards for employees through this plan are directed to purchasing Alumina shares, with executive officers required to
hold shares equivalent in value to 0.5 times their salary. These Alumina shares may only be released to executives once the multiple is exceeded and then only those shares over the multiple.



From December 2002, short term incentives are payable to management according
to key performance indicators applicable to the individual and Alumina.



Prior to Aluminas demerger, all full time Australian based employees and expatriate employees of WMC Limited (including executive directors and officers) and its subsidiaries were members of the WMC Superannuation Plan (formerly WMC
Superannuation Fund).



Aluminas current employees are
members of the Alumina Superannuation Plan. This plan is an accumulation plan, which offers a minimum company contribution (subject to certain cashing out options and legislation) of 9 per cent of basic salary to each members account.



|C. | Board Practices
|-- | ---------------



The Board, working with senior management, is responsible to shareholders for overall management of Alumina Limited, its business performance and for
formulating and establishing its strategic goals. It approves company goals and directions, strategic plans, operating budgets and performance targets. The Board ensures that appropriate policies, procedures and systems are in place to manage risk,
optimise business performance, maintain high standards of ethical behaviour and legal compliance and protect the interests of shareholders.



The Board comprises a non-executive chairman, three other non-executive directors and one executive director. Relevant experience, diverse perspectives
and complementary business skills are sought when appointing new directors. A balance between independent business experience and industry knowledge is sought. To assist in the discharge of their duties, the Board collectively and individually have
the right to seek independent professional advice.



At least 11
Board meetings are held each year. To increase business knowledge, board visits are made to operational sites.



The Directors (other than a Managing Director) are subject to retirement by rotation, one-third retiring each year (or the number nearest to one-third if
the number of Directors is not a multiple of three), and may not continue to hold office without re-election after the third Annual General Meeting following their last election by the shareholders. Eligible retiring directors may offer themselves
for re-election by the shareholders. The Companys Nominations Committee Charter provides that Non Executive Directors shall retire after 9 years of continuous service as a Non Executive Director (or immediately prior to the next succeeding
annual general meeting of the Company after completion of the 9 year period) unless otherwise requested to continue by the Board. .Executive Directors retire at 65 years of age. After once being elected by the shareholders, a Director who is
appointed a Managing Director by the Board is not required to retire by rotation. The Directors may appoint a Director either to fill a casual vacancy or as an addition to their numbers. Such Directors hold office until the next Annual General
Meeting and may be elected by the



- 45 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



shareholders at such meeting, but are not taken into account in determining the number of Directors who are to retire by rotation at that meeting.



Each Director has the power to appoint any person approved by
a majority of his co-Directors to act as an Alternate Director in his place, whether for a stated period or periods or until the happening of a specified event or from time to time, whenever by absence or illness or otherwise he shall be unable to
attend to his duties as a Director.



The Directors may from
time to time appoint one or more of their body to be a Managing Director or Managing Directors either for an unlimited period but not for life, a fixed term not exceeding five years, or a period terminable upon the happening of such specific events
as the Directors may stipulate. The Directors may confer upon any Managing Director such of the powers exercisable under Aluminas Constitution by the Directors as they may elect, without derogating from the exercise of those powers by the
Directors. John Marlay is currently the sole Managing Director and Chief Executive Officer of Alumina and was appointed to such position for an unspecified period.



Aluminas Constitution provides that the Directors may elect a Chairman of their meetings and determine the period for
which he is to hold office. Where there is an equality of votes on a question voted on at a meeting, the Chairman has a second or casting vote. Donald M Morley is currently the Non-Executive Chairman of Alumina.



Aluminas most senior employee, the Chief Executive Officer, is selected
by the Board and is subject to semi-annual performance reviews by the non-executive directors. The Chief Executive Officer recommends policy and strategic direction for board approval and is responsible for managing day-to-day operations.



Specific board committees assist the full Board. Charters set
out the roles and terms of reference for the audit, compensation and nomination committees. The Audit Committee, consisting of four non-executive directors, meets at least four times a year, assists the Board in fulfilling its responsibilities
for the Companys accounts and external reporting by ensuring that appropriate processes are in place to support the Board in fulfilling its responsibilities for:



| |  | reporting of financial information to users of Aluminas financial reports;
| | - | ---------------------------------------------------------------------------



| |  | Aluminas application of accounting policies;
| | - | ---------------------------------------------



| |  | Aluminas internal financial control systems;
| | - | ---------------------------------------------



| |  | the independent auditors qualifications and independence;
| | - | ---------------------------------------------------------



| |  | the performance of Aluminas independent auditors and internal audit function, and
| | - | ----------------------------------------------------------------------------------



| |  | agreeing the scope and monitor the progress of Aluminas internal audit plan.
| | - | -----------------------------------------------------------------------------



Annually, the Audit Committee reviews audit programmes conducted by independent external auditors, and the internal audit
function to ensure that its resources are adequate, used effectively and co-ordinated with the external auditors. It meets regularly with management, and internal and external auditors, to ensure that adequate controls and practices are in place.
The Audit Committee is responsible for the appointment and compensation of external auditors. A process has been established whereby complaints or concerns regarding financial impropriety of employees and others can be confidentially directed to the
Chairman of the Audit Committee.



The Compensation Committee of
four non-executive directors meets at least two times a year. Its role is to establish and review Aluminas remuneration and compensation plans, policies and practices, including remuneration of the non-executive directors, the chief executive
officer and senior executives, and succession planning. On behalf of the Board, the Committee considers the remuneration strategy with regard to community and industry standards and, where possible, verifies its appropriateness using external
information and advice to ensure that:



| |  | employee interests are aligned to corporate objectives;
| | - | -------------------------------------------------------



| |  | the company can attract, develop and retain motivated and talented employees; and
| | - | ---------------------------------------------------------------------------------



| |  | the integrity of the companys reward programme is maintained.
| | - | --------------------------------------------------------------



The Compensation Committee also determines actual payments to all directors and reviews director remuneration annually based on independent external
advice with regard to market practices, relativities and the duties and accountabilities of directors.



- 46 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



The Nomination Committee consists of four non-executive directors and meets as necessary. Its role is
to assist the Board in fulfilling its responsibilities to shareholders relating to:



| |  | identifying the necessary and desirable competencies of board members;
| | - | ----------------------------------------------------------------------



| |  | assessing the extent to which the competencies are represented on the board;
| | - | ----------------------------------------------------------------------------



| |  | the selection and appointment process for directors. and
| | - | --------------------------------------------------------



| |  | conducting performance evaluations of directors who are retiring and seeking re-election.
| | - | -----------------------------------------------------------------------------------------



Board committee meetings are occasionally convened to address predetermined issues, when it is not practical to organise a
full Board meeting. A Board committee comprises two or more directors.



The individual and collective performance of directors is evaluated annually. In 2003 the evaluation process required directors to rank their performance according to a defined scale for each responsibility/activity. Results of
questionnaires were collated and statistically ranked and comparative analysis conducted. Initiatives arising from the evaluation process were reviewed and endorsed by the Board. Future evaluations will involve an external facilitator.



It is company policy that directors and officers are prohibited from the
extension or maintaining of credit or arranging for the extension of credit in the form of a personal loan from the company The policy does allow for bona fide business related advances and use of a company credit card.



The directors, executive management and employees have adopted and abide by a
Code of Conduct (Ethics) to deter wrongdoing and promote honest and ethical conduct.



The New York Stock Exchange (NYSE) Listing Rules, Section 303A, recently instituted a broad regime of new corporate governance requirements for NYSE-listed companies. Under the NYSE Listing Rules foreign
private issuers, such as Alumina Limited, are permitted to follow home country practice in lieu of the requirements of Section 303A, except for the Listing Rule relating to compliance with Rule 10A-3 of the Securities Exchange Act of 1934 and
certain notification provisions contained in Section 303A of the Listing Rules. Section 303A.09 of the Listing Rules, however, requires us to disclose any significant ways in which our corporate governance practices differ from those followed by
U.S. listed companies under NYSE Listing Rules. We have compared our corporate governance practices to the requirements of the Section 303A of the NYSE Listing Rules that would otherwise currently apply to foreign private issuers and note the
following significant differences:



| |  | Our Board Charter does not provide for regular scheduled meetings of non-management directors, although it provides that the Board will meet from time to time without the presence
of management. In addition, we do not provide in our annual report for a particular method of communicating with the presiding director of these non-management director meetings, which will be the Chairman.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our Nomination Committee Charter does not include the purpose of developing and recommending to the board a set of corporate governance principles applicable to the corporation
(which is largely a Board function) and our Nomination and Compensation Committee Charters do not provide for formal annual committee performance evaluations. However, these committees have conducted periodic reviews and evaluations from time to
time.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Shareholders are not provided under Australian law with the opportunity to vote on certain new equity compensation plans or material revisions to existing equity compensation plans
such as the Companys Employee Share Plan, which involves the purchase of shares on market by the Trustee of the Plan.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | We have not published a set of corporate governance guidelines as set forth in Section 303A.09. However, we do provide information on corporate governance policies and practices as
required by Australian Stock Exchange rules, which are available in our annual report and on the website.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 47 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



|D. | Employees
|-- | ---------



At December 31, 2003, Alumina employed 8 people directly. All Alumina employees work in the corporate segment in Australia. For details of the number of
AWAC employees for the periods presented refer to Item 4.B.(iv) Employees.



|E. | Share Ownership
|-- | ---------------



Employees of Alumina, who were formerly employees of WMC, were eligible to participate in and receive options under the WMC Employee Option Plan.
Following the demerger each WMC employee option became an Alumina Limited option and entitled the holder to subscribe for one Alumina Limited share. The exercise price of options held over at the date of the demerger was reduced from the previous
WMC exercise price at a factor of 0.537. There was one allotment of options to WMC employees during the financial period prior to the demerger. In May 2002, an allotment of 600,000 options was made to Executive General Managers of WMC. There is no
ongoing option plan available to Alumina directors or employees and accordingly, no allotments were made to Alumina employees after the demerger.



The table set forth below shows the options on issue at December 31, 2003 as well as the movements in options during the 2003 fiscal year.



OPTIONS TO ACQUIRE FULLY PAID ALUMINA LIMITED ORDINARY SHARES



|                                         |  |               |  |               |  |                |      |             |                  
|---------------------------------------- |  | ------------- |  | ------------- |  | -------------- | ---- | ----------- | -----------------
|                                         |  | Number Issued |  | Number Quoted |  | Exercise Price |      | Expiry Date
|Balance at December 31, 2003             |  |               |  |               |  |                |      |             |                  
|1999 Option Plan                         |  | 1,495,600     |  | Nil           |  | $              | 4.52 |             | December 20, 2004
|2000 Option Plan                         |  | 1,986,400     |  | Nil           |  | $              | 4.04 |             | December 18, 2005
|2001 Option Plan                         |  | 4,577,600     |  | Nil           |  | $              | 5.02 |             | November 30, 2006
|                                         |  |               |  |               |  |                |      |             |                  
|                                         |  | 8,059,600     |  |               |  |                |      |             |                  
|                                         |  |               |  |               |  |                |      |             |                  
|Issued during the current period         |  | Nil           |  |               |  |                |      |             |                  
|                                         |  |               |  |               |  |                |      |             |                  
|Exercised during the current period      |  |               |  |               |  |                |      |             |                  
|                                         |  | 902,920       |  | Nil           |  | $              | 2.62 |             | December 21, 2003
|                                         |  | 375,000       |  | Nil           |  | $              | 2.88 |             | December 21, 2003
|                                         |  | 2,196,400     |  | Nil           |  | $              | 4.52 |             | December 20, 2004
|                                         |  | 3,941,400     |  | Nil           |  | $              | 4.04 |             | December 18, 2005
|                                         |  | 5,056,200     |  | Nil           |  | $              | 5.02 |             | November 30, 2006
|                                         |  | 600,000       |  | Nil           |  | $              | 5.02 |             | November 30, 2006
|                                         |  |               |  |               |  |                |      |             |                  
|                                         |  | 13,071,920    |  |               |  |                |      |             |                  
|                                         |  |               |  |               |  |                |      |             |                  
|Expired/lapsed during the current period |  |               |  |               |  |                |      |             |                  
|                                         |  | 60,500        |  | Nil           |  | $              | 4.52 |             | December 20, 2004
|                                         |  | 8,900         |  | Nil           |  | $              | 4.04 |             | December 18, 2005
|                                         |  | 348,100       |  | Nil           |  | $              | 5.02 |             | November 30, 2006
|                                         |  |               |  |               |  |                |      |             |                  
|                                         |  | 417,100       |  |               |  |                |      |             |                  
|                                         |  |               |  |               |  |                |      |             |                  



- 48 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



Options may be exercised and converted to fully paid shares at the exercise price after one year from
the date of allotment or on termination of employment due to retrenchment or age retirement. If the request to exercise options has not been made at the completion of five years, or within 30 days from termination of employment, the options will
lapse.



As at December 31, 2003, the aggregate number of Plan
Shares, Plan Options and ESPP Shares held by Directors and those officers referred to in Item 6A was 851,490. All directors and executives own shares or hold options. Other than Mr Morley who holds approximately 3% of Plan options, no director or
executive, directly or beneficially holds more than one percent of any class of share.



There are no outstanding partly paid employee share plan shares (2002: nil, 2001: 142,500).



WMC Employee Share Scheme



The establishment of the WMC Employee Share Scheme (ESS) was approved by shareholders at the Annual General Meeting held on December 12, 1987.
Under the ESS a number of share plans have operated. Fully paid shares, partly paid shares and share options have been granted to employees since establishment of the ESS. All permanent employees (including executive directors) of Alumina Limited
and its subsidiaries who were employed by the company or a subsidiary were eligible to participate in the ESS and were offered options for fully paid shares prior to demerger. Existing options allotted to Alumina employees remain exercisable until
such time as their exercise periods expire. There is no ongoing option plan available to Alumina Limited directors or employees following the demerger.



Impact of demerger on plans



In conjunction with the demerger, WMC Limited and WMC Resources Ltd entered into an employee benefits agreement. This agreement covered the treatment of
WMC Limited common stock options issued to WMC Limited and WMC Resources employees. According to the agreement, each WMC Limited option granted to WMC Limited and WMC Resources employees prior to December 4, 2002, that was outstanding under the ESS
as of the demerger date, was adjusted. This adjustment resulted in each individual who was a holder of a WMC Limited option receiving, immediately after the demerger date, an adjusted WMC Limited option and a WMC Resources option. As part of the
demerger from WMC Limited, WMC Limited option holders were granted one option for Alumina Limited and one for WMC Resources Ltd. The aggregate exercise prices of the Alumina Limited option and the WMC Resources Ltd option is equal to the exercise
price of the WMC Limited option prior to demerger. The Alumina Limited option and WMC Resources option have the same lapse date as the WMC Limited option would have had if the demerger had not proceeded  being the earlier of five years after
the option was issued and 30 days after the WMC Limited option holder ceases to be employed by WMC Limited Group, WMC Resources Group or Alumina Group. The exercise price of a WMC Resources Ltd option was determined by reference to the pre-demerger
exercise price of the WMC Limited option (which became an Alumina option) in respect of which the WMC Resources Ltd option was granted and the volume weighted average price of WMC Resources shares and Alumina Limited shares sold on the ASX over the
first five days of trading on the ASX commencing on the listing date. The Stock Appreciation Plan was treated in the same manner as the Share Scheme, as detailed above.



Partly Paid Share Plan



The major provisions of the partly paid share plans provide that the employee may request that the shares be made fully paid after one year from the date
of allotment. Partly paid shares are exercisable at the lower of the exercise price and the market price at the date of conversion. All partly paid shares were converted to fully paid shares during 2002, prior to demerger.



The partly paid shares were granted to a select few employees which makes the
plan a compensatory plan under US GAAP. This results in a stock compensation expense to the company when the market price is greater than



- 49 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



the exercise price on date of grant. As a result of non-interest bearing notes granted to the employees to purchase the partly paid shares, the shares were
considered variable grants. Variable grants require the shares to be marked to market and compensation expense to be recognised for the difference between the fair value and the exercise price at each balance sheet date.



Stock Appreciation Plans



In various years since approval of the WMC Employee Share Scheme
(ESS) in 1987, WMC Limited established Stock Appreciation Plans (SAPs) for the benefit of employees in countries outside Australia. The purpose of the SAPs was to provide such employees, who due to securities law constraints
are not eligible to participate under the Option Plans, with benefits similar to those conferred by the Option Plans.



The terms of each SAP are, in substance, the same. Under each SAP, eligible employees were invited to apply for the grant by WMC Limited of SAP
Rights. Although employees were not required to pay any amount for the grant of the SAP Rights, each has a notional allotment price, equal to the weighted average sale price of WMC Limiteds (or, postdemerger Alumina Limited) shares
on the ASX on the trading day that the invitation to apply for the relevant SAP Right was made to an employee. Upon redemption of a SAP Right before its expiry by the holder, the holder is entitled to a payment equal to the difference between the
closing price of WMC Limited (or, post-demerger Alumina Limited) Shares on the ASX on the trading day immediately before redemption, and the allotment price (assuming the former amount is higher). Compensation cost is measured as the amount by which
the quoted market value of the shares covered by the grant exceeds the allotment price.



The table set forth below shows the SAP Rights on issue at December 31, 2003 and the allotment price for each right.



|                |  |                   |  |                                     |  |                                                                              
|--------------- |  | ----------------- |  | ----------------------------------- |  | -----------------------------------------------------------------------------
|WMC Limited SAP |  | Expiry Date       |  | AluminaSAP RightAllotmentPrice (A$) |  | Balance ofAlumina SAPRights IssuedUnder SAPRight Allotmentat December 31,2003
|1999 SAP        |  | December 20, 2004 |  | 4.52                                |  | 11,000                                                                       
|2000 SAP        |  | December 18, 2005 |  | 4.04                                |  | 58,300                                                                       
|2001 SAP        |  | November 30, 2006 |  | 5.02                                |  | 847,600                                                                      



Alumina Employee Share Plan



In 2003, the Company established an employee long term
incentive plan which involves the on market purchase of the companys shares which can vest to employees provided certain performance tests are achieved. The criteria are the Companys share performance against a comparator group of 50
Australian-listed entities and a comparator group of 30 international entities listed on stock exchanges inside and outside Australia. The maximum number of shares which could be awarded under the plan annually are purchased through a fully
consolidated trust. The shares vest in December, provided the performance criteria are achieved. The compensation charge is recorded in the period when the shares vest with the employee as the liability is determined on that date. If all of the
performance criteria are not achieved then the shares which do not vest are treated as treasury shares in shareholder equity. In 2003, all performance criteria were achieved and 91,300 shares representing 0.008% of shares on issue were vested in the
period.



- 50 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



|ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|------- | -------------------------------------------------



|A. | Major Shareholders
|-- | ------------------



The issued capital of Alumina is currently constituted by one class of registrable voting securities being ordinary shares.



As at April 30, 2004, Alumina had on issue 1,160,878,148 fully paid ordinary
shares, and 6,743,500 Share Options. The Share Options were issued pursuant to Aluminas Employee Option Plan and carry no voting rights. See Item 6 Directors, Senior Management and Employees.



The following table sets forth, as at April 30, 2004, information in respect
of:



|(i) | any person who is known to Alumina to be the registered owner of more than 5% of any class of its voting securities; and
|--- | ------------------------------------------------------------------------------------------------------------------------



|(ii) | the total amount of any class of its voting securities owned by the Directors and Executive General Managers of Alumina as a group.
|---- | -----------------------------------------------------------------------------------------------------------------------------------



|                              |  |                                                        |  |              |  |           
|----------------------------- |  | ------------------------------------------------------ |  | ------------ |  | ----------
|Title of class                |  | Identity of person or group                            |  | Amount owned |  | % of class
|Fully paid Ordinary Shares    |  | J P Morgan Nominees Australia Ltd                      |  | 201,713,214  |  | 17.38     
|                              |  | National Nominees Ltd                                  |  | 169,720,739  |  | 14.62     
|                              |  | Westpac Custodian Nominees Ltd                         |  | 150,720,005  |  | 12.98     
|                              |  | Citicorp Nominees Pty Ltd                              |  | 64,899,731   |  | 5.59      
|                              |  | ANZ Nominees Limited                                   |  | 62,052,026   |  | 5.35      
|                              |  |                                                        | 
|Fully paid Ordinary Shares(1) |  | Directors and Executive officers of Alumina as a group |  | 437,625      |  | 0.04      
|Employee Share Options        |  | Directors and Executive officers of Alumina as a group |  | 439,824      |  | 0.04      



|(1) | Includes Aluminas ADSs
|--- | ------------------------



- 51 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



The nominee companies listed in the previous table hold these fully paid Ordinary Shares on behalf of
numerous beneficial owners. The only beneficial owners known to have owned more than 5% of the issued and outstanding fully-paid ordinary shares are Capital Group International Inc. and Commonwealth Bank of Australia. Their history of significant
changes over the last three years is outlined below:



|                                 |  |            |  |                  |  |                |  
|-------------------------------- |  | ---------- |  | ---------------- |  | -------------- | -
|Beneficial Owner                 |  | Date       |  | Number of Shares |  | % Shareholding |  
|Commonwealth Bank of Australia   |  | 05/11/2004 |  | 83,562,783       |  | 7.21           | %
|                                 |  | 09/05/2003 |  | 91,652,478       |  | 8.12           | %
|                                 |  | 07/03/2003 |  | 79,861,511       |  | 7.08           | %
|                                 |  | 03/20/2003 |  | 68,434,191       |  | 6.07           | %
|                                 |  | 01/23/2003 |  | 56,346,711       |  | 5.07           | %
|Capital Group International Inc. |  | 05/21/04   |  | 83,612,505       |  | 7.21           | %
|                                 |  | 04/14/2004 |  | 96,419,007       |  | 8.32           | %
|                                 |  | 03/29/2004 |  | 108,267,979      |  | 9.34           | %
|                                 |  | 03/17/2004 |  | 120,351,877      |  | 10.38          | %
|                                 |  | 12/22/2003 |  | 130,688,217      |  | 11.39          | %
|                                 |  | 08/01/2003 |  | 140,859,047      |  | 12.48          | %
|                                 |  | 04/17/2003 |  | 128,816,984      |  | 11.42          | %
|                                 |  | 09/13/2001 |  | 114,731,532      |  | 10.39          | %
|                                 |  | 09/05/2001 |  | 102,267,776      |  | 9.31           | %
|                                 |  | 08/31/2001 |  | 99,490,853       |  | 9.06           | %
|                                 |  | 04/12/2001 |  | 91,144,990       |  | 8.29           | %
|                                 |  | 02/09/2001 |  | 61,096,440       |  | 5.60           | %
|                                 |  | 02/05/2001 |  | 79,572,042       |  | 7.24           | %



All fully paid
shareholders have the same voting rights.



There are no
arrangements, known to the Company, the operation of which may at a subsequent date result in a change in control of Alumina.



As at December 31, 2003, 413,960 Alumina fully paid Ordinary Shares were registered in the name of 291 residents of the United States and represented
approximately 0.04% of the total number of Alumina fully paid Ordinary Shares issued and outstanding. As at December 31, 2003, 5,204,940 Alumina ADRs were outstanding (representing 20,819,760 Alumina fully paid Ordinary Shares) and were registered
in the name of 360 residents of the United States and represented approximately 1.80% of the total number of fully paid Ordinary Shares issued and outstanding.



- 52 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



|B | Related Party Transactions
|- | --------------------------



Loans to directors



On January 1, 2001, directors of our controlled entities had outstanding secured loan balances of $5,900. During the 2001 fiscal year, there were no
additional loans made to directors and an amount of A$1,000 was repaid, resulting in a final outstanding balance of A$4,900.



During the year ended December 31, 2002, a loan of A$93,050 was advanced to Jens Balkau, a director of one of our controlled entities. All outstanding
loans (A$93,375) were repaid or forgiven (A$3,643) during the year resulting in no outstanding loans to Alumina directors at December 31, 2002.



All of the loans to directors referred to above were made prior to the demerger in connection with the Employee Share Purchase Plan, the Partly Paid Share
Plan and the Senior Staff Share Issue to enable them to acquire shares of WMC Limited. The share plan loans were secured by shares allocated by WMC Limited under the 1988 allotment of the Employee Share Purchase Plan, the 1987 and 1988 Partly Paid
Share Plan and the 1994 allotment of the Senior Staff Share Issue. The loans were interest free with repayments due in December 2002 and November 2003, although these were all repaid or forgiven prior to the demerger.



Shareholding transactions of directors



Aluminas directors are also shareholders of the company and as such,
they may purchase and/or sell Aluminas shares.



Where
directors have purchased and/or sold shares they have done so on a normal commercial basis, on conditions no more favorable than those available to other shareholders.



Some of the directors who were employees of the WMC Limited group prior to the demerger were eligible to participate in the
WMC Employee Share Scheme, and were issued with options, priced at market value. These transactions were conducted on a commercial basis on conditions no more beneficial than those available to other eligible employees.



- 53 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



|                                                                                                                                                                          |  |                                                        |  |         |  |          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------ |  | ------- |  | ---------
|                                                                                                                                                                          |  | 2003                                                   |  | 2002    |  | 2001     
|*                                                                                                                                                                         |  | Number of Alumina Limited(formerly WMC Limited) shares
|The aggregate number of shares acquired by directors of the parent entity or their director related entities through purchases
was:                                       |  | 71,000                                                 |  | 5,000   |  | 130,000  
|The aggregate number of shares allotted to directors of the parent entity or their director-related entities as a result of the exercise of
options was:                  |  | 140,000                                                |  | 240,000 |  |         
|The aggregate number of options allotted by directors of the parent entity or their director related entities through participation in the WMC
Employee Share Scheme was: |  |                                                       |  | 150,000 |  | 320,000  
|The aggregate number of vested shares granted to executives through participation in the Alumina Employee Share Plan was:                                                 |  | 103,324                                                |  |        |  |         
|The aggregate number of shares and options disposed of by directors of the parent entity or their director related entities
was:                                          |  |                                                        |  |         |  |          
|- fully paid shares                                                                                                                                                       |  | 125,000                                                |  |        |  |         
|- options (lapsed)                                                                                                                                                        |  |                                                       |  |        |  | 300,000  
|- options ( exercised and shares sold)                                                                                                                                    |  | 52,000                                                 |  | 250,000 |  |         
|The aggregate number of partly paid shares paid up by directors of the parent entity or their director-related entities was:                                              |  |                                                       |  | 331,000 |  | 100,000  
|The aggregate number of shares disposed of by directors of the parent entity or their director-related entities on retirement
was:                                        |  |                                                        |  |         |  |          
|- fully paid shares                                                                                                                                                       |  |                                                       |  | 594,829 |  |         
|- options (options exercised and shares sold)                                                                                                                             |  |                                                       |  | 980,000 |  |         
|Details of shares and share options held by directors of the parent entity or their director-related entities at period end are as
follows:                               |  |                                                        |  |         |  |          
|- fully paid shares                                                                                                                                                       |  | 531,490                                                |  | 342,166 |  | 435,459  
|- ordinary shares partly paid to five cents                                                                                                                               |  |                                                       |  |        |  | 331,000  
|- options for ordinary shares                                                                                                                                             |  | 320,000                                                |  | 512,000 |  | 1,770,000
|- Central Norseman Gold Corporation Limited, fully paid shares                                                                                                            |  | N/A                                                    |  | N/A     |  | 2,000    



|* | Individual directors beneficially own less than 1% of total ordinary shares outstanding, the only class of shares issued by Alumina Limited
|- | -------------------------------------------------------------------------------------------------------------------------------------------



All other transactions relating to shares and options of WMC Limited prior to
the demerger, and Alumina Limited post demerger including the payment and receipt of dividends, were on the same basis as similar transactions with other shareholders.



- 54 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



Other transactions of directors and director related entities



A number of the directors of Alumina Limited are also directors of other
public companies which may have transactions with the Alumina group. The relevant directors do not believe that they have the capacity to control or significantly influence the financial or operating policies of either those companies or the Alumina
group in their dealings with one another. Those companies are therefore not considered to be director-related entities for the disclosure requirements of Accounting Standard AASB 1017: Related Party Disclosures.



| | (i) | Legal/financial service fees
| | --- | ----------------------------



A director Mr P A F Hay, is the Chief Executive Officer of Freehills. Freehills has provided legal services to Alumina Limited and a
number of Alumina Limited controlled entities for several years on normal commercial terms and conditions. The total of those services for 2003 amounts to $106,149 (2002: $722,997).



Mr J Meck and Ms A E Seneshen are shareholders in a US based law firm Welborn Sullivan Meck & Tooley,
P.C and are directors of a number of Alumina Limiteds controlled entities. Welborn Sullivan Meck & Tooley, P.C has provided legal services for several years on normal commercial terms and conditions. The total of those services for 2003
amounts to $14,031 (2002: $327,815).



During 2002 there were
transactions with directors of WMC Limited controlled entities, which became WMC Resources controlled entities after the de-merger. These transactions totaled $438,858 and were on normal commercial terms and conditions.



|C. | Interests of Experts and Counsel
|-- | --------------------------------



Not applicable.



- 55 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



FINANCIAL INFORMATION



|ITEM 8. | FINANCIAL INFORMATION
|------- | ---------------------



|A. | Financial Statements
|-- | --------------------



Aluminas consolidated financial statements are included as Item 18.



Legal Proceedings



At the date of this Annual Report there were no material pending legal proceedings, other than:



| | (i) | those mentioned below; or
| | --- | -------------------------



| | (ii) | ordinary routine litigation or other legal proceedings incidental to the business.
| | ---- | ----------------------------------------------------------------------------------



Native Title in Australia



Native title describes the rights and interests of Aboriginal and Torres Strait Islander people in land and waters according to their
traditional laws and customs as recognized by the common law of Australia.



Native title law has evolved through judicial decisions and the enactment of legislation. The first significant High Court decision on the subject of native title was Mabo v Queensland (No 2) (1992) 175 CLR 1
(the Mabo decision) in 1992, in which the Court recognized the concept of native title and said that Aboriginal and Torres Strait Islander people who have maintained their connection with their land according to their laws and customs
may hold native title. Proving connection usually involves showing that traditional laws and customs have been passed down through generations of Aboriginal or Torres Strait Islander people to the present day. The native title of a particular group
will depend on the traditional laws and customs of those people. Recent decisions have indicated that native title may change over time.



The Mabo decision also recognized that native title could be extinguished prior to the enactment of the Racial Discrimination Act 1975 (October 31, 1975)
by government legislation or inconsistent executive action. In response to the Mabo decision, the Commonwealth Government enacted the Native Title Act, 1993 (NTA) which validated acts done and granted by it prior to January 1, 1994
(past acts) and allowed the States and Territories to enact their own validation legislation. Subsequent amendments also validated grants (intermediate period acts) made by the Commonwealth (and allowed the States and
Territories to enact similar legislation) relating to certain grants up to December 23, 1996. The NTA also created the National Native Title Tribunal, responsible for mediation of native title claims and the administration of various procedures
under the NTA governing native title claims. Finally, the NTA specifies the conditions to be satisfied and the procedures to be followed in order for acts done after January 1, 1994 (future acts) to be valid with respect to native title.



Native title may exist in areas where it has not been
extinguished (removed). Although a determination of native title does not invalidate anothers validly granted, the High Court decision in the Wik Peoples v Queensland (1996) 187 CLR 1 (Wik) case, made it clear that native title may
co-exist with other forms of tenure where that tenure is not exclusive, provided the native title rights are not incompatible with the exercise of the other rights.



In August 2002, the High Court handed down its decision in the State of Western Australia v Ward (Ward). It
held, among other things, that native title can be categorized as a  bundle of rights, that there could be partial extinguishment of native title rights and that Western Australian and Northern Territory mining and petroleum legislation
extinguishes all native title rights that may have existed over minerals and petroleum in Western Australia and Northern Territory. The High Court also held that a mining lease under the relevant Western Australian legislation extinguished any
native title right to control access to land, or to be asked permission to use, or have access to, land but does not necessarily extinguish all native title rights. This decision, which provides some clarity about the impact of native title on
pastoral leases and mining leases in Western Australia and the Northern Territory is significant to Alcoa of Australia Ltd because its operations are in Western Australia. However the decision also leaves many issues to be decided on a case by case
basis.



- 56 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



FINANCIAL INFORMATION



There are current claimant applications for native title determination in the Federal Court over
areas that include Alcoa of Australia Ltds Special Mining Lease MLISA (Western Australia) (the Alcoa Lease) and a portion of the conveyor associated with Alcoas 45% interest in the Portland Smelter (Victoria).



|(a) | Western Australia
|--- | -----------------



Alcoa of Australia Ltds operations fall within two native title applications:



| |  | Combined Perth Metropolitan Working Group Native Title claim  Federal Court Action WAG 142 & 149 of 1998; and
| | - | --------------------------------------------------------------------------------------------------------------



| |  | Gnaala Karla Booja claim  Federal Court Action WAG 6274 of 1998.
| | - | -----------------------------------------------------------------



These claims are yet to be determined by the Federal Court. However, as a result of the Ward decision the potential exposure of Alcoa of Australia Ltd to
these claims is significantly reduced by the High Courts finding that any native title right in minerals (if it could be established on the evidence) has been extinguished.



|(b) | Victoria
|--- | --------



Alcoa of Australia Ltds interest in Portland Smelter falls within the Gournditch-Mara native title claim  Federal Court Action VG 6004 of 1998.



This native title claim is also yet to be determined by the Federal Court. However, the Portland Smelter is situated on a
validly granted freehold title which has been excluded by the claimants from this claim. Therefore the claim only affects a small portion of the land on which the Portland Conveyor is situate pursuant to a Conveyor Licence Agreement.



While native title may still exist in each of the above Western Australian
and Victorian claim areas, the Alcoa Lease and the Conveyor Licence Agreement are valid and Alcoa of Australia Ltds rights will prevail to the extent of any inconsistency. Accordingly, Alcoa of Australia Ltd is entitled to continue its
operations without interference from native title claimants.



AWAC
Litigation



In the ordinary course of its business,
AWAC is involved in a number of lawsuits and claims, both actual and potential, including some that is has asserted against others. While the amounts claimed may be substantial, the ultimate liability cannot now be determined because of the
considerable uncertainties that exist. It is possible that results of operations or liquidity in a particular period could be materially affected by certain contingencies.



AWACs Point Comfort alumina refinery is part of an area which has been declared a US Environmental Protection Agency
superfund site.



There has also been recent
publicity in respect of complaints by some nearby residents of the Wagerup refinery that there is a link between their various health problems and odours and emissions from the refinery and, in particular, from the liquor burner. Legal proceedings
have been filed by some nearby residents of the Wagerup refinery in the District court in Western Australia claiming unspecified damages and alleging that emissions form the Wagerup refinery have harmed their health.



In response to community concern, the Legislative Council of Western
Australia Standing Committee on Environment and Public Affairs has initiated an inquiry into the complaints associated with the Wagerup refinery. Alcoa of Australia has participated in the public hearings. The inquiry is ongoing and a date for
release of the Committees findings has not yet been set.



- 57 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



FINANCIAL INFORMATION



Other Financial Information



Dividends



The dividends paid to shareholders are determined by the Board of Directors, based on Aluminas performance and current business conditions.



During the 12 month period January 1, 2003 to December 31,
2003, Alumina paid cash dividends to its shareholders of A$0.23 (fully franked) a fully paid ordinary share. This compares to cash dividends provided for the 12 months to December 31, 2002 of A$0.18 (fully franked) a fully paid ordinary share. For a
discussion on the taxation of the dividends, see Item 10E Additional Information  Taxation.



Financing and Corporate Items



Net financing and corporate expenses for the year ended December 31, 2003 totalled A$18.9 million compared to A$171.7 million for the year ended December 31, 2002. The principal components were:



|                                                                    |  |                             |   |  |                             |   |  |                             |  
|------------------------------------------------------------------- |  | --------------------------- | - |  | --------------------------- | - |  | --------------------------- | -
|                                                                    |  | Year EndedDecember 31, 2003 |   |  | Year EndedDecember 31, 2002 |   |  | Year EndedDecember 31, 2001 |  
|Loss/(Gain) on revaluation of foreign currency assets & liabilities |  |                            |   |  | 20.2                        |   |  | 0.6                         |  
|Interest received / receivable                                      |  | (2.4                        | ) |  | (98.2                       | ) |  | (154.3                      | )
|Interest paid / payable                                             |  | 8.7                         |   |  | 140.6                       |   |  | 295.2                       |  
|Corporate expenditure                                               |  | 12.6                        |   |  | 109.1                       |   |  | 69.2                        |  



Net interest charged
to profit was A$6.3 million for the year ended December 31, 2003 compared to A$42.4 million for the year ended December 31, 2002, reflecting the decrease in borrowings and lower interest rates.



|B. | Significant Changes
|-- | -------------------



Up to the end of May 2004, the average Australian US dollar exchange rate has been higher than 2003, which has had a negative effect upon profit. However,
average LME aluminium prices have also been higher in 2004 than in 2003 which have a positive effect on profit.



AWAC sold alumina into the spot market in 2003 at prices in excess of long-term contract prices. In 2004, AWAC will have reduced tonnages available for
sale into the spot market due to the expiry of an alumina purchase contract which related to the Reynolds acquisition and divestiture by Alcoa in the year 2000.



- 58 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



THE OFFER AND LISTING



|ITEM 9. | THE OFFER AND LISTING
|------- | ---------------------



|A. | Offer and Listing Details
|-- | -------------------------



Market Prices



The following table sets forth, for the periods indicated, the highest and lowest closing sale prices of Aluminas fully paid Ordinary Shares based
upon information provided by the ASX and the highest and lowest bid prices for Aluminas American Depositary Shares (ADSs) based on information provided by the NYSE. In the United States, ADSs evidenced by American Depositary Receipts (ADRs)
represent fully paid ordinary shares of Alumina. Each ADR represents four fully paid ordinary shares. Alumina commenced trading (as AWC) on the ASX and NYSE on December 4, 2002 on a post-demerger basis.



|                                |  |                |  |                 |  |        |  |                           |  |        
|------------------------------- |  | -------------- |  | --------------- |  | ------ |  | ------------------------- |  | -------
|                                |  |                |  | Ordinary Shares |  |        |  | AmericanDepositary Shares
|Period                          |  |                |  | A$ High         |  | A$ Low |  | US$ High                  |  | US$ Low
|Month ended May 31, 2004        |  |                |  | 5.35            |  | 4.95   |  | 15.45                     |  | 13.47  
|Month ended April 30, 2004      |  |                |  | 5.52            |  | 4.92   |  | 16.87                     |  | 13.90  
|Month ended March 31, 2004      |  |                |  | 5.84            |  | 5.25   |  | 17.80                     |  | 15.30  
|Month ended February 28, 2004   |  |                |  | 5.95            |  | 5.48   |  | 19.10                     |  | 16.95  
|Month Ended January 31, 2004    |  |                |  | 6.77            |  | 5.50   |  | 21.16                     |  | 17.07  
|Month Ended December 31, 2003   |  |                |  | 6.57            |  | 5.90   |  | 20.06                     |  | 17.16  
|                                |  |                |  |                 | 
|Year Ended December 31, 2003    |  | First Quarter  |  | 5.21            |  | 3.90   |  | 11.84                     |  | 9.53   
|                                |  | Second Quarter |  | 4.48            |  | 4.03   |  | 11.70                     |  | 9.72   
|                                |  | Third Quarter  |  | 5.51            |  | 4.14   |  | 14.25                     |  | 11.38  
|                                |  | Fourth Quarter |  | 6.57            |  | 5.07   |  | 20.06                     |  | 13.93  
|                                |  |                |  |                 | 
|Year Ended December 31, 2002(1) |  | First Quarter  |  | 10.26           |  | 9.24   |  | 20.97                     |  | 18.95  
|                                |  | Second Quarter |  | 9.92            |  | 8.73   |  | 22.00                     |  | 19.52  
|                                |  | Third Quarter  |  | 9.22            |  | 7.09   |  | 20.57                     |  | 15.55  
|                                |  | Fourth Quarter |  | 4.92            |  | 3.79   |  | 19.45                     |  | 10.60  
|                                |  |                |  |                 | 
|Year Ended December 31, 2001(1) |  | Full Year      |  | 10.09           |  | 6.58   |  | 20.90                     |  | 13.60  
|                                |  |                |  |                 | 
|Year Ended December 31, 2000(1) |  | Full Year      |  | 8.91            |  | 6.12   |  | 23.38                     |  | 14.88  
|                                |  |                |  |                 | 
|Year Ended December 31, 1999(1) |  | Full Year      |  | 8.55            |  | 4.63   |  | 21.88                     |  | 11.50  



|(1) | These share prices relate to the Company prior to the Demerger except for the Fourth Quarter
of 2002 which includes share prices prior to and after the Demerger.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



During 2000 WMC bought back and cancelled 56,030,317 shares at prices between A$6.42 and A$8.30 and at an average cost including incidental expenses of A$7.45 per share. Directors approved the buyback of up to a
further 55,917,817 shares, however during 2001 and 2002 there was no buyback of shares.



The closing price of Aluminas fully paid Ordinary Shares on December 31, 2003 was A$6.57 and on May 31, 2004 was A$ 5.33. The closing price of Aluminas ADRs on December 31, 2003 was US$20.06 and on May 28,
2004 was US$15.25.



- 59 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



THE OFFER AND LISTING



|B. | Plan of Distribution
|-- | --------------------



Not applicable.



|C. | Markets
|-- | -------



Ordinary Shares



All of
Aluminas fully paid ordinary shares are listed on the ASX which presently constitutes the principal trading market for Aluminas ordinary shares. The ASX is a nationally operated stock exchange with trading being carried out on automatic
computer trading systems (SEATS). Aluminas fully paid ordinary shares are also listed on the New York Stock Exchange (traded as American Depositary Shares). WMC Limited was also listed on the Swiss Stock Exchange until mid 2002 and
the Frankfurt Stock Exchange until January 2003.



In accordance
with the terms of the WMC demerger approved by shareholders on November 29, 2002 WMC shares ceased trading on the ASX on December 3, 2002. WMC Resources Ltd and Alumina Limited shares commenced trading on December 4, 2002 on the ASX.



American Depositary Shares



In the United States, American Depositary Shares (ADSs)
evidenced by American Depositary Receipts (ADRs) represent fully paid ordinary shares of Alumina. Each ADR represents four fully paid ordinary shares. The ADRs are issued pursuant to a Deposit Agreement, dated October 6, 1989, as amended
and restated on December 4, 2002 between Alumina and the Depositary. On January 2, 1990, trading of Aluminas ADSs commenced on the New York Stock Exchange (NYSE) under the symbol WMC. WMCs ADS ceased trading
on the NYSE on December 3, 2002 and recommenced trading on December 4, 2002 under the name of WMC Resources Ltd (WMC) and Alumina Limited (AWC)



As at April 30, 2004, 412,115 Alumina fully paid ordinary shares were registered in the name of 293 residents of the United
States and represented approximately 0.04% of the total number of Alumina fully paid ordinary shares issued and outstanding. As at April 30, 2004, 7,289,761 Alumina ADRs were outstanding (representing 29,159,044 Alumina fully paid ordinary shares)
and were registered in the name of 351 residents of the United States and represented approximately 2.51% of the total number of fully paid ordinary shares issued and outstanding.



|D. | Selling Shareholders
|-- | --------------------



Not applicable.



|E. | Dilution
|-- | --------



Not applicable.



|F. | Expenses of the Issue
|-- | ---------------------



Not applicable.



- 60 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



|ITEM 10. | ADDITIONAL INFORMATION
|-------- | ----------------------



|A. | Share Capital
|-- | -------------



Not applicable.



|B. | Constitution
|-- | ------------



Aluminas corporate organisation and conduct are governed by its constitution (the Constitution). Set forth below is a summary of the
provisions of the principal terms of the Constitution.



Company Objects
& Purposes



Alumina is taken to be registered as a
public company limited by shares under the Corporations Act 2001 of the Commonwealth of Australia (the Corporations Act) and is registered with Australian Business Number 85 004 820 419.



The Constitution was adopted by shareholders at the Annual General Meeting
held on April 15, 1999 and subsequently amended by shareholders at the general meeting held on November 29, 2002 and April 21, 2004. The Constitution does not specify Aluminas objects and purposes. Rather, under section 124 of the Corporations
Act, Alumina has the legal capacity and powers of an individual person.



Directors Powers & Qualifications



|(a) | No director is permitted to vote or be counted in the quorum as a director in respect of any contract or arrangement in which the director has a material interest. Subject to the
Corporations Act, this prohibition can be relaxed or suspended by an ordinary resolution passed in general meeting (rule 85(b)).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Directors remuneration is to be determined by them from time to time and in such proportions and manner as they determine, provided that the aggregate remuneration paid to directors
in any year must not exceed the amount approved in general meeting (rule 82).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, every director is entitled to be paid all reasonable travelling, hotel and other expenses incurred in attending meetings of Alumina and if any director is called upon to perform extra services or provide
special professional skill for any purpose of Alumina, the director may be paid travelling outlays and such additional sum by way of remuneration fixed by the directors (rule 83).



|(c) | Directors may, from time to time, at their discretion raise or borrow any sum or sums of money for the purposes of Alumina with or without security (rule 47).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



|(d) | The Constitution does not contain any age limit requirement on the retirement of directors.
|--- | -------------------------------------------------------------------------------------------



|(e) | A director does not need to own shares in Alumina as a qualification for office (rule 80).
|--- | ------------------------------------------------------------------------------------------



|(f) | At each Annual General Meeting one third of the directors (or the nearest number to one third) retire from the office and are subject to re-election. In any event, a director, other
than the managing director, shall retire from office at the conclusion of the third Annual General Meeting after the general meeting at which he or she was elected or re-elected.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Rights & Restrictions Attaching to Each Class of Shares



|(a) | Alumina has only one class of shares, the ordinary class. The rights attached to ordinary shares include the right to dividends in the event that the directors declare them.
Directors may determine that a dividend is payable, fix the amount, the date at which the entitlement accrues, date for payment and the method of payment.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Dividends which have not been claimed for one year after having been declared may be invested or otherwise made use of by
the directors for the benefit of Alumina until claimed or disposed of according to law (rule 125).



- 61 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



|(b) | The voting right attached to ordinary shares is the right to vote in person, by representative, attorney or proxy in general meeting.
|--- | -------------------------------------------------------------------------------------------------------------------------------------



On a show of hands each shareholder (regardless of the number of shares
held) has one vote. On a poll each shareholder may exercise one vote for each fully paid ordinary share held. In respect of partly paid shares, the shareholder has a vote equivalent to the proportion which the amount paid up bears to the total issue
price of the share at the date the poll is taken.



For the
purposes of determining voting entitlements at a general meeting, shares will be taken to be held by those persons recorded in the register of members at the time and date determined by the directors under regulations 7.11.37 and 7.11.38 of the
Corporations Regulations 2001 of the Commonwealth of Australia.



|(c) | Dividends are only payable out of the profits (rule 114).
|--- | ---------------------------------------------------------



|(d) | In the event of a winding up, ordinary shares rank equally in the division of any surplus.
|--- | ------------------------------------------------------------------------------------------



|(e) | Shareholders cannot redeem ordinary shares.
|--- | -------------------------------------------



|(f) | The holders of fully paid ordinary shares have no further liability to Alumina in respect of those shares. The holders of partly paid shares are liable to Alumina once a call is
made for the payment of the unpaid amount.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(g) | There is no provision in the Constitution which discriminates against an existing or prospective shareholder as a result of that shareholder owning a substantial number of shares
unless such ownership leads to a partial takeover bid (see heading Partial Takeover Approval below) or the directors exercise their discretion under Rule 144 in regard to foreign persons (see sub-heading Foreign Persons under the
heading Limitations on the Right to Own Securities).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(h) | To vary or cancel the rights attached to ordinary shares, a special resolution approving the variation or cancellation must be passed at a special meeting of the holders of ordinary
shares, or by consent in writing signed by the holders of a least three-fourths of the issued ordinary shares within two calendar months from the date of such special meeting (rule 11).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



General Meetings of the Company



The Board may convene general meetings of Alumina to be held at such times
and places and in the manner determined by the Board (rule 52). No shareholder or director may convene a general meeting unless entitled to do so under the Corporations Act.



Subject to the Corporations Act and the Listing Rules of the Australian Stock Exchange, notices of general meetings convened
by the Board may be given in the form and in the manner determined by the Board (rule 54).



At least 28 days notice must be given of a general meeting (section 249HA of the Corporations Act).



All shareholders may attend general meetings in person, or be represented by the attendance of a representative, attorney or by proxy (who need not be
shareholders of Alumina in their own right).



The quorum for a
general meeting is three members present in person, by proxy or attorney or by representative (rule 57). If within 15 minutes of the time appointed for holding the meeting a quorum is not present, the meeting, if convened by requisition, is
dissolved, but in all other cases stands adjourned to the same day in the next week at the same time and place (rule 58). If at the adjourned meeting a quorum is not present within 15 minutes from the time appointed for holding the meeting, the
meeting is dissolved.



Limitations on the Right to Own Securities



Aluminas Constitution does not impose limitations
on the right to own securities except those provisions relating to foreign persons who seek to acquire a substantial interest in Alumina.



Foreign Persons



Directors have the discretion to refuse to allot shares or to register any transfer or transmission of shares to any person, if the allotment, transfer or
transmission results in a foreign person (as defined in the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth of Australia) acquiring a substantial interest (defined as 15% of the voting



- 62 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



power), or two or more foreign persons, alone or together with any associate or associates, acquiring an aggregate substantial interest (defined as 40% of
the voting power) in Alumina (rule 144).



Other
Takeover Limitations



The rights of non-resident or
foreign shareholders to hold or exercise voting rights on Aluminas securities are subject to the Foreign Acquisitions and Takeovers Act 1975. The Treasurer of the Australian Federal Government has the power to prohibit the acquisition
of a controlling interest in any Australian company by a foreign person or foreign persons, if the Treasurer is of the opinion that the acquisition would be contrary to the national interest. For this purpose, a shareholding of 15% or more held by a
single foreign person or 40% or more held by two or more foreign persons is deemed to constitute a controlling interest.



Section 50 of the Trade Practices Act 1974 of the Commonwealth of Australia prohibits an acquisition of shares that would have the effect, or be
likely to have the effect, of substantially lessening competition in a substantial market for goods or services, unless the acquisition is authorised by the Australian Competition and Consumer Commission.



Partial Takeover Approval



In the event that there is an offer made under a proportional takeover
bid (within the meaning given to that expression by Chapter 6 of the Corporations Act) to acquire shares in Alumina, the registration of a transfer giving effect to a contract resulting from the acceptance of the offer, is prohibited unless
and until a resolution to approve the proportional takeover bid is passed in accordance with rule 139 of the Constitution. This resolution is to be voted on at a meeting convened and conducted by Alumina, of the persons entitled to vote on the
resolution. The resolution is taken to have been passed if the proportion that the number of votes in favour of the resolution bears to the total number of votes on the resolution is greater than one-half. The provision with respect to partial
takeover bids (ie rule 139) cease to have effect on the third anniversary of the date of their adoption or last renewal. The provisions were last adopted by shareholders on November 29, 2002.



Disclosure of Share Ownership



The Constitution does not prescribe an ownership threshold above which
shareholders must disclose their holding to Alumina. However, Part 6C.1 of the Corporations Act imposes disclosure requirements on persons who acquire or cease to hold a substantial holding (see section 9 of the Corporations Act) in Alumina. The
disclosure must be given to Alumina and the Australian Stock Exchange within the prescribed time.



The directors may at any time by written notice require a member within 14 days of receiving the notice to provide Alumina with full particulars of the
name and address of every person who has an interest in any of the shares held by the member, including full particulars of that interest and of the circumstances by reason of which the other person has that interest (rule 144(c)). On receiving
particulars of a person holding an interest in any shares of Alumina (other than as registered holder), Alumina may give that person written notice requiring that person to provide Alumina with a statement in writing setting out full particulars of
that persons interest and of the circumstances by reason of which that interest is held.



Changes in Share Capital



Alumina by resolution passed in general meeting may from time to time alter its share capital in one or more of the ways provided for, and in the manner prescribed by, the Corporations Act (rule 44).



Subject to the Constitution, Alumina may reduce its share capital (rule 46)
or buy back shares (rule 141) in accordance with the Corporations Act.



|C. | Material Contracts
|-- | ------------------



Formation Agreement among Aluminium Company of America, Alcoa International Holdings Corporation, ASC Aluminium Inc., the Company and certain subsidiaries of the Companies that established AWAC.



On 21 December 1994, Alcoa and WMC finalised and executed the AWAC
Agreements establishing and governing the operation of AWAC, with the Formation Date of AWAC being 1 January 1995. The main AWAC Agreements are the agreements known respectively as the Formation Agreement and the Charter of the
Strategic



- 63 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



Council. Key aspects of the AWAC Agreements are set out below. Copies of the main AWAC Agreements are also annexed to this Report as exhibits.



|(a) | Enterprise
|--- | ----------



AWAC is comprised of a series of affiliated operating entities in which Alcoa has a 60% interest and Alumina a 40% interest. Alcoa acquired 9% of Alcoa of
Australia and Alumina acquired a 40% interest in the other Alcoa affiliated operating entities and assets included within AWAC, upon its formation. Alumina has acquired a 40% interest in AWAC entities and assets acquired (such as that of San
Ciprian) since AWACs formation.



|(b) | Consideration
|--- | -------------



On 1 January 1995, Alumina paid to Alcoa approximately US$386 million and transferred 9% of Alcoa of Australia to Alcoa. Alumina contributed an additional
sum of approximately US$120 million to AWAC which was repaid during the course of initial establishment and operation of AWAC and for further acquisitions. Alcoa was also to receive additional compensation based upon the future earnings of
AWACs alumina-based industrial chemicals operations if the earnings exceeded performance targets for the period 1995-1999 (inclusive). Since the growth plan for the alumina-based chemicals business was not achieved, this additional
compensation was not required to be paid by WMC.



|(c) | Scope
|--- | -----



The scope of AWAC includes the following:



Bauxite and alumina: the exploration, searching and prospecting for and the mining of bauxite and other aluminous ores as well as the refining and
other processing of these ores into alumina and other necessary but ancillary facilities.



Industrial chemicals: the research, development, production, marketing and sale of industrial chemicals, comprised initially of the output of the existing Alcoa and Alcoa of Australia facilities for industrial
alumina-based chemicals and other agreed mineral-based chemicals or as may be agreed from time to time.



Integrated operations: the ownership and operation of certain primary aluminium smelting, aluminium fabricating and other necessary but ancillary
facilities that are run as part of an integrated operation at certain of the locations existing on the formation of AWAC.



|(d) | Formation
|--- | ---------



The formation of AWAC was completed on 1 January 1995.



|(e) | Role of the parties
|--- | -------------------



Industrial leader



Under the general direction of the Strategic Council, Alcoa is the industrial leader and provides the operational management of AWAC and of
all affiliated operating entities within AWAC, unless Alcoa requests Alumina to manage a particular operation.



Strategic Council



The Strategic Council is the principal forum for Alcoa and Alumina to provide direction and counsel to the AWAC entities in respect of strategic and
policy matters. The Alcoa and Alumina representatives on the boards of the AWAC entities are required, subject to their general fiduciary duties, to carry out the directions and the decisions of the Strategic Council. The Strategic Council has five
members, three appointed by Alcoa (of which one is Chairman) and two by Alumina (of which one is the Deputy Chairman). Decisions are made by majority vote except for matters which require a super majority vote, which is a vote of 80% of
the members appointed to the Strategic Council.



The following decisions
require a super majority vote:

| |  | a change of the scope of AWAC;
| | - | ------------------------------



| |  | a change in the dividend policy;
| | - | --------------------------------



| |  | sale of all or a majority of the assets of AWAC;
| | - | ------------------------------------------------



- 64 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



| |  | equity calls on behalf of AWAC totalling in any one year in excess of US$1 billion; and
| | - | ---------------------------------------------------------------------------------------



| |  | loans to Alcoa or Alumina, or their respective affiliates by AWAC.
| | - | ------------------------------------------------------------------



The Strategic Council meets as frequently as the Chairman after consultation with the Deputy Chairman determines, but meetings of the Council must be held
at least twice a year. The Deputy Chairman may require additional meetings to be held.



Other management and personnel roles



Alumina is entitled to representation in proportion to its ownership interest on the board of each entity in the AWAC structure, including Alcoa of Australia. In addition to the Strategic Council meetings,
Operation meetings (with representatives from Alcoa and Alumina) are held typically up to four times a year (usually two in Australia and two at operations/offices outside Australia).



|(f) | Exclusive Vehicle
|--- | -----------------



AWAC is the exclusive vehicle for the pursuit of Aluminas and Alcoas (and their affiliates as defined) interests in the bauxite, alumina and
inorganic industrial (alumina-based) chemicals businesses included within the scope of AWAC, and neither party can compete, within that scope, with AWAC so long as they maintain an ownership interest in AWAC.



If either party acquires a new business which has as a secondary component a
bauxite, alumina or inorganic industrial chemicals business included within the scope of AWAC, that component must be offered to AWAC for purchase at its acquisition cost or, if not separately valued, at an independently determined value. If the
companies within AWAC and the Strategic Council decide not to accept the offer, the component must be divested by Alcoa or Alumina (as the case may be) to a third party that is not an affiliate.



Smelting is not subject to these exclusivity provisions, although there are
certain smelting assets in AWAC, primarily those in Alcoa of Australia in which Alumina already had an interest at the time AWAC was formed.



It should be noted that the AWAC Agreements do not expressly address the position of an acquirer of Alumina or Alcoa, where that acquirer already operates
a bauxite, alumina or industrial (alumina-based) chemicals business. Such an acquirer would be an affiliate of Alumina or Alcoa (as relevant) and therefore the exclusive vehicle provisions of the AWAC agreements would apply. However, the
agreements are silent on the action that Alumina or Alcoa (as relevant) and the acquirer must take. The relevant business could be offered to AWAC for purchase, with the value to be agreed. Alternatively, the acquirer might divest itself of the
relevant business or undertake some other action consistent with the exclusive vehicle provisions of the AWAC Agreements.



|(g) | Capital requirements
|--- | --------------------



The cash flow of AWAC and borrowings are the preferred sources of funding for the needs of AWAC. Should the aggregate annual capital budget of AWAC
require an equity contribution from Alcoa and Alumina, the following limits apply:



|(i) | With respect to amounts up to US$500 million in annual equity requested to be contributed in total by Alcoa and Alumina to AWAC (including amounts requested pursuant to paragraphs
(g)(ii) and (g)(iii)), each party must contribute its proportionate share based on its current ownership in AWAC. If either party does not contribute its proportionate share, the other party may make up the contribution, in addition to its own
contribution, and the non-contributing partys interest in AWAC will be diluted in accordance with an agreed formula.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(ii) | With respect to annual equity requests in excess of US$500 million but less than US$1 billion, each party must declare within 30 days of when the equity request is
made if it has the ability to fund its share of the request and, if so, each party must contribute its proportionate share. Should Alumina be unable to contribute the full amount of the equity in the year required, the parties will work together to
find alternative interim external financing arrangements reasonably acceptable to Alumina for AWAC or for Alumina, or Alumina may choose to have its interest in AWAC diluted in accordance with the formula noted above. If alternative external
financing is not acceptable to Alumina, Alcoa may fund the Alumina proportionate share and this contribution will be deemed to be a loan by Alcoa to Alumina at the current market rate for Alcoas long-term
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 65 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



| | borrowings. Alumina must repay the amount contributed on its behalf in a period not to exceed one year. If either party does not contribute its share or
Alumina does not repay the loan after one year and contribute its share, the dilution provision referred to above applies.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(iii) | With respect to annual equity requests in excess of US$1 billion approved by a super majority vote, each party must contribute its proportionate share. However, if Alumina is unable
to contribute the full amount of the equity in the year required, the parties must work together to find alternative financing arrangements reasonably acceptable to Alumina for AWAC or for Alumina. If Alumina does not contribute the balance of its
full proportionate share, Alcoa may make, and must be compensated for, all or part of the remaining contribution in Aluminas place. However, if this occurs, Aluminas interest in AWAC will only be diluted in accordance with the dilution
provision referred to in paragraph (i) above in respect of Alcoas contribution to the capital requirements up to US$1 billion. If Alcoa elects to proceed, Alcoa and Alumina will review the mechanism to compensate Alcoa for its excess
contribution, which may include a disproportionate allocation of returns associated with the excess contribution.
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(h) | Dividend policy
|--- | ---------------



AWAC must distribute by way of dividends, in each financial year, at least 30% of the net income of the prior year of each of the entities comprising
AWAC, unless the Strategic Council agrees by a super majority vote to pay a smaller dividend. AWAC must also endeavour to distribute dividends above 30% of the net income of AWAC, consistent with prudent financial management and in the context of
the strategic and business objectives of AWAC.



|(i) | Leveraging policy
|--- | -----------------



The affiliated operating entities within AWAC must maintain a limit of debt (net of cash) in the aggregate equalling not more than 30% of total capital,
where total capital is defined as the sum of debt (net of cash) plus any minority interest plus shareholder equity.



|(j) | Pre-formation liabilities
|--- | -------------------------



Where AWAC sustains an extraordinary liability (described below), Alcoa and Alumina must, to the extent of their preformation ownership interest,
indemnify, reimburse and hold harmless AWAC for such extraordinary liability. Certain matters including litigation, environmental and industrial hygiene matters, and non-compliances with government regulations or permits are identified and
responsibility allocated in the AWAC Agreements. An extraordinary liability is:



| |  | a liability to a third party claim at law or in equity;
| | - | -------------------------------------------------------



| |  | a claim by any government or governmental agency;
| | - | -------------------------------------------------



| |  | an environmental liability; or
| | - | ------------------------------



| |  | an industrial disease or personal injury.
| | - | -----------------------------------------



which relates to an act or omission that occurred totally or partially during a period prior to Formation date.



To be subject to the indemnity a claim or a series of quarterly related
claims (other than those specifically identified and referred to in the AWAC Agreements) must exceed an initial threshold amount of US$250,000. For liabilities that involve both activities or operations before and after the formation of AWAC, the
liabilities are allocated by applicable methods as provided in schedules to the AWAC Agreements or, if none of those methods are relevant, by a fair and reasonable allocation of the responsibility for the extraordinary liability (based on an
assessment of the respective contributions to the extraordinary liability by pre-formation and post-formation activities among AWAC, Alcoa and Alumina).



|(k) | Alumina pre-payment for Alcoa of Australia liabilities
|--- | ------------------------------------------------------



By an amending agreement dated 31 December 1995, Alcoas purchase price for Aluminas 9% of Alcoa of Australia was adjusted, with such
adjustment being in full satisfaction of Aluminas indemnity obligations for environmental extraordinary liabilities (as defined in the AWAC Agreements and described above) that should reasonably have been known, or for known
environmental extraordinary liabilities, at plants in Australia, except for the cost of reclaiming spent potlining stored at Portland. Alcoa assumed obligations to indemnify Alumina for any such extraordinary liabilities.



- 66 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



|(l) | Dispute resolution
|--- | ------------------



The AWAC Agreements mechanism prescribes for the resolution of all disputes, difference, controversies or claims between the parties in
relation to AWAC. The mechanism employs an escalating procedure for resolution.



|(m) | Transfer of interests
|--- | ---------------------



Rights of first refusal apply in relation to Alumina and Alcoas interests in AWAC, or their affiliated holding interests in AWAC.



In addition, without the other partys consent, neither party can
transfer its interests in AWAC to a competitor. For these purposes, a competitor is any person engaged in the mining of bauxite, the processing of alumina or inorganic chemicals or the production of primary aluminium, either directly
itself or indirectly through any company in which it holds, legally or beneficially, either 10% or more of the issued capital or 10% or more of the voting power.



Any increase or decrease in AWAC interests must be proportionate across all entities in AWAC unless the increase or decrease
was the involuntary consequence of government action, in which case Alumina and Alcoa must consult as to the appropriate course of action.



There is no change of control clause triggered by an upstream change of control of Alumina or Alcoa.



|(n) | Material inequity
|--- | -----------------



A principle agreed on the original formation of AWAC was that if either Alumina Limited or Alcoa believed eight years after the formation of AWAC that a
material inequity had resulted to them which substantially altered the value of a partys original contribution to AWAC, they could commence a procedure for making an adjustment to their contributions. Alcoa and Alumina Limited have agreed,
subsequent to a joint review in January 2003, that no such material inequity has occurred and no adjustment is to be made.



Demerger Deed



|(a) | Nature of contract
|--- | ------------------



In connection with the demerger, WMC Resources and Alumina Limited entered into the Demerger Deed. The Demerger Deed deals with transitional and
miscellaneous commercial and legal issues arising in connection with the legal and economic separation from WMC Resources.



|(b) | Key terms
|--- | ---------



| | (i) | Fundamental demerger principle
| | --- | ------------------------------



The fundamental principle of the separation from WMC Resources is that, following the demerger, WMC Resources has the entire economic benefit, risk and
liabilities of all of WMC Resources businesses, companies and assets as if WMC Resources had owned and operated those businesses, companies and assets at all times. Alumina continues to have the entire economic benefit, risk and liabilities of its
companies and assets following the demerger.



| | (ii) | Acknowledgement
| | ---- | ---------------



Consistent with the fundamental demerger principle outlined above, WMC Resources and Alumina acknowledged in the Deed that once the demerger was complete,
WMC Resources would not have any rights against Alumina, and Alumina would not have any rights against WMC Resources, except in specified circumstances. Neither WMC Resources nor Alumina has any right to make a claim for loss or damage arising
directly or indirectly in relation to the demerger, WMC Resources internal restructure and the operation of WMC Resources businesses prior to the demerger, unless expressly permitted by the Demerger Deed or any other document or agreement between
the parties.



(iii) Business restructure



Aluminas non-AWAC business and companies have been substantially
restructured pursuant to a series of separate restructure agreements prior to the demerger so that an identifiable corporate group has come into existence comprising the companies that constitute WMC Resources assets and our businesses. The Demerger
Deed makes provision for:



| |  | the approach to be adopted by the parties to the restructure of WMCs non-AWAC businesses and companies prior to the demerger;
| | - | ------------------------------------------------------------------------------------------------------------------------------



- 67 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



| |  | the practical, economic and legal effect of WMC Resources separation from Alumina;
| | - | ----------------------------------------------------------------------------------



| |  | the mechanism under which WMC Resources and Alumina can transfer to the other group any asset or contract which a group member owns or holds after the demerger date but which at the
demerger date was most directly used in the other groups business, or was incorrectly transferred as part of the restructure of WMC Limiteds non-AWAC businesses; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | if any asset or share transfers required to establish WMC Resources were not completed prior to the date of execution of the Demerger Deed, the principles in accordance with which
the parties are to conduct their arrangements pending each transfer, so as to ensure that, to the extent possible, each transferee gets the benefit and all risks of the asset or company being transferred as from the accounting effective date;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | Accounting separation
| | ---- | ---------------------



The Demerger Deed confirms that, for accounting purposes, Alumina and WMC Resources will be treated as being demerged as from November 30, 2002, or on
such other date as may be agreed between WMC Resources and Alumina Limited, with the intention that it be the date of the closest month end preceding the effective date of the demerger;



| | (v) | Access to records
| | --- | -----------------



Records held by each of WMC Resources and Alumina at the effective date of the demerger that relate to the other are to be maintained. Each of WMC
Resources and Alumina must allow the other to access those records and must notify the other prior to any destruction of those records so that they can be copied or retrieved;



(vi) Financial and tax assistance



WMC Resources and Alumina will assist each other in relation to future and past financial and tax matters and each will allow the other access to
financial and other records in connection with the preparation of tax returns or tax audits by the Australian Taxation Office of either WMC Resources or Alumina;



| | (vii) | Employees and superannuation
| | ----- | ----------------------------



The Demerger Deed addresses matters relating to the transfer of certain of WMC Resources employees to Alumina. Alumina is obliged to indemnify WMC
Resources against all costs and expenses relating to the transfer. WMC Resources and Alumina are each obliged to indemnify the other against all costs and expenses (including claims) relating to any redundancy, retrenchment or termination of a
former Alumina employee or employee of WMC Resources (as applicable);



In accordance with the fundamental demerger principle, each of WMC Resources and Alumina are required to meet all costs relating to the provision of retirement savings or retirement income benefits and other related benefits for their
employees. The Demerger Deed also requires Alumina to assume responsibility for the superannuation arrangements of those employees transferring to it from WMC Resources;



| | (viii) | Use of intellectual property
| | ------ | ----------------------------



The Demerger Deed sets out the general principles that determine ownership of intellectual property by WMC Resources and Alumina (other than trade marks
and business names). The Demerger Deed also sets out the restrictions on the use of jointly-owned intellectual property.



Under the Demerger Deed, Alumina is required as soon as practicable, and in any event within one month, after the demerger date to cease the use of the
WMC name (and derivatives) and the WMC logo and to arrange for the change of Alumina group company names including the WMC name (or derivatives);



| | (ix) | Litigation management
| | ---- | ---------------------



WMC Resources and Alumina will assist each other in relation to the management of current and new litigation matters involving Alumina (other than in
respect of litigation between WMC Resources and Alumina). Each of WMC Resources and Alumina indemnifies the other in respect of liability or loss suffered in connection with a claim where that liability relates to the business of the other; and



- 68 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



| | (x) | Insurance
| | --- | ---------



WMC Resources are to provide their own group business insurance and insurance for directors and officers from the effective date of the demerger. However, WMC Resources and their directors and officers will have
access to the existing directors and officers insurance policy maintained by Alumina for the remaining life of that policy in respect of matters which occurred on or before the effective date of the demerger.



Transitional Services Agreement



|(a) | Nature of contract
|--- | ------------------



In connection with the demerger, WMC Resources and Alumina entered into the Transitional Services Agreement. Under the agreement, WMC Resources provided,
or procured the provision of, certain services to the Alumina group for a period of up to 6 months after the demerger date.



|(b) | Services
|--- | --------



WMC Resources provided the following services to Alumina and to members of the Alumina group:



General corporate services



Accounting and Finance



IT support



Legal and company secretariat



Human resources



|(c) | Charges for Services
|--- | --------------------



WMC Resources charged Alumina a fixed fee of A$360,000 for providing, or procuring the provision of, the services described above.



|(d) | Protection of information
|--- | -------------------------



The agreement imposes obligations on each of WMC Resources and Alumina to protect all information, records, reports and other data and other agreements or
documents relating to or used in connection with the agreement.



|(e) | Indemnity
|--- | ---------



WMC Resources must indemnify Alumina against all claims and losses (as defined in the agreement) which may be made or brought against Alumina or incurred or suffered by Alumina as a result of WMC Resources wilful
misconduct (as defined in the Agreement) or the misconduct of WMC Resources directors, employees, officers, agents or contractors.



|D. | Exchange Controls
|-- | -----------------



(a) The Australian Banking (Foreign Exchange) Regulations and other Australian legislation and regulations control the import and export of capital and remittance of payments involving non-residents of Australia.
Alumina is not restricted from receiving funds into or transferring funds from Australia to the credit of non-residents of Australia but in certain cases is required to:



| | (i) | withhold Australian taxes;
| | --- | --------------------------



| | (ii) | obtain the Reserve Banks authority -
| | ---- | -------------------------------------



to place any sum in Australia to the credit of, or make any payment in Australia to, by order of or on behalf of:



| |  | the Government of Iraq, its agencies or nationals;
| | - | --------------------------------------------------



| |  | certain entities related to the Federal Republic of Yugoslavia (in limited circumstances) and certain named individuals associated with the former Milosevic regime;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 69 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



| |  | certain ministers and senior officials of the Government of Zimbabwe
| | - | --------------------------------------------------------------------



| |  | the Taliban or any undertaking owned or controlled, directly or indirectly by the Taliban or specific associated individuals, entities, agencies associated with the Taliban, Osama
bin Laden, al-Quaeda or other terrorists or their sponsors; or
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



to sell or purchase foreign currency or take or send from Australia any Australian currency where that transaction relates to:



| |  | property, securities or funds in Australia belonging either directly or indirectly to, or other payments to, the Government of Iraq, its agencies or nationals;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | property, securities or funds belonging either directly or indirectly to certain entities related to the Federal Republic of Yugoslavia or their agencies (in limited circumstances)
and certain named individuals associated with the former Milosevic regime;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | property, securities or funds in Australia owned or controlled, directly or indirectly, by or otherwise relating to payments to certain ministers and senior officials of the
government of Zimbabwe; or
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | property, securities or funds owned or controlled directly or indirectly by, or otherwise relating to payments to, or for the benefit of, the Taliban or any undertaking owned or
controlled, directly or indirectly, by the Taliban or specific associated individuals, entities, agencies associated with the Taliban, Osama bin Laden, Al-Quaeda or other terrorists or their sponsors; or
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | lodge a report of the transaction details.
| | ----- | ------------------------------------------



(b) There are no limitations, under the laws of Australia, on the right of non-residents to acquire, hold or vote Ordinary Shares in the Company, except for the Foreign
Acquisitions and Takeovers Act (the Act) and Section 606 of the Corporations Act 2001 (Cth) (the Corporations Act). The Act controls the rights of non-residents to hold 15% or more of the total voting power as outstanding
shares of an Australian company, but it does not affect the rights attaching to shares that are held or acquired in accordance with its provisions.



Under the Act, any acquisition or issue of shares (including the acquisition of an option to acquire shares) which would increase or alter beyond 15% in
the case of any single foreign interest, or 40% in the case of more than one foreign interest, the level of foreign ownership in a corporation that carries on an Australian business is subject to review and approval by the Treasurer of the
Commonwealth of Australia.



The Act permits the Treasurer to
deny or refuse proposals where such proposals would be contrary to the Australian national interest.



Section 606 of the Corporations Act provides that, subject to certain exceptions, a person must not acquire a relevant interest in shares in a company if
as a result someones voting power in the company increases to more than 20%, or from a starting point that is above 20% and below 90%. Section 606 also prohibits a person acquiring a legal or equitable interest in shares if, because of the
acquisition, another person acquires a relevant interest in shares and someones voting power increases to more than 20%, or from a starting point that is above 20% and below 90%. Section 608 of the Corporations Act provides that a person has a
relevant interest in shares if that person holds the shares, or has power or control over the voting rights attaching to them or their disposal, whether directly or indirectly.



The foregoing summary does not purport to be complete and is qualified in its
entirety by reference to the applicable legislation and to the Constitution. A copy of the Constitution is filed as Exhibit 1 to this Annual Report on Form 20-F.



|E. | Taxation
|-- | --------



The following is a summary of the principal Australian and United States federal income tax consequences to United States holders (as defined below) of
the acquisition, ownership and disposition of ADS or Ordinary Shares and is based on the laws in force as at the date of this Annual Report. Holders are advised to consult their own tax advisers



- 70 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



concerning the overall tax consequences of the acquisition, ownership and disposition of ADS or Ordinary Shares in their particular circumstances. This
discussion relies in part on representations by the Depositary in the Deposit Agreement and related documents.



Commonwealth of Australia Taxation



With effect from July 1, 2002, Australia rewrote dividend imputation legislation system relating to company tax. Broadly, the legislation rewrites the old dividend system. It is intended to produce a similar tax
outcome as the old system with some noted differences. The dividend imputation system of company tax relieves double taxation on dividends paid by Australian resident corporations. Under this system, companies are required to identify dividends paid
as either franked or unfranked dividends. Franked dividends are those paid out of profits which have borne Australian corporate tax (i.e. to which franking credits have been allocated) while unfranked dividends are paid out of untaxed profits. The
Australian corporate tax rate is 30%. Franked dividends paid to non-residents are exempt from withholding tax but unfranked (or partly franked) dividends are subject to withholding tax, generally at 15% on the unfranked amount. Notices are provided
to shareholders which specify the amount (if any) of dividend withholding tax deducted.



The current Australian tax rules require taxpayers to hold shares at risk for certain periods before obtaining the benefit of the dividend imputation system. The minimum period for holding ordinary shares
at risk is currently 45 days. Failure to satisfy these requirements may result in the deduction of Australian withholding tax from dividends paid to non-residents of Australia. There is an exemption from these rules for defined
small transactions.



The tax rules classify
interests which satisfy a financial arrangements test as either debt or equity. An interest that is classified as equity will be frankable, whereas an interest that is classified as debt will not be frankable. ADS and Ordinary Shares are likely to
be classified as equity on the basis that the return is contingent on our performance or at our discretion. These rules apply from July 1, 2001.



Under the provisions of the Convention between the Government of the United States of America and the Government of Australia for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (the Treaty) from 1 July 2003 the withholding tax rate on dividends is 5% of the gross amount of the dividends where the beneficial corporate shareholder
entitled to the dividends holds directly at least 10% of the voting power in the company. This rate is reduced to nil for certain corporate beneficial shareholders who own at least 80% of the voting shares. For other shareholders the withholding tax
rate will be 15% by virtue of the Treaty and domestic law.



A
United States citizen who is resident in Australia, or a United States corporation that is resident in Australia (by reason of carrying on business in Australia and being managed or controlled in Australia or having its voting power controlled by
shareholders who are residents of Australia) holding ADS or ordinary shares as capital assets, may be liable for Australian capital gains tax (CGT) on the disposal of our ADS or ordinary shares.



In calculating the amount of a capital gain that may be subject to Australian
CGT, special rules apply to individuals, trusts, certain superannuation funds and shareholders of certain listed investment companies. For ADS or ordinary shares acquired after September 21, 1999 and held for at least 12 months, individuals and
trusts will pay tax on half of the gain (calculated in nominal terms) or two-thirds of the gain for certain superannuation funds after allowing for any offsetting capital losses which are applied against the whole nominal gain. For ADS or Ordinary
Shares acquired before that time and held for at least 12 months, individuals, trusts and certain superannuation funds may choose between paying CGT on half of the gain (or two-thirds of the gain for certain superannuation funds), or paying CGT on
all of the gain with the gain being calculated on the basis of the cost of the ADS or shares being indexed for inflation up to September 30, 1999. For all types of taxpayers, the legislation freezes the indexation (for inflation) of the cost of ADS
and Ordinary Shares as at September 30, 1999, and abolishes such indexation for ADS and ordinary shares acquired after September 21, 1999.



Under current Australian law, no income or other tax is payable on any profit on disposal of the ADS or ordinary shares held by persons who are residents
of the United States within the meaning of the Treaty except:



| |  | if the person (together with associates, if any) owns or owned ADS and/or Ordinary Shares at any time during the period of five years preceding the disposal,
representing 10% or more of our issued share capital (excluding share capital carrying no right to participate beyond a specified amount in distribution
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 71 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



| | of profits or capital). However, in these circumstances there may be relief from Australian tax for residents of the United States under the Treaty; or
| | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | if the ADS or Ordinary Shares have been used by the person in carrying on a trade or business wholly or partly at or through a permanent establishment in Australia.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



Different rules will apply to persons and
corporations which are not residents of the United States.



Australia does not impose gift, estate or inheritance taxes in relation to gifts of shares or upon the death of a shareholder.



Neither the issue or transfer of an ADS or our Ordinary Shares or the payment of a dividend will give rise to a liability to goods and services tax in
Australia.



Australian Stamp Duty



No Australian stamp duty will be payable on the issue or transfer of an ADS
or the transfer of our Ordinary Shares.



United States Federal Income Tax
Consequences



The following discussion is a summary of the
material United States federal income tax consequences of owning Ordinary Shares or ADS. The discussion below, except where specifically noted, does not address the effects of any state, local or non-United States tax laws. In addition, it applies
to you only if you hold your Ordinary Shares or ADS as a capital asset, and does not address the tax consequences that may be relevant to you in light of your particular circumstances. Moreover, it does not apply to you if you are not a U.S. person,
as defined below, or if you are subject to special treatment under the United States federal income tax laws, including if you are:



a dealer in securities or currencies;



a trader in securities if you elect to use a mark-to-market method of accounting for your securities holdings;



a financial institution;



an insurance company;



a tax-exempt organization;



a person liable for alternative minimum tax;



a person that holds Ordinary Shares or ADS as part of a straddle or a hedging
or conversion transaction;



a person that actually or
constructively owns 10% or more of the voting stock of Alumina; or



a person whose functional currency is not the United States dollar.



This discussion is based on the Internal Revenue Code of 1986, as amended (the Code), existing and proposed regulations, published rulings and court decisions, all as currently in effect, as well as the
Convention Between the Government of the United States of America and the Government of Australia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the Treaty). These laws are
subject to change, possibly on a retroactive basis.



You are a
United States person if you are:



a citizen or resident of the
United States;



a domestic corporation;



an estate, the income of which is subject to United States federal income
taxation regardless of its source; or



a trust if a United
States court can exercise primary supervision over the trusts administration and one or more United States persons are authorized to control all substantial decisions of the trust.



- 72 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



For purposes of this discussion an eligible U.S. holder is a U.S. person that:



is a resident of the United States for purposes of the Treaty;



does not maintain, for purposes of the Treaty, a permanent
establishment or fixed base in Australia to which Ordinary Shares or ADS are attributable and through which the U.S. person carries on or has carried on business (or, in the case of an individual, performs or has performed independent personal
services); and



is otherwise eligible for benefits under the
Treaty with respect to income or gain from ordinary shares or ADS.



The tax consequences to you of the ownership of Ordinary Shares or ADS will depend upon the facts of your particular situation. We encourage you to consult your own tax advisors with regard to the application of the federal income tax laws,
as well as to the applicability and effect of any state, local or foreign tax laws to which you may be subject. In particular you should confirm your status as an eligible US holder with your advisors and should discuss any possible consequence of
failing to qualify as an eligible U.S. holder.



In general, and
taking into account the earlier assumptions, for United States federal income tax purposes, if you hold ADS evidencing ADS, you will be treated as the owner of the Ordinary Shares represented by those ADS. Exchanges of Ordinary Shares for ADS, and
ADS for Ordinary Shares, generally will not be subject to United States federal income tax.



Distributions



Subject
to the passive foreign investment company rules discussed below, distributions made to you on or with respect to Ordinary Shares or ADS will be treated as dividends and will be taxable as ordinary income to the extent that those distributions are
made out of our current or accumulated earnings and profits as determined for United States federal income tax purposes. You must include the gross amount of the dividend payment (including, in the case of unfranked or partially unfranked dividends,
any Australian tax withheld) as income at the time you receive it, actually or constructively. Subject to the passive foreign investment company rules discussed below, to the extent that the amount of any distribution exceeds our current or
accumulated earnings and profits for a taxable year, the excess will be treated as a tax-free return of capital which reduces your tax basis in the Ordinary Shares or ADS to the extent of the tax basis, and any remaining amount will be treated as
capital gain. If you are a corporation you generally will not be entitled to claim dividends received deduction with respect to distributions paid with respect to your Ordinary Shares or ADS.



The amount of the dividend distribution that you must include in your income
will be the US dollar value of the Australian dollar payments made, determined at the spot Australian dollar/US dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted
into US dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into US dollars will be treated as ordinary
income or loss. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes.



With effect from January 1, 2003, the United States reduced the maximum tax rate on certain qualifying dividend distributions to 15%. In order for
dividends paid by foreign corporations to qualify for the reduced rates, the foreign corporation must meet certain requirements, including that it not be classified as a foreign investment company or a passive foreign investment company for United
States federal income tax purposes in either the taxable year of the distribution or the preceding taxable year. The Company believes that its Ordinary Shares or ADS will not be treated as stock of a foreign investment company or a passive foreign
investment company, but this conclusion is a factual determination that is made annually and thus may be subject to change.



The company believes that dividends on ADS will qualify for these lower tax rates if the taxpayer meets the required holding period. In order for the
dividends on the ADS to qualify, taxpayers must hold the ADS for at least 61 days during the 121-day period beginning 60 days before the ex-dividend date.



Dividends paid to eligible U.S. holders with respect to our stock and that are unfranked or partially unfranked are subject to Australian withholding tax
at a maximum rate of 15% with respect to the unfranked portion of the dividend payment. Subject to certain limitations, the Australian tax withheld in accordance with the Treaty and paid over to Australia generally will be creditable against your
United States federal income tax liability.



- 73 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



Dividends will be income from sources outside the United States, but generally will be passive
income or financial services income which is treated separately from other types of income for purposes of computing the foreign tax credit allowable to you. Dividends qualifying for the special 15% maximum U.S. tax rate are
subject to special rules in determining a taxpayers foreign tax credit limitation.



Disposition



Subject to
the passive foreign investment company rules discussed below, any gain or loss you realize on the sale, exchange or other taxable disposition of Ordinary Shares or ADS will be subject to United States federal income taxation as a capital gain or
loss in an amount equal to the difference between the US dollar value of the amount that you realize on that sale, exchange or other disposition and your adjusted tax basis, determined in US dollars, in the Ordinary Shares or ADS surrendered. The
gain or loss will be long term capital gain or loss if your holding period for the ordinary shares or ADS is more than one year. A noncorporate U.S. person is generally taxed at a maximum rate of 20% on long term capital gain. Any capital gain or
loss so realized will generally be United States source gain or loss. Your ability to deduct capital losses is subject to limitations.



Passive Foreign Investment Company Rules



Alumina believes that its Ordinary Shares or ADS will not be treated as stock of a passive foreign investment company, or PFIC, for United
States federal income tax purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change. Moreover, the application of the PFIC rules to a corporation such as Alumina that is primarily engaged in the
active business of mining and processing metals is not entirely clear.



In general, if you are a U.S. holder, we will be a PFIC with respect to you if for any taxable year in which you held our ADS or Ordinary Shares:



at least 75% of our gross income for the taxable year is passive income or



at least 50% of the value, determined on the basis of a quarterly average, of our assets is attributable to assets that
produce or are held for the production of passive income.



Passive income generally includes dividends, interest, royalties, rents (other than certain rents and royalties derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income. If a foreign
corporation owns at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its
proportionate share of the other corporations income.



If
the company is treated as a PFIC, and you are a U.S. holder that did not make a mark-to-market election, as described below, you will be subject to special rules with respect to:



any gain you realize on the sale or other disposition of your Ordinary Shares or ADS and



any excess distribution that the company make to you (generally, any
distributions to you during a single taxable year that are greater than 125% of the average annual distributions received by you in respect of the Ordinary Shares or ADS during the three preceding taxable years or, if shorter, your holding period
for the Ordinary Shares or ADS).



Under these rules:



the gain or excess distribution will be allocated ratably over
your holding period for the Ordinary Shares or ADS,



the amount
allocated to the taxable year in which you realized the gain or excess distribution will be taxed as ordinary income,



the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate in effect for that year, and



the interest charge generally applicable to underpayments of tax will be
imposed in respect of the tax attributable to each such year.



- 74 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



Special rules apply for calculating the amount of the foreign tax credit with respect to excess
distributions by a PFIC.



If you own Ordinary Shares or ADS in
a PFIC that are treated as marketable stock, you may also make a mark-to-market election. If you make this election, you will not be subject to the PFIC rules described above. Instead, in general, you will include as ordinary income each year the
excess, if any, of the fair market value of your Ordinary Shares or ADS at the end of the taxable year over your adjusted basis in your Ordinary Shares or ADS. You will also be allowed to take an ordinary loss in respect of the excess, if any, of
the adjusted basis of your Ordinary Shares or ADS over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). Your basis in the
Ordinary Shares or ADS will be adjusted to reflect any such income or loss amounts.



If you own Ordinary Shares or ADS during any year that we are a PFIC, you must file Internal Revenue Service Form 8621.



|F. | Dividends and Paying Agents
|-- | ---------------------------



Not applicable.



|G. | Statements by Experts
|-- | ---------------------



Not applicable.



|H. | Documents on Display
|-- | --------------------



It is possible to read and copy documents referred to in this Annual Report on Form 20-F that have been filed with the Securities and Exchange Commission
(SEC) at the SECs public reference room located at 450 Fifth Street, NW, Washington DC 20549. Please telephone the SEC at 1-800-SEC-0330 or access the SEC website (www.sec.gov) for further information.



- 75 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



ADDITIONAL INFORMATION



|I. | Subsidiary Information
|-- | ----------------------



All controlled entities are wholly owned, unless otherwise indicated. Aluminas significant subsidiaries are described in Item 4C  Key
Information  Organisational Structure. The following is a list of all entities controlled by Alumina.



|                                       |  |                       |  |      
|-------------------------------------- |  | --------------------- |  | -----
|Controlled Entities                    |  | Place ofIncorporation |  | Notes
|Alumina Holdings (USA) Inc.            |  | Delaware, USA         |  | b    
|Alumina (U.S.A.) Inc.                  |  | Delaware, USA         |  | b    
|Westminer (Investments) B.V.           |  | Netherlands           |  | b    
|Westminer Acquisition (U.K.) Limited   |  | UK                    |  | b    
|Westminer International (U.K.) Limited |  | UK                    |  | b    
|Alumina International Holdings Pty Ltd |  | VIC, Australia        |  | a, b 



Notes to Subsidiaries:



These controlled entities have:



| | (a) | been granted relief from the necessity to prepare accounts pursuant to Australian Securities and Investment Commission (ASIC) Class Order 98/1418. These companies, which
are also referred to in the Directors Declaration are, with Alumina Limited, all members of a Closed Group as defined in the Class Order and are parties to a deed of cross guarantee which has been lodged with and approved by the
ASIC. Under the deed of cross guarantee, each of these companies guarantees the debts of the other companies party to the deed of cross guarantee;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | been translated as a self-sustaining entity.
| | --- | --------------------------------------------



|J. | Enforcement of Civil Liabilities
|-- | --------------------------------



Alumina is a corporation organized under the laws of the Commonwealth of Australia. All the directors and officers of Alumina, and some of the experts
named in this document, reside outside the United States, principally in Australia. A substantial portion of the assets of Alumina, and the assets of Alumina directors, officers and experts, are located outside the United States. Therefore, you may
not be able to effect service of process within the United States upon Alumina or these persons so that you may enforce judgments of United States courts against them based on the civil liability provisions of the United States federal securities
laws. In addition, you may have difficulty bringing an original action in an Australian court to enforce liabilities against Alumina or any of these persons based on U.S. federal securities laws.



- 76 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------



Quantitative Information about Market Risk



Continuing operations



Aluminas policy currently is not to hedge its commodity or currency exposure other than to secure the Australian dollar value of foreign currency
bank accounts. This policy will be reviewed periodically. AWAC has previously sought to manage its exposure to both the aluminium price and the A$/US$ exchange rate through the use of derivative products. During 2003, no new hedge positions were
implemented, but hedges equal to approximately 46 per cent of Australian dollar costs, at an average exchange rate of US$0.57, were closed out, resulting in no open positions at December 31, 2003. There were no aluminium hedge positions in place at
December 31, 2003.



Discontinuing operations



Price Risk Management Policy



Prior to the demerger of WMC Limited into Alumina Limited and WMC Resources
Ltd, WMCs Price Risk Management policy provided the framework for the management of price exposures and was established by the Board. The policy detailed the approach of WMC to managing price exposures and delineated hedging limits and
delegated management authorities. Management of exposures was delegated to the Risk Management Committee within parameters set by the Board, and was chaired by the Chief Executive Officer and comprised the Chief Financial Officer and several senior
executives. The Risk Management Committee was responsible for strategic hedging decisions and ensuring that these were implemented.



Due to changes to the scale, diversity and competitiveness of the Companys operations, WMC revised its Risk Management Policy during 1999 to limit
hedging activity to securing acceptable rates of return for new projects. Previously existing hedging contracts remained in place, but were not replaced or renewed.



Hedging gains or losses, together with the cost of contracts, were brought to account when the designated sale occurs. Price
Risk Management transactions are entered into with domestic and international banks and financial institutions, which the Board of Directors approved.



Commodity Hedging Policy



Commodity price risk related to WMCs exposure to changes in the commodity prices. WMCs revenue streams were significantly derived from the
sale of its commodity production and the amount of revenue fluctuated with the moving commodity prices.



Consistent with the Price Risk Management policy, the Company did, at times, seek to reduce its exposure to commodity price movements by entering into
commodity hedging contracts for a proportion of the Companys production. When looked at in isolation, hedging transactions could result in costs to the Company if:



| | (a) | the commodity price at the date of maturity of the hedge contract is greater than the hedged price (either due to the requirement to expend cash to financially settle hedge
contracts, or via the receipt of a hedge contract price lower than the prevailing spot price at contract maturity); or
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | a counterparty were to default and the commodity price at the date of default is less than the hedged price.
| | --- | ------------------------------------------------------------------------------------------------------------



In the case of (a), the hedging loss will be offset by a higher revenue
stream from the higher commodity price relative to the prevailing prices at the date of conception of the hedge, although the net revenue WMC would receive would be less than it would otherwise had received had the hedge transaction not been in
place.



Following the demerger, the subsidiary which held the
outstanding hedge contracts was transferred to WMC Resources Ltd leaving Alumina with no outstanding hedging positions.



- 77 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



A table showing the movement in the selling price of nickel, gold, fertilizer, aluminium and copper
over the last five years is set out below.



AVERAGE QUARTERLY
PRICES



|                       |  |                                   |  |                             |  |                                 |  |                                     |  |                                  
|---------------------- |  | --------------------------------- |  | --------------------------- |  | ------------------------------- |  | ----------------------------------- |  | ---------------------------------
|Financial Year Ended   |  | Nickel LondonMetal ExchangeUS$/lb |  | GoldLondonGold MarketUS$/oz |  | FertilizerUS GulfPriceUS$/tonne |  | AluminiumLondonMetal ExchangeUS$/lb |  | Copper LondonMetal ExchangeUS$/lb
|December 31, 1999      |  |                                   |  |                             |  |                                 |  |                                     |  |                                  
|First Quarter          |  | 2.11                              |  | 287                         |  | 199                             |  | 0.54                                |  | 0.64                             
|Second Quarter         |  | 2.37                              |  | 274                         |  | 190                             |  | 0.59                                |  | 0.66                             
|Third Quarter          |  | 2.89                              |  | 259                         |  | 174                             |  | 0.65                                |  | 0.76                             
|Fourth Quarter         |  | 3.53                              |  | 296                         |  | 153                             |  | 0.68                                |  | 0.79                             
|                       |  |                                   |  |                             | 
|December 31, 2000      |  |                                   |  |                             |  |                                 |  |                                     |  |                                  
|First Quarter          |  | 4.29                              |  | 291                         |  | 148                             |  | 0.74                                |  | 0.81                             
|Second Quarter         |  | 4.26                              |  | 280                         |  | 145                             |  | 0.67                                |  | 0.79                             
|Third Quarter          |  | 3.75                              |  | 277                         |  | 164                             |  | 0.71                                |  | 0.85                             
|Fourth Quarter         |  | 3.38                              |  | 269                         |  | 158                             |  | 0.69                                |  | 0.84                             
|                       |  |                                   |  |                             | 
|December 31, 2001      |  |                                   |  |                             |  |                                 |  |                                     |  |                                  
|First Quarter          |  | 2.97                              |  | 259                         |  | 162                             |  | 0.70                                |  | 0.79                             
|Second Quarter         |  | 3.04                              |  | 268                         |  | 142                             |  | 0.68                                |  | 0.75                             
|Third Quarter          |  | 2.51                              |  | 276                         |  | 138                             |  | 0.63                                |  | 0.67                             
|Fourth Quarter         |  | 2.29                              |  | 279                         |  | 147                             |  | 0.60                                |  | 0.64                             
|                       |  |                                   |  |                             | 
|December 31, 2002      |  |                                   |  |                             |  |                                 |  |                                     |  |                                  
|First Quarter          |  | 2.80                              |  | 291                         |  | 152                             |  | 0.63                                |  | 0.70                             
|Second Quarter         |  | 3.15                              |  | 313                         |  | 313                             |  | 0.62                                |  | 0.73                             
|Third Quarter          |  | 3.11                              |  | 314                         |  | 168                             |  | 0.59                                |  | 0.69                             
|Fourth Quarter         |  | 3.22                              |  | 323                         |  | 153                             |  | 0.61                                |  | 0.70                             
|                       |  |                                   |  |                             | 
|December 31, 2003      |  |                                   |  |                             |  |                                 |  |                                     |  |                                  
|First Quarter          |  | N/A                               |  | N/A                         |  | N/A                             |  | 0.63                                |  | N/A                              
|Second Quarter         |  | N/A                               |  | N/A                         |  | N/A                             |  | 0.63                                |  | N/A                              
|Third Quarter          |  | N/A                               |  | N/A                         |  | N/A                             |  | 0.64                                |  | N/A                              
|Fourth Quarter         |  | N/A                               |  | N/A                         |  | N/A                             |  | 0.68                                |  | N/A                              
|                       |  |                                   |  |                             | 
|Prices on June 2, 2004 |  |                                   |  |                             |  |                                 |  | 0.76                                |  |                                  



Following the
demerger, Alumina is no longer exposed to nickel, gold, fertilizer or copper price movements.



- 78 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Currency Hedging Policy



Foreign currency risk relates to Aluminas exposure to changes in exchange rates. Aluminas revenue streams were
significantly derived from the sale of its commodity production in US dollars and the amount of Australian dollar revenue it would receive fluctuated with the moving AUD/USD exchange rate.



Consistent with approved Board policy, the Company sought to reduce its
exposure to exchange rate movements by entering into foreign exchange hedging contracts for a proportion of its outstanding receivables with a view to reducing the effects of adverse currency rate fluctuations.



When looked at in isolation, hedging transactions relating to the conversion
of US dollar receivables to Australian dollars they could result in losses if:



| | (a) | the AUD weakens against the USD between contract inception and maturity; or
| | --- | ---------------------------------------------------------------------------



| | (b) | a counterparty were to default and the commodity price at the date of default is less than the hedged price.
| | --- | ------------------------------------------------------------------------------------------------------------



In the case of a), the hedging loss will be offset by a higher Australian
dollar revenue stream from the lower AUD/USD exchange rate, although the net revenue Alumina would receive would be less than it would otherwise have received had the hedge transaction not been in place.



Following the demerger, the subsidiary which held the outstanding hedge
contracts was transferred to WMC Resources Ltd leaving Alumina with no outstanding hedging positions.



Summary Hedging Results



Hedging results for Alumina (coming only from discontinuing operations) for the years ended December 31, 2003, 2002, and 2001 were:



A$ million profit / (loss)



|                   |  |      |  |        |   |  |        |  
|------------------ |  | ---- |  | ------ | - |  | ------ | -
|Hedging Results    |  | 2003 |  | 2002   |   |  | 2001   |  
|Currency - AUD/USD |  |     |  | (108.3 | ) |  | (328.1 | )
|Gold               |  |     |  | (5.2   | ) |  | 64.1   |  
|Copper             |  |     |  |       |   |  |       |  
|Nickel             |  |     |  |       |   |  | 2.0    |  
|                   |  |      |  |        |   |  |        |  
|Total              |  |     |  | (113.5 | ) |  | (262.0 | )



These gains and losses
have been allocated to the revenue and profits of individual business units.



The following information is provided in compliance with Financial Reporting Release No. 48. Alumina has elected to disclose information in the Tabular Presentation set down in s305(a)(I)(i).



Commodity Hedging



|(A) | Trading Purposes
|--- | ----------------



Nil.



|(B) | Non-trading (Hedging Purposes)
|--- | ------------------------------



As at December 31, 2003:



As at December 31, 2003, the group had no outstanding commodity hedge contracts.



- 79 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



As at December 31, 2002, the group had no outstanding commodity hedge contracts.



Currency Hedging



|(A) | Trading Purposes
|--- | ----------------



Nil



|(B) | Non-trading (Hedging Purposes)
|--- | ------------------------------



As at December 31, 2003:



As at December 31, 2003, the group had no outstanding currency hedging positions.



As at December 31, 2002, the group had no outstanding currency hedge contracts.



Interest rate hedging



Interest rate risk refers to Aluminas exposure to movements in interest rates. Alumina is primarily exposed to
interest rate risk on its outstanding interest bearing liabilities. As the interest rates fluctuate, the amount of interest payable on debt balances where the interest rate is not fixed will also fluctuate. Interest rate swaps and cross currency
swaps allow the group to manage its interest rate risk.



Interest rate risk



As at December 31, 2003 the group had short term bank
debt outstanding totaling A$467.0 million or US$351.0 million which is due in December 2004. It is intended this debt will be refinanced prior to maturity.



As at December 31, 2002 the group had short term bank debt outstanding totaling A$534.8 million or US$303.0 million which was refinanced in
November/December 2003.



Interest rate and cross-currency swaps



At December 31, 2003 and at December 31 2002, Alumina had
no outstanding interest rate hedging contracts in relation to its debt. During 2002 the company closed off all previous interest rate swaps at December 31, 2001 recording a gain of A$75.9 million.



As at 31 December 2003 and at December 31 2002, the group had nil cross
currency swaps in place.



Interest rate caps



As at 31 December 2003 and at 31 December 2002, the
group had no interest caps.



Adoption of FAS 133



The Company adopted Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities as amended by Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging Activities  Deferral of the Effective Date of
FASB Statement No. 133, an amendment of FASB Statement No. 133, and Statement of Financial Accounting Standards No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement



- 80 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



No. 133 (referred to hereafter as FAS 133), on January 1, 2001. In accordance with the transition provisions of FAS 133, the Company recorded the
following net-of-tax cumulative effect adjustments in earnings as of January 1, 2001:



|                                                                   |  |              |  
|------------------------------------------------------------------ |  | ------------ | -
|                                                                   |  | Millions(A$) |  
|Related to previously designated fair value hedging relationships: |  |              |  
|Fair value of hedging instruments                                  |  | 36.0         |  
|Offsetting changes in fair value of hedged items                   |  | (36.0        | )
|                                                                   |  |              |  
|Total adjustment net of tax                                        |  |             |  
|                                                                   |  |              |  



In addition, the
Company recorded the following net-of-tax cumulative-effect adjustments in other comprehensive income as of January 1, 2001.



|                                                                   |  |              |  
|------------------------------------------------------------------ |  | ------------ | -
|                                                                   |  | Millions(A$) |  
|Related to previously designated fair value hedging relationships: |  |              |  
|Fair value of hedging instruments                                  |  | 29.2         |  
|Previously deferred hedging gains and losses                       |  | (647.9       | )
|                                                                   |  |              |  
|Total adjustment net of tax                                        |  | (618.7       | )
|                                                                   |  |              |  



Accounting for
Derivatives and Hedging Activities



The Company
formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as
fair-value, cash flow, or foreign-currency hedges to (1) specific assets and liabilities on the balance sheet or (2) specific firm commitments or forecasted transactions. The Company also formally assesses (both at the hedges inception and on
an ongoing basis) whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the fair value or cash flows of hedged items and whether those derivatives may be expected to remain highly effective
in future periods. When it is determined that a derivative is not (or has ceased to be) highly effective as a hedge, the Company discontinues hedge accounting prospectively, as discussed below.



The Company discontinues hedge accounting prospectively when (1) it
determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of a hedged item (including hedged items such as firm commitments or forecasted transactions); (2) it is probable that the forecasted
transaction will not occur; (3) a hedged firm commitment no longer meets the definition of a firm commitment; or (4) management determines that designating the derivative as a hedging instrument is no longer appropriate.



Fair-Value Hedges



The Company used interest rate swaps to convert a portion of its non
prepayable fixed-rate debt into variable-rate debt. Under the interest rate swap contracts, the Company agreed with other parties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts, which is
calculated based on an agreed-upon notional amount.



Cash
Flow Hedges



Prior to demerger, the Companys
sales were denominated in United States dollars. The Company entered into foreign-exchange options and forward-exchange contracts as hedges of anticipated sales denominated in foreign currencies. The Company entered into these contracts to protect
itself against the risk that the eventual dollar-net-cash inflows resulting from direct-foreign-export sales would be adversely affected by changes in exchange rates.



As at December 31, 2002 the Company recognized a net gain of A$0.2 million, representing the change in time value on certain
of its forward contracts that had been excluded from the assessment of hedge effectiveness. A



- 81 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



further net loss of A$6.2 million was recorded for the ineffective portion of certain options designated as cash flow hedges.



The revaluation of foreign currency debt which is not treated as a hedge for
accounting purposes under US GAAP resulted in a net gain after tax of A$87.5 million.



The total of the adjustments referred to in the preceding two paragraphs on a pre-tax basis was A$146.5 million.



The maximum term over which the company is hedging exposures to the variability of cash flows using derivative instruments for all forecasted transactions
is nine years.



Subsequent gains and losses on cash flow hedges
are taken to other comprehensive income and are reclassified to profit and loss in the same period the hedged transaction is recognized. Gains and losses on fair value hedges continue to be taken to profit and loss in subsequent periods, as
offsetting gains and losses on hedged liabilities. In both cases, these gains and losses are not recognized under Australian GAAP until the hedged transaction is recognized.



FAS 133 requires that any component of the gain or loss which is deemed to be ineffective be taken to the Income Statement
immediately. For Australian GAAP any ineffectiveness is recognized over the term of the derivative.



- 82 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Carrying amounts and estimated fair values of financial instruments



The carrying amounts and estimated fair values of the groups financial
instruments are as follows:



|                                        |  |                    |  |               |  |                    |  |              
|--------------------------------------- |  | ------------------ |  | ------------- |  | ------------------ |  | -------------
|                                        |  | A$ Million        
|                                        |  | Carryingamount2003 |  | FairValue2003 |  | Carryingamount2002 |  | Fairvalue2002
|Recognized in the Balance Sheet         |  |                    |  |               |  |                    |  |              
|Financial Assets                        |  |                    |  |               |  |                    |  |              
|Cash assets                             |  | 165.3              |  | 165.3         |  | 23.2               |  | 23.2         
|Current receivables                     |  | 4.0                |  | 4.0           |  | 2.3                |  | 2.3          
|Financial Liabilities                   |  |                    |  |               |  |                    |  |              
|Current payables                        |  | 3.2                |  | 3.2           |  | 2.6                |  | 2.6          
|Short term interest bearing liabilities |  | 467.0              |  | 467.0         |  | 534.8              |  | 534.8        
|                                        |  |                    |  |               |  |                    |  |              



The following methods
and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate a value.



Cash assets and current other financial assets



The carrying amount approximates fair value because of the short maturity of these instruments.



Non-current other financial assets



The other investments are carried at cost. Shares quoted on a prescribed
stock exchange are valued at the quoted market value at balance date.



Debtors and creditors



The fair value
of debtors and creditors relating to hedging contracts have been calculated on a mark-to-market basis using forward prices. Other current debtors and creditors mainly represent financial obligations incurred in exchange for goods and services
provided and received by the group in the normal course of its operations, net of provisions for doubtful debts. Due to the short term nature of these financial obligations, their carrying values are estimated to equal their fair values.



Short and long term debt



The carrying value of short term debt is considered to approximate the fair
value due to the short maturity of the debt. Short term debt of A$467.0 million comprised bank loans. There was no long term debt.



Other Disclosures



Further disclosures relating to financial instruments are included in Note 25 to the Consolidated Financial Statements.



Contribution of Hedging to results for 2003 year



There was no currency hedging impact in the 2003 operating result.



- 83 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Contribution of Hedging to results for 2002 year



Commodity hedging contributed a loss of A$5.2 million to the operating
result. The total currency loss for the 12 months ended December 31, 2002 was A$108.3 million. The currency losses were attributable to forward contracts, implemented in prior periods and maturing in 2002, at an average rate above the HSRA rate for
the period.



Contribution of Hedging to results for 2001
year



Commodity hedging contributed a gain of A$66.2
million to the operating results. The total currency loss for the 12 months ended December 31, 2001 was A$328.2 million. The currency losses were attributable to forward contracts, implemented in prior periods and maturing in 2001, at an average
rate above the HSRA rate for the period.



Contribution of
Hedging to results for 2000 year



Commodity hedging
contributed a loss of A$14.9 million to the operating results. The total currency loss for the 12 months was A$253.0 million. This was due to forward contracts implemented in prior periods and maturing in 2000 at an average rate above the HSRA rate
for the period.



Contribution of Hedging to results for
1999 year



Commodity hedging contributed a gain of
A$62.8 million to the operating results. The total currency loss for the 12 months was A$19.8 million. This was due to forward contracts implemented in prior periods and maturing in 1999 at an average rate above the HSRA rate for the period.



In managements opinion, the Company did not engage in
any Price Risk Management transactions of a speculative nature during 2002, 2001, 2000, and 1999.



Qualitative Information About Market Risk



Qualitative information on price risk management, and commodity and currency hedging, is included in the discussion above in Item 11 Quantitative
Information on Price Risk Management. Qualitative information on treasury management and exchange rate and interest rate risk is discussed in Item 5B Operating and Financial Review and Prospects  Liquidity and Capital
Resources.



- 84 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|-------- | ------------------------------------------------------



Not applicable.



|ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|-------- | -----------------------------------------------



Not applicable.



|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|-------- | ----------------------------------------------------------------------------



Not applicable.



|ITEM 15. | CONTROLS AND PROCEDURES
|-------- | -----------------------



|A. | Evaluation of Disclosure Controls and Procedures
|-- | ------------------------------------------------



Alumina management, including our Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure
controls and procedures as of a date within 90 days before the filing of this annual report. Based on that review and evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are
effective in providing them with all material information required to be disclosed in this annual report on a timely basis.



|B. | Internal Controls
|-- | -----------------



Alumina management, including the Chief Executive Officer and Chief Financial Officer, have reviewed whether or not there have been significant changes in
internal controls or in other factors that could significantly affect the internal controls of Alumina subsequent to the date of their most recent evaluation. Based on that review, the Chief Executive Officer and Chief Financial Officer have
concluded that there have been no such significant changes.



|ITEM 16. | 
|-------- | 



|ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT
|--------- | --------------------------------



The board has determined that Mr Donald M Morley is an audit committee financial expert as defined in the listing standards of the New York
Stock Exchange. Although the board of directors has determined that Mr Morley has the requisite attributes defined under the rules of the Securities and Exchange Commission, his responsibilities are the



- 85 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



same as those of the other audit committee members. He is not an auditor or accountant, does not perform field work and is not a full-time
employee. The SEC has determined that an audit committee member who is designated as an audit committee financial expert will not be deemed to be an expert for any purpose as a result of being identified as an audit committee financial
expert. The audit committee is responsible for oversight of management in the preparation of our financial statements and financial disclosures. The audit committee relies on the information provided by management and the independent auditors. The
audit committee does not have the duty to plan or conduct audits or to determine that our financial statements and disclosures are complete and accurate. A copy of Audit Committee Charter is available from our web site at www.aluminalimited.com.
This link is an inactive textual link for reference only.



|ITEM 16B. | CODE OF ETHICS
|--------- | --------------



Alumina has adopted a code of conduct that applies to its directors, executive officers and employees. This code of conduct is available from our web site
at www.aluminalimited.com. This link is an inactive textual link for reference only.



- 86 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



|ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|--------- | --------------------------------------



|                                                                                                                                |  |                           |  |                       
|------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- |  | ----------------------
|                                                                                                                                |  | YearEndedDecember31, 2003 |  | YearEndedDecember,2002
|                                                                                                                                |  | A$ thousand              
|(a)    Remuneration for audit or review of the financial reports of the parent entity or any entity in the consolidated
entity: |  |                           |  |                       
|Auditors of parent entity  PricewaterhouseCoopers                                                                              |  |                           |  |                       
|- parent entity                                                                                                                 |  |                           |  |                       
|Fees for the annual audit                                                                                                       |  | 416                       |  | 365                   
|- controlled entities                                                                                                           |  |                          |  | 287                   
|                                                                                                                                |  |                           |  |                       
|                                                                                                                                |  | 416                       |  | 652                   
|                                                                                                                                |  |                           |  |                       
|(b)    Remuneration for audit-related services                                                                                  |  |                           |  |                       
|Annual report on US Form 20-F fees for the annual audit                                                                         |  | 93                        |  | 52                    
|Additional 2002 costs incurred in 2003                                                                                          |  | 100                       |  |                      
|                                                                                                                                |  |                           |  |                       
|                                                                                                                                |  | 193                       |  | 52                    
|                                                                                                                                |  |                           |  |                       
|(c)    Remuneration for tax services                                                                                            |  |                           |  |                       
|Australian tax services                                                                                                         |  |                          |  | 232                   
|International tax services                                                                                                      |  | 205                       |  | 181                   
|                                                                                                                                |  |                           |  |                       
|                                                                                                                                |  | 205                       |  | 413                   
|                                                                                                                                |  |                           |  |                       
|(d)    Remuneration for other services                                                                                          |  |                           |  |                       
|Risk management services                                                                                                        |  |                          |  | 684                   
|Independent accountants report and other due diligence                                                                          |  |                           |  |                       
|Services in connection with the demerger                                                                                        |  |                          |  | 3,315                 
|                                                                                                                                |  |                           |  |                       
|                                                                                                                                |  |                          |  | 3,999                 
|                                                                                                                                |  |                           |  |                       
|Total                                                                                                                           |  | 814                       |  | 5,116                 
|                                                                                                                                |  |                           |  |                       



- 87 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



Pre-Approval Policies



The policy Alumina has adopted for pre-approval of non-audit services to be performed by our independent auditor,
PricewaterhouseCoopers (PwC) is as follows:



| |  | PwC services which have fees of up to A$100,000 shall require the prior approval of the Audit Committee Chairman. Such approval shall include the scope of the services and the
approximate amount of fees and shall be reported to the next Audit Committee;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | For PwC services of more than A$100,000 and less than A$250,000, the provision of such services requires the prior approval of the Audit Committee;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  | For PwC services of more than A$250,000, proposed services to be put to competitive tender with requirement for CFO, CEO and Audit Committee Chairmans approval of inclusion of
PwC in tender list. The provision of such services also require the prior approval of the Audit Committee.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 16D. | EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES
|--------- | ------------------------------------------------------



Not applicable.



- 88 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



|ITEM 17. | FINANCIAL STATEMENTS
|-------- | --------------------



Not applicable, as Alumina complies with Item 18.



- 89 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



FINANCIAL STATEMENTS



|ITEM 18. | FINANCIAL STATEMENTS
|-------- | --------------------



Financial Statements and Financial Statement Schedules



The attached financial statements and financial statement schedules, pages F1-F100, with a full index on page F3, together with the Reports of Independent Accountants thereon, are filed as part of this Annual Report.



|                                                                          |  |            
|------------------------------------------------------------------------- |  | -----------
|                                                                          | 
|Alumina Limited Report of Independent Accountants                         |  | F-2        
|                                                                          | 
|Consolidated Balance Sheets                                               |  | F-5        
|                                                                          | 
|Consolidated Statements of Income, Comprehensive Income & Members Equity |  | F-4        
|                                                                          | 
|Consolidated Statements of Cash Flows                                     |  | F-7        
|                                                                          | 
|Notes to Consolidated Financial Statements                                |  | F-10  F-72
|                                                                          | 
|Schedule A  AWAC                                                         |  |            
|                                                                          | 
|Report of Independent Accountants                                         |  | F-73       
|                                                                          | 
|Combined Balance Sheets                                                   |  | F-74       
|                                                                          | 
|Combined Statements of Income, Comprehensive Income & Members Equity     |  | F-75       
|                                                                          | 
|Combined Statements of Cash Flows                                         |  | F-76       
|                                                                          | 
|Notes to Combined Financial Statements                                    |  | F-76-F-100 



- 90 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



FINANCIAL STATEMENTS



|ITEM 19. | EXHIBITS
|-------- | --------



Exhibit 1  Constitution of Alumina



Exhibit 4  Material contracts 4.1 The Alcoa World Alumina and Chemicals (AWAC) Joint Venture Agreements (incorporated by reference to Exhibit 4 to Alumina Limiteds (formerly known as WMC Limited) Annual Report
on Form 20-F for the fiscal year ended December 31, 2001, as filed with the Commission on April 4, 2002.). These Agreements comprise:



| | 4.1.1 | Heads of Agreement, dated July 6, 1994 between Aluminum Company of America and Western Mining Corporation Holdings Limited.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------



| | 4.1.2 | Charter of the Strategic Council, dated December 21, 1994 between Aluminum Company of America and Western Mining Corporation Holdings Limited.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------



| | 4.1.3 | Formation Agreement, dated December 21, 1994 among Aluminum Company of America, Alcoa International Holdings Corporation, ASC Alumina Inc., Western Mining Corporation Holdings
Limited, Westminer International Holdings Limited and WMC Alumina (USA) Inc.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.1.4 | Amended and Restated Limited Liability Company Agreement of Alcoa Alumina & Chemicals, L.L.C., dated December 31, 1994 among Aluminum Company of America, ASC Alumina Inc.,
Westminer International Holdings Limited and WMC Alumina (USA) Inc.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.1.5 | Loan Agreement, dated January 3, 1995 between Alcoa Alumina & Chemicals, L.L.C. and WMC Alumina (USA) Inc.
| | ----- | ----------------------------------------------------------------------------------------------------------



| | 4.1.6 | Administrative and Services Agreement, dated January 1, 1995 between Alcoa Alumina & Chemicals, L.L.C. and Aluminum Company of America.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------



| | 4.1.7 | AAC-ACOA Employee Services Agreement dated January 1, 1995 between Alcoa Alumina & Chemicals, L.L.C. and Aluminum Company of America.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------



| | 4.1.8 | WMC-ACOA Employee Services Agreement dated January 1, 1995 between Aluminum Company of America and Western Mining Holdings Limited.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------



| | 4.1.9 | Master Hedging Agreement dated December 31, 1994 among Aluminum Company of America, Alcoa of Australia Limited, Alcoa Alumina & Chemicals L.L.C., Suriname Aluminum Company
L.L.C. and Alcoa Minerals of Jamaica.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.1.10 | Assignment Agreement dated February 1, 1995 among Aluminum Company of America and Alcoa Alumina & Chemicals, L.L.C. regarding the Bauxite Contract with Compagnie des Bauxites de
Guinée.
| | ------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.1.11 | Abalco Shareholders Agreement, dated March 29, 1995 among Alcoa Alumina & Chemicals, L.L.C., Alcoa Brazil Holdings Company and Westminer International (UK) Limited.
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.2 | Demerger Deed between Alumina Limited and WMC Resources Limited dated March 5, 2003 (previously filed).
|--- | -------------------------------------------------------------------------------------------------------



|4.3 | Transitional Services Agreement between Alumina Limited and WMC Resources Limited dated 18 December 2002 (previously filed).
|--- | ----------------------------------------------------------------------------------------------------------------------------



- 91 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



FINANCIAL STATEMENTS



|4.4 | Management Contracts (previously filed).
|--- | ----------------------------------------



Exhibit 8  Significant Subsidiaries



Alumina Limiteds significant subsidiaries are as follows:



| |  | Alumina International Holdings Pty Ltd  Incorporated in Australia this company holds all entities in the Alumina Groups AWAC joint venture (except for Alcoa of
Australia Ltd, see below) through its indirect 40% interest in each of Alcoa World Alumina LLC, Alcoa Caribbean Holdings LLC, Alumina Espanola SA, Alcoa Chemie Nederland BV, Alcoa Chemie GMBH and Abalco SA. It is wholly owned by Alumina.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Alcoa of Australia Ltd  Incorporated in Australia, and 40% (2002:39.25%) owned by Alumina, this company is a significant entity in the Alumina Groups AWAC joint
venture, with integrated bauxite mining, alumina refining and aluminium smelting facilities in Australia.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Exhibit 12  Certifications pursuant to Rule 15d-14a under the US Securities Exchange Act of 1934



Exhibit 13  Certification pursuant to Rule 15d-14b under the US Securities Exchange
Act of 1934



- 92 -



---

##### Table of Contents

LOGO



2003 FORM 20-F



FINANCIAL STATEMENTS



Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant
certifies it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorised.



|                   |  |  |  |                 |  |                      |  |                        
|------------------ |  |  |  | --------------- |  | -------------------- |  | -----------------------
|                   |  |  |  | ALUMINA LIMITED
|                   |  |  | 
|                   |  |  |  |                 |  | /s/    Robert Davies
|                   |  |  |  |                 |  | (Signed)             |  | Robert Davies          
|Date: June 4, 2003 |  |  |  |                 |  |                     
|                   |  |  |  |                 |  | Name:                |  | Robert Davies          
|                   |  |  |  |                 |  | Title:               |  | Chief Financial Officer



- 93 -



---

##### Table of Contents

LOGO



ALUMINA LIMITED

(Australian Business Number 85 004 820 419)



AND CONTROLLED ENTITIES



U.S. FINANCIAL REPORT



AS OF AND FOR THE YEAR ENDED

31
DECEMBER 2003



Prepared in accordance

with Australian generally accepted

accounting principles (Australian GAAP)

except where noted



Amounts are stated in Australian dollars (A$) except where noted





---

##### Table of Contents

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors of

Alumina Limited



We have audited the accompanying consolidated statements of financial position of Alumina
Limited and its controlled entities, (the Group), as of 31 December 2003 and 2002, and the related consolidated statements of financial performance, statements of cash flows and consolidated statements of changes in shareholders
equity for each of the three years in the period ended 31 December 2003. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based
on our audits.



We conducted our audits in accordance with generally accepted
auditing standards in Australia and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Alumina Limited and its
controlled entities at 31 December 2003 and 2002, and the results of their operations and cash flows for the three years in the period ended 31 December 2003 in conformity with accounting principles generally accepted in Australia.



Accounting principles generally accepted in Australia vary in certain significant respects
from accounting principles generally accepted in the United States of America. The application of the latter would have affected the determination of net income for each of the three years in the period ended 31 December 2003 and the determination
of consolidated shareholders equity at 31 December 2003 and 2002 to the extent summarised in Note 35 to the consolidated financial statements.



|                              |  |                     
|----------------------------- |  | --------------------
|PricewaterhouseCoopers        |  |                     
|                              | 
|/s/    PricewaterhouseCoopers |  |                     
|PricewaterhouseCoopers        |  | Melbourne, Australia
|Chartered Accountants         |  | February 26, 2004,  
|                              |  | Except for Note 37  
|                              |  | Which is dated      
|                              |  | June 4, 2004        



F - 2



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Consolidated Financial Statements as of and for the year ended 31 December 2003



CONTENTS PAGE



|                                                           |  |                                                                               |  |   
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------- |  | --
|CONSOLIDATED STATEMENTS OF FINANCIAL PERFORMANCE           |  | 4                                                                            
|CONSOLIDATED STATEMENTS OF FINANCIAL POSITION              |  | 5                                                                            
|CONSOLIDATED STATEMENTS OF CASH FLOWS                      |  | 7                                                                            
|CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY |  | 9                                                                            
|1.                                                         |  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                    |  | 10
|2.                                                         |  | REVENUES                                                                      |  | 17
|3.                                                         |  | DISCLOSURES ABOUT ITEMS INCLUDED IN OPERATING INCOME/(LOSS) BEFORE INCOME TAX |  | 18
|4.                                                         |  | EXCEPTIONAL ITEMS                                                             |  | 19
|5.                                                         |  | INCOME TAX                                                                    |  | 21
|6.                                                         |  | EARNINGS PER SHARE                                                            |  | 24
|7.                                                         |  | FINANCIAL REPORTING BY SEGMENT                                                |  | 25
|8.                                                         |  | DIVIDENDS DECLARED AND PAID                                                   |  | 30
|9.                                                         |  | CURRENT ASSETS  CASH ASSETS                                                  |  | 30
|10.                                                        |  | CURRENT ASSETS  RECEIVABLES                                                  |  | 31
|11.                                                        |  | CURRENT ASSETS  OTHER                                                        |  | 31
|12.                                                        |  | INVESTMENTS IN ASSOCIATES                                                     |  | 31
|13.                                                        |  | NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT                            |  | 35
|14.                                                        |  | NON-CURRENT ASSETS  DEFERRED TAX ASSETS                                      |  | 35
|15.                                                        |  | CURRENT LIABILITIES  PAYABLES                                                |  | 35
|16.                                                        |  | CURRENT LIABILITIES  INTEREST BEARING LIABILITIES                            |  | 36
|17.                                                        |  | CURRENT LIABILITIES  CURRENT TAX                                             |  | 37
|18.                                                        |  | CURRENT LIABILITIES  PROVISIONS                                              |  | 37
|19.                                                        |  | NON-CURRENT LIABILITIES  DEFERRED TAX LIABILITIES                            |  | 37
|20.                                                        |  | NON-CURRENT LIABILITIES  PROVISIONS                                          |  | 37
|21.                                                        |  | CONTRIBUTED EQUITY                                                            |  | 37
|22.                                                        |  | MINORITY INTERESTS                                                            |  | 41
|23.                                                        |  | NOTES TO THE STATEMENTS OF CASH FLOWS                                         |  | 42
|24.                                                        |  | FINANCING FACILITIES                                                          |  | 43
|25.                                                        |  | FINANCIAL INSTRUMENTS                                                         |  | 44
|26.                                                        |  | PARTICULARS RELATING TO ENTITIES CONSOLIDATED IN THE ECONOMIC ENTITY          |  | 46
|27.                                                        |  | CONTINGENT LIABILITIES                                                        |  | 48
|28.                                                        |  | COMMITMENTS FOR EXPENDITURE                                                   |  | 49
|29.                                                        |  | SUPERANNUATION BENEFITS                                                       |  | 49
|30.                                                        |  | RELATED PARTY TRANSACTIONS                                                    |  | 51
|31.                                                        |  | REMUNERATION OF DIRECTORS                                                     |  | 53
|32.                                                        |  | REMUNERATION OF EXECUTIVES                                                    |  | 54
|33.                                                        |  | REMUNERATION OF AUDITORS                                                      |  | 56
|34.                                                        |  | DISCONTINUED OPERATIONS                                                       |  | 57
|35.                                                        |  | RECONCILIATION TO US GAAP                                                     |  | 60
|36.                                                        |  | RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS                                |  | 71
|37.                                                        |  | EVENTS SUBSEQUENT TO BALANCE DATE                                             |  | 71
|38.                                                        |  | (Schedule II)                                                                 |  | 72



F - 3



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENTS OF FINANCIAL PERFORMANCE



|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|----------------------------------------------------------------------------------------------------------------------- |  | ----- | --- |  | ------------------- | - |  | ------------------- | - |  | ------------------- | -
|                                                                                                                        |  | Notes |     |  | Year to 31 Dec 2003 |   |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001 |  
|                                                                                                                        |  |       |     |  | A$m                 |   |  | A$m                 |   |  | A$m                 |  
|Continuing Operations:                                                                                                  |  |       |     |  |                     |   |  |                     |   |  |                     |  
|General and administrative                                                                                              |  |       |     |  | (12.6               | ) |  | (6.3                | ) |  | (3.4                | )
|Other expenses                                                                                                          |  |       |     |  |                    |   |  | (1.3                | ) |  | (10.4               | )
|Other income                                                                                                            |  |       |     |  | 4.8                 |   |  | 1.3                 |   |  | 14.9                |  
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|(Loss)/profit before interest and income tax                                                                            |  |       |     |  | (7.8                | ) |  | (6.3                | ) |  | 1.1                 |  
|Interest expense                                                                                                        |  |       |     |  | (8.7                | ) |  | (0.6                | ) |  |                    |  
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|(Loss)/profit before income taxes                                                                                       |  |       |     |  | (16.5               | ) |  | (6.9                | ) |  | 1.1                 |  
|Income tax credit                                                                                                       |  | 5(a)  |     |  | 9.3                 |   |  | 0.3                 |   |  | 1.2                 |  
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Net (loss)/profit from continuing operations                                                                            |  |       |     |  | (7.2                | ) |  | (6.6                | ) |  | 2.3                 |  
|Equity in net of tax earnings of associates                                                                             |  | 12(b) |     |  | 244.1               |   |  | 216.3               |   |  | 279.1               |  
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Net profit from continuing operations                                                                                   |  |       |     |  | 236.9               |   |  | 209.7               |   |  | 281.4               |  
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Discontinued Operations:                                                                                                |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Net sales revenue                                                                                                       |  | 2     |     |  |                    |   |  | 2,220.9             |   |  | 2,816.9             |  
|Net expenses                                                                                                            |  |       |     |  |                    |   |  | (2,332.9            | ) |  | (2,987.1            | )
|Income tax credit                                                                                                       |  |       |     |  |                    |   |  | 26.9                |   |  | 49.4                |  
|Profit on disposal of gold operations (tax exempt at 2002, net of income tax benefit of $34.4 million at December 2001) |  | 4     |     |  |                    |   |  | 25.1                |   |  | 170.0               |  
|Profit on sale of right to Gold Royalty                                                                                 |  | 4     |     |  |                    |   |  | 15.4                |   |  |                    |  
|Profit on disposal of Long/Victor mines at Kambalda (net of tax expense of $2.6 million)                                |  | 4     |     |  |                    |   |  | 9.4                 |   |  |                    |  
|Profit on disposal of Three Springs Talc operation (net of income tax benefit of $1.4 million at December 2001)         |  | 4     |     |  |                    |   |  |                    |   |  | 20.0                |  
|Profit on disposal of equity interest in Mondo Minerals (net of income tax expense of $10.1 million at December 2001)   |  | 4     |     |  |                    |   |  |                    |   |  | 51.1                |  
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Net (loss)/profit from discontinued operations                                                                          |  |       |     |  |                    |   |  | (35.2               | ) |  | 120.3               |  
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Combined Operations:                                                                                                    |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Net sales revenue                                                                                                       |  |       |     |  |                    |   |  | 2,220.9             |   |  | 2,816.9             |  
|Cost of goods sold                                                                                                      |  |       |     |  |                    |   |  | (1,650.9            | ) |  | (2,232.4            | )
|Selling and distribution                                                                                                |  |       |     |  |                    |   |  | (143.7              | ) |  | (165.8              | )
|General and administrative                                                                                              |  |       |     |  | (12.6               | ) |  | (333.8              | ) |  | (252.7              | )
|General and administrative  exceptional items                                                                          |  |       |     |  |                    |   |  |                    |   |  | (513.1              | )
|Exploration and evaluation                                                                                              |  |       |     |  |                    |   |  | (34.3               | ) |  | (95.1               | )
|Other expenses                                                                                                          |  |       |     |  |                    |   |  | (94.1               | ) |  | (55.6               | )
|Other expenses  exceptional items                                                                                      |  |       |     |  |                    |   |  | (178.5              | ) |  |                    |  
|Other income                                                                                                            |  |       |     |  | 4.8                 |   |  | 57.9                |   |  | 204.1               |  
|Other income  exceptional items                                                                                        |  |       |     |  |                    |   |  | 230.7               |   |  | 635.2               |  
|Share of net profits of associates                                                                                      |  |       |     |  | 244.1               |   |  | 216.3               |   |  | 279.1               |  
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Profit before interest and income tax                                                                                   |  |       |     |  | 236.3               |   |  | 290.5               |   |  | 620.6               |  
|Interest expense                                                                                                        |  | 3     | (b) |  | (8.7                | ) |  | (140.6              | ) |  | (295.2              | )
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Profit before income taxes                                                                                              |  |       |     |  | 227.6               |   |  | 149.9               |   |  | 325.4               |  
|Income tax credit                                                                                                       |  | 5     | (a) |  | 9.3                 |   |  | 24.6                |   |  | 76.3                |  
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Net profit attributable to holding company shareholders                                                                 |  |       |     |  | 236.9               |   |  | 174.5               |   |  | 401.7               |  
|- Foreign currency adjustments                                                                                          |  |       |     |  | 28.4                |   |  | 6.0                 |   |  | 28.6                |  
|- Equity share of foreign currency adjustments                                                                          |  |       |     |  |                    |   |  | 29.4                |   |  | (8.8                | )
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|                                                                                                                        |  |       |     |  | 28.4                |   |  | 35.4                |   |  | 19.8                |  
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Total changes in equity other than those resulting from transactions with owners as owners                              |  |       |     |  | 265.3               |   |  | 209.9               |   |  | 421.5               |  
|                                                                                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Net earnings per share attributable to holding company shareholders (A$ per share)                                      |  | 6     |     |  |                     |   |  |                     |   |  |                     |  
|- Australian GAAP (basic)                                                                                               |  |       |     |  | 0.21                |   |  | 0.16                |   |  | 0.36                |  
|- Australian GAAP (diluted)                                                                                             |  |       |     |  | 0.21                |   |  | 0.16                |   |  | 0.36                |  



The accompanying notes form part of
these consolidated financial statements.



F - 4



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



|                                                |  |       |  |                   |  |        
|----------------------------------------------- |  | ----- |  | ----------------- |  | -------
|                                                |  |       |  | As at 31 December
|                                                |  | Notes |  | 2003              |  | 2002   
|                                                |  |       |  | A$m               |  | A$m    
|CURRENT ASSETS                                  |  |       |  |                   |  |        
|Cash assets                                     |  | 9     |  | 165.3             |  | 23.2   
|Receivables                                     |  | 10    |  | 4.0               |  | 2.3    
|Deferred tax assets                             |  |       |  | 4.1               |  |       
|Other                                           |  | 11    |  | 0.3               |  | 0.9    
|                                                |  |       |  |                   |  |        
|Total current assets                            |  |       |  | 173.7             |  | 26.4   
|                                                |  |       |  |                   |  |        
|NON-CURRENT ASSETS                              |  |       |  |                   |  |        
|Investments in associates                       |  | 12    |  | 1,625.0           |  | 1,668.7
|Property, plant and equipment                   |  | 13    |  | 0.4               |  |       
|                                                |  |       |  |                   |  |        
|Total non-current assets                        |  |       |  | 1,625.4           |  | 1,668.7
|                                                |  |       |  |                   |  |        
|TOTAL ASSETS                                    |  |       |  | 1,799.1           |  | 1,695.1
|                                                |  |       |  |                   |  |        
|CURRENT LIABILITIES                             |  |       |  |                   |  |        
|Payables                                        |  | 15    |  | 3.2               |  | 2.6    
|Interest bearing liabilities                    |  | 16    |  | 467.0             |  | 534.8  
|Current tax liabilities                         |  | 17    |  | 2.5               |  | 1.7    
|Provisions                                      |  | 18    |  | 0.1               |  | 0.1    
|Other                                           |  |       |  | 2.3               |  |       
|                                                |  |       |  |                   |  |        
|Total current liabilities                       |  |       |  | 475.1             |  | 539.2  
|                                                |  |       |  |                   |  |        
|NON-CURRENT LIABILITIES                         |  |       |  |                   |  |        
|Deferred tax liabilities                        |  | 19    |  |                  |  | 2.2    
|Provisions                                      |  | 20    |  | 0.2               |  | 0.2    
|                                                |  |       |  |                   |  |        
|Total non-current liabilities                   |  |       |  | 0.2               |  | 2.4    
|                                                |  |       |  |                   |  |        
|TOTAL LIABILITIES                               |  |       |  | 475.3             |  | 541.6  
|                                                |  |       |  |                   |  |        
|Minority shareholders interest in subsidiaries |  | 22    |  |                  |  |       
|                                                |  |       |  |                   |  |        
|NET ASSETS                                      |  |       |  | 1,323.8           |  | 1,153.5
|                                                |  |       |  |                   |  |        



The accompanying notes form part of
these consolidated financial statements.



F - 5



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)



|                                                                                      |  |       |     |  |                   |  |        
|------------------------------------------------------------------------------------- |  | ----- | --- |  | ----------------- |  | -------
|                                                                                      |  |       |     |  | As at 31 December
|                                                                                      |  | Notes |     |  | 2003              |  | 2002   
|                                                                                      |  |       |     |  | A$m               |  | A$m    
|EQUITY                                                                                |  |       |     |  |                   |  |        
|Share capital:                                                                        |  |       |     |  |                   |  |        
|- Authorized: 2,000,000,000 shares                                                    |  |       |     |  |                   |  |        
|- Issued:                                                                             |  |       |     |  |                   |  |        
|1,159,778,548 (31 Dec 2002: 1,128,333,747) fully paid ordinary shares of no par value |  | 21    |     |  | 384.8             |  | 220.2  
|Asset revaluation reserve:                                                            |  |       |     |  |                   |  |        
|- parent and subsidiaries                                                             |  |       |     |  | 34.3              |  | 34.3   
|Equity accounted reserves                                                             |  | 12    | (d) |  |                  |  | 101.3  
|Capital reserve                                                                       |  |       |     |  | 16.5              |  | 16.5   
|Retained earnings:                                                                    |  |       |     |  |                   |  |        
|- parent and subsidiaries                                                             |  |       |     |  | 400.3             |  | 382.9  
|- equity accounted associates                                                         |  |       |     |  | 407.7             |  | 346.5  
|Accumulated other comprehensive income                                                |  |       |     |  | 80.2              |  | 51.8   
|                                                                                      |  |       |     |  |                   |  |        
|TOTAL EQUITY                                                                          |  |       |     |  | 1,323.8           |  | 1,153.5
|                                                                                      |  |       |     |  |                   |  |        
|Contingent liabilities                                                                |  | 27    |     |  |                   |  |        
|Commitment for expenditure                                                            |  | 28    |     |  |                   |  |        



The accompanying notes form part
of these consolidated financial statements.



F - 6



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                   |  |       |     |  |                         |   |  |                         |   |  |                         |  
|------------------------------------------------------------------ |  | ----- | --- |  | ----------------------- | - |  | ----------------------- | - |  | ----------------------- | -
|                                                                   |  | Notes |     |  | Year to 31 Dec 2003 A$m |   |  | Year to 31 Dec 2002 A$m |   |  | Year to 31 Dec 2001 A$m |  
|                                                                   |  |       |     |  | A%m                     |   |  | A$m                     |   |  | A$m                     |  
|CASH FLOWS FROM OPERATING ACTIVITIES                               |  |       |     |  |                         |   |  |                         |   |  |                         |  
|Receipts from customers                                            |  |       |     |  |                        |   |  | 2,193.5                 |   |  | 2,981.0                 |  
|Payments to suppliers and employees                                |  |       |     |  | (7.3                    | ) |  | (1,832.0                | ) |  | (2,212.7                | )
|Interest and other items of a similar nature received              |  |       |     |  | 2.2                     |   |  | 27.6                    |   |  | 51.5                    |  
|Borrowing costs                                                    |  |       |     |  | (8.3                    | ) |  | (150.0                  | ) |  | (204.9                  | )
|Proceeds from guarantee                                            |  |       |     |  | 2.4                     |   |  |                        |   |  |                        |  
|Proceeds from interest rate swap close out                         |  |       |     |  |                        |   |  | 71.2                    |   |  | 11.7                    |  
|Dividends received from associates                                 |  |       |     |  | 284.2                   |   |  | 281.0                   |   |  | 377.0                   |  
|Income taxes paid                                                  |  |       |     |  | (4.7                    | ) |  | (3.2                    | ) |  | (6.7                    | )
|Proceeds from insurance claims                                     |  |       |     |  |                        |   |  | 35.0                    |   |  | 34.3                    |  
|Payments for:                                                      |  |       |     |  |                         |   |  |                         |   |  |                         |  
|-exploration (grassroots)                                          |  |       |     |  |                        |   |  | (17.1                   | ) |  | (57.2                   | )
|-exploration (additional, supporting existing operations)          |  |       |     |  |                        |   |  | (3.4                    | ) |  | (19.3                   | )
|                                                                   |  |       |     |  |                         |   |  |                         |   |  |                         |  
|Net cash provided by operating activities                          |  | 23    | (a) |  | 268.5                   |   |  | 602.6                   |   |  | 954.7                   |  
|                                                                   |  |       |     |  |                         |   |  |                         |   |  |                         |  
|CASH FLOWS FROM INVESTING ACTIVITIES                               |  |       |     |  |                         |   |  |                         |   |  |                         |  
|Payments for property, plant and equipment                         |  |       |     |  | (0.3                    | ) |  | (412.3                  | ) |  | (426.8                  | )
|Proceeds from sale of St Ives and Agnew gold operations            |  |       |     |  |                        |   |  |                        |   |  | 432.0                   |  
|Proceeds from sale of Three Springs Talc operation                 |  |       |     |  |                        |   |  |                        |   |  | 56.0                    |  
|Proceeds from sale of equity interest in Mondo Minerals            |  |       |     |  |                        |   |  |                        |   |  | 122.2                   |  
|Proceeds from sale of Central Norseman Gold Corporation            |  |       |     |  |                        |   |  | 25.7                    |   |  |                        |  
|Proceeds from sale of investments                                  |  |       |     |  |                        |   |  |                        |   |  | 24.9                    |  
|Proceeds from sale of non-current assets                           |  |       |     |  |                        |   |  | 67.6                    |   |  | 64.2                    |  
|Proceeds from insurance claims                                     |  |       |     |  |                        |   |  | 15.7                    |   |  | 23.6                    |  
|(Payments for)/proceeds from gold hedge close out                  |  |       |     |  |                        |   |  | (34.4                   | ) |  | 21.7                    |  
|Proceeds from/(payments for) short term investments                |  |       |     |  |                        |   |  | 2.6                     |   |  | (8.6                    | )
|Payments for research and development                              |  |       |     |  |                        |   |  | (0.4                    | ) |  |                        |  
|Payments for evaluation expenditure                                |  |       |     |  |                        |   |  | (4.4                    | ) |  | (4.9                    | )
|Payment for purchase of Halco and MRN shares                       |  |       |     |  |                        |   |  | (72.9                   | ) |  |                        |  
|Payment for purchase of Yakabindie Nickel Pty Limited              |  |       |     |  |                        |   |  |                        |   |  | (25.2                   | )
|Cash reserves retained by WMC Resources Ltd upon demerger          |  |       |     |  |                        |   |  | (65.2                   | ) |  |                        |  
|                                                                   |  |       |     |  |                         |   |  |                         |   |  |                         |  
|Net cash (used in)/provided by investing activities                |  |       |     |  | (0.3                    | ) |  | (478.0                  | ) |  | 279.1                   |  
|                                                                   |  |       |     |  |                         |   |  |                         |   |  |                         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                               |  |       |     |  |                         |   |  |                         |   |  |                         |  
|Proceeds from issues of shares                                     |  |       |     |  | 56.2                    |   |  | 38.5                    |   |  | 67.6                    |  
|Proceeds from borrowings                                           |  |       |     |  | 79.2                    |   |  | 1,816.6                 |   |  | 277.2                   |  
|Repayments of borrowings                                           |  |       |     |  |                        |   |  | (1,966.1                | ) |  | (1,055.5                | )
|Dividends paid                                                     |  |       |     |  | (259.6                  | ) |  | (199.7                  | ) |  | (396.4                  | )
|Distributions paid to minority shareholders                        |  |       |     |  |                        |   |  |                        |   |  | (1.0                    | )
|                                                                   |  |       |     |  |                         |   |  |                         |   |  |                         |  
|Net cash used in financing activities                              |  |       |     |  | (124.2                  | ) |  | (310.7                  | ) |  | (1,108.1                | )
|                                                                   |  |       |     |  |                         |   |  |                         |   |  |                         |  
|Net (decrease)/increase in cash held                               |  |       |     |  | 144.0                   |   |  | (186.1                  | ) |  | 125.7                   |  
|Cash at the beginning of the financial year                        |  |       |     |  | 23.2                    |   |  | 214.2                   |   |  | 86.1                    |  
|Effects of exchange rate changes on foreign currency cash balances |  |       |     |  | (1.9                    | ) |  | (4.9                    | ) |  | 2.4                     |  
|                                                                   |  |       |     |  |                         |   |  |                         |   |  |                         |  
|Cash at the end of the financial year                              |  | (a    | )   |  | 165.3                   |   |  | 23.2                    |   |  | 214.2                   |  
|                                                                   |  |       |     |  |                         |   |  |                         |   |  |                         |  



The accompanying notes form part of
these consolidated financial statements.



F - 7



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)



|                                                                                                                                                                                        |  |       |  |                        |  |                        |  |                        |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | ---------------------- |  | ---------------------- |  | ---------------------- | -
|                                                                                                                                                                                        |  | Notes |  | Year to31 Dec 2003 A$m |  | Year to31 Dec 2002 A$m |  | Year to31 Dec 2001 A$m |  
|                                                                                                                                                                                        |  |       |  | A$m                    |  | A$m                    |  | A$m                    |  
|(a)    Reconciliation of Cash                                                                                                                                                           |  |       |  |                        |  |                        |  |                        |  
|For the purposes of the consolidated statements of cash flows, cash represents cash on hand, at the bank and on short-term deposit (maturity
of 3 months or less) less bank overdrafts: |  |       |  |                        |  |                        |  |                        |  
|Cash assets - US GAAP cash and cash equivalents                                                                                                                                         |  | 9     |  | 165.3                  |  | 23.2                   |  | 214.4                  |  
|                                                                                                                                                                                        |  |       |  |                        |  |                        |  |                        |  
|Bank overdrafts                                                                                                                                                                         |  |       |  |                       |  |                       |  | (0.2                   | )
|                                                                                                                                                                                        |  |       |  |                        |  |                        |  |                        |  
|Australian GAAP cash and cash equivalents                                                                                                                                               |  |       |  | 165.3                  |  | 23.2                   |  | 214.2                  |  
|                                                                                                                                                                                        |  |       |  |                        |  |                        |  |                        |  



The above statements differ from US
GAAP in that under US GAAP bank overdrafts are not considered to be part of the net cash equivalents and so changes in bank overdrafts (net) would be included in cash flows from financing activities. In addition, payments for research and
development would be included in cash flows from operating activities instead of investing activities. Refer to Note 35.



F - 8



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY



|                                                                                        |  |                        |   |  |                        |   |  |                         |  
|--------------------------------------------------------------------------------------- |  | ---------------------- | - |  | ---------------------- | - |  | ----------------------- | -
|                                                                                        |  | Year to31 Dec 2003 A$m |   |  | Year to31 Dec 2002 A$m |   |  | Year to 31 Dec 2001 A$m |  
|                                                                                        |  | A$m                    |   |  | A$m                    |   |  | A$m                     |  
|Issued shares fully paid                                                                |  |                        |   |  |                        |   |  |                         |  
|Beginning of period                                                                     |  | 220.2                  |   |  | 3,190.9                |   |  | 3,123.3                 |  
|Shares issued:                                                                          |  |                        |   |  |                        |   |  |                         |  
|- Employee share scheme :                                                               |  |                        |   |  |                        |   |  |                         |  
|- Converted from partly paid                                                            |  |                       |   |  | 2.2                    |   |  | 0.8                     |  
|- Conversion of options                                                                 |  | 56.2                   |   |  | 36.3                   |   |  | 66.8                    |  
|- Shares issued to acquire Corridor Sands                                               |  |                       |   |  | 123.8                  |   |  |                        |  
|- Shares issued to acquire QBEs 0.75% share of Alcoa of Australia                      |  | 108.4                  |   |  |                       |   |  |                        |  
|Less: return of capital to effect the demerger                                          |  |                       |   |  | (3,133.0               | ) |  |                        |  
|                                                                                        |  |                        |   |  |                        |   |  |                         |  
|End of period                                                                           |  | 384.8                  |   |  | 220.2                  |   |  | 3,190.9                 |  
|                                                                                        |  |                        |   |  |                        |   |  |                         |  
|Asset revaluation reserve                                                               |  |                        |   |  |                        |   |  |                         |  
|Beginning and end of period                                                             |  | 34.3                   |   |  | 34.3                   |   |  | 34.3                    |  
|                                                                                        |  |                        |   |  |                        |   |  |                         |  
|Capital reserve                                                                         |  |                        |   |  |                        |   |  |                         |  
|Beginning and end of period                                                             |  | 16.5                   |   |  | 16.5                   |   |  | 16.5                    |  
|                                                                                        |  |                        |   |  |                        |   |  |                         |  
|Retained earnings                                                                       |  |                        |   |  |                        |   |  |                         |  
|Beginning of period                                                                     |  | 729.4                  |   |  | 1,451.7                |   |  | 1,368.3                 |  
|Net income                                                                              |  | 236.9                  |   |  | 174.5                  |   |  | 401.7                   |  
|Transfer from reserves                                                                  |  |                       |   |  | 33.3                   |   |  | 2.6                     |  
|Dividends provided for or paid:                                                         |  |                        |   |  |                        |   |  |                         |  
|2003 interim 10 cents per fully paid share                                              |  | (112.9                 | ) |  |                       |   |  |                        |  
|2002 final 13 cents per fully franked share                                             |  | (146.7                 | ) |  |                       |   |  |                        |  
|2002 interim 5 cents fully franked per share                                            |  |                       |   |  | (55.6                  | ) |  |                        |  
|Special dividend distributed to effect the demerger                                     |  |                       |   |  | (823.0                 | ) |  |                        |  
|2001 interim 16 cents fully franked per share                                           |  |                       |   |  |                       |   |  | (176.8                  | )
|2001 final 13 cents fully franked per share                                             |  |                       |   |  |                       |   |  | (144.1                  | )
|Transfer from reserve following revaluation of non-current assets in Alcoa of Australia |  | 101.3                  |   |  |                       |   |  |                        |  
|Distribution on demerger of WMC Resources Ltd                                           |  |                       |   |  | (51.5                  | ) |  |                        |  
|                                                                                        |  |                        |   |  |                        |   |  |                         |  
|End of period                                                                           |  | 808.0                  |   |  | 729.4                  |   |  | 1,451.7                 |  
|                                                                                        |  |                        |   |  |                        |   |  |                         |  
|Accumulated other comprehensive income                                                  |  |                        |   |  |                        |   |  |                         |  
|Foreign currency translation adjustment                                                 |  |                        |   |  |                        |   |  |                         |  
|Beginning of period                                                                     |  | 51.8                   |   |  | 79.1                   |   |  | 53.1                    |  
|Transfer to retaining earnings                                                          |  |                       |   |  | (33.3                  | ) |  | (2.6                    | )
|Difference on translation of self sustaining foreign entities                           |  | (118.6                 | ) |  | (26.0                  | ) |  | 58.2                    |  
|Revaluation of naturally hedged net monetary liabilities                                |  | 147.0                  |   |  | 44.4                   |   |  | (42.3                   | )
|Income taxes allocated to translation adjustments                                       |  |                       |   |  | (12.4                  | ) |  | 12.7                    |  
|                                                                                        |  |                        |   |  |                        |   |  |                         |  
|End of period                                                                           |  | 80.2                   |   |  | 51.8                   |   |  | 79.1                    |  
|                                                                                        |  |                        |   |  |                        |   |  |                         |  
|Equity accounted reserves                                                               |  |                        |   |  |                        |   |  |                         |  
|Beginning of period                                                                     |  | 101.3                  |   |  | 71.9                   |   |  | 80.7                    |  
|Transfer to retained profits                                                            |  | (101.3                 | ) |  |                       |   |  |                        |  
|Equity share of translation adjustment                                                  |  |                       |   |  | 29.4                   |   |  | (8.8                    | )
|                                                                                        |  |                        |   |  |                        |   |  |                         |  
|End of period                                                                           |  |                       |   |  | 101.3                  |   |  | 71.9                    |  
|                                                                                        |  |                        |   |  |                        |   |  |                         |  
|Total shareholders equity                                                              |  | 1,323.8                |   |  | 1,153.5                |   |  | 4,844.4                 |  
|                                                                                        |  |                        |   |  |                        |   |  |                         |  



The accompanying notes form part of
these consolidated financial statements.



F - 9



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------



|(a) | BACKGROUND AND BASIS OF ACCOUNTING
|--- | ----------------------------------



Basis of Accounting



The accompanying consolidated financial statements have been prepared in accordance with Australian Accounting Standards and other mandatory professional
reporting requirements. These standards and reporting requirements form part of generally accepted accounting principles in Australia (Australian GAAP). Where these principles differ from those generally accepted in the United States of America (US
GAAP), reference is made by footnote. A reconciliation of the major differences between these principles and those applicable under US GAAP is included as Note 35.



The financial report is prepared in accordance with the historical cost convention. Unless otherwise stated, the accounting
policies adopted are consistent with those of the previous year.



The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.



On 11 December 2002 WMC Limited, the former parent entity of WMC Resources,
consummated the separation of WMC Limited together with its interest in Alcoas World Alumina and Chemicals business (AWAC), from WMC Limiteds mineral businesses which now comprise WMC Resources (the demerger).



Prior to effecting the demerger, through a series of transactions internal
to the WMC Limited Group, WMC Resources acquired WMC Limiteds shares in the legal entities which held the copper/uranium and fertilizer businesses, WMC Finance Limited, WMC Finance (USA) Limited as well as WMC Limiteds exploration and
development interests other than those relating to AWAC. Under Australian GAAP, all of these acquisitions were accounted for at fair value in return for shares in WMC Resources. Under US GAAP, the internal transactions were accounted for at book
value. To consummate the demerger, WMC Limited effected a capital reduction and dividend to its shareholders in an amount equivalent to the value of WMC Resources after the internal transfers were completed. The entitlement of WMC Limiteds
shareholders to the capital reduction and dividend was ultimately satisfied in the demerger through the distribution to WMC Limiteds shareholders of shares in WMC Resources on a one-for-one basis.



As part of the demerger, a net deficit arose due to the difference between
the consideration received from shareholders for their entitlement to WMC Resources shares and net book value of the assets demerged. The directors have determined that as the demerger transaction was with shareholders, the net deficit arising
should be included as a movement in equity. Specifically the net deficit is shown as a movement in retained profits in the consolidated Statements of changes in Shareholders Equity.



Advisory costs incurred throughout the demerger process were expensed as
incurred. These amounts have been separately identified in Note 4 to the financial statements.



Further information relating to the discontinued operations for the period to the date of disposal is set out in Note 34.



|(b) | PRINCIPLES OF CONSOLIDATION
|--- | ---------------------------



The consolidated financial report is prepared for the economic entity, being Alumina Limited (parent entity) and the entities it controls. Australian GAAP
defines entity widely including any legal, administrative or fiduciary arrangement. All material entities in the group are companies. The economic entity consisting of Alumina Limited and its controlled entities is referred to in the financial
report as the group. In preparing the financial statements, the effects of all transactions between entities within the group are eliminated in full, including unrealised profits and losses on transactions with associates accounted for
on an equity basis.



F - 10



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------------------



|(b) | PRINCIPLES OF CONSOLIDATION (continued)
|--- | ---------------------------------------



Where control of an entity is obtained during a financial year, its results are included in the consolidated statements of income from the date on which
control commences. Where control of an entity ceases during a financial year, its results are included for that part of the year during which control existed. This financial report includes the results of WMC Resources Ltd and the entities acquired
by WMC Resources Ltd as part of the demerger up to 30 November 2002.



Interest in companies which the group does not control or exercise significant influence over are included in the accounts as investments, initially recorded at cost. Dividends receivable are taken into profits of the investing entity on
the date of declaration.



Associates are those entities over
which the consolidated entity exercises significant influence, but not control. Investments in associates are accounted for in the consolidated financial statements using the equity method. Under this method, the consolidated entitys share of
the post-acquisition profits or losses of associates is recognised in the consolidated statement of financial performance, and its share of post-acquisition movements in reserves is recognised in consolidated reserves. The cumulative
post-acquisition movements are adjusted against the cost of the investment.



The groups share of the retained profits of associated entities is not available for payment of dividends to shareholders of Alumina Limited, except to the extent that those profits are later received as
dividends from the associated entities concerned, and such dividends do not represent a recoupment of the cost or revalued amount of the investments concerned.



Accounting policies adopted by associated entities are generally consistent with those of the group but, where necessary, the results of associated
entities are restated in order to comply with the accounting policies of the group. Any remaining differences would not materially affect the amounts reflected in the consolidated results of the group.



Alumina Limited does not use the cost method to account for any entities for
which there is a greater than 20% ownership.



|(c) | FOREIGN CURRENCY TRANSLATION
|--- | ----------------------------



Transactions



Foreign currency transactions are initially translated into Australian currency at the rate of exchange at the date of the transaction. The subsequent
payment or receipt of funds relating to that transaction is translated at the rate applicable on the date of payment or receipt. Any such amounts outstanding at balance date are translated at the rate of exchange prevailing on the balance date.
Resulting exchange differences that are related directly to property, plant and equipment under construction or development net of the effects of a hedge of the monetary item are recorded as part of the cost of property, plant and equipment, while
all other exchange differences are brought to account in determining the profit or loss



Controlled foreign entities



The accounts of self-sustaining controlled foreign entities that report other than in Australian dollars are translated into Australian currency using rates of exchange current at balance date for assets and liabilities, and actual or an
average of rates ruling during the reporting period for revenues and expenses. Equity is translated at historical rates. All exchange gains and losses arising on these translations are taken to the foreign currency translation reserve as part of
other comprehensive income.



Upon disposal of a self
sustaining controlled foreign entity the balance of the foreign currency translation reserve relating to the operation is transferred to retained profits.



F - 11



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|1. | SUMMARY OF ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------



|(c) | FOREIGN CURRENCY TRANSLATION (continued)
|--- | ----------------------------------------



Controlled foreign entities (continued)



The exchange gains and losses arising on those foreign currency borrowings (net of gains and losses on any related specific hedge contracts) which are
designated as hedges of investments in self-sustaining controlled foreign entities are offset in the foreign currency translation reserve against the exchange gains and losses arising on the translation of the net assets of those entities. These
circumstances represent an effective natural hedge.



For
integrated foreign controlled entities, monetary assets and liabilities are translated into Australian currency at rates of exchange current at balance date, while non-monetary items and revenue and expense items are translated at exchange rates
current when the transactions occurred. Exchange differences arising on translation are brought to account in determining the profit or loss.



|(d) | INCOME TAX
|--- | ----------



The provision for income taxes in Alumina Limiteds consolidated financial statements has been determined on a separate-return basis. The liability
method of tax-effect accounting is used, whereby the income tax expense for the year is matched with the accounting profit after allowance for permanent differences. The income tax effect of significant permanent differences on the tax expense for
the year is set out in Note 5. Income tax set aside on cumulative timing differences is brought to account as either a provision for deferred income tax or an asset described as a deferred tax asset at the rate of income tax applicable to the period
in which the liability will become payable or the benefit will be received.



The deferred tax asset relating to tax losses is not carried forward as an asset unless the benefit can be regarded as being virtually certain of realization. The deferred tax asset relating to timing differences is
not carried forward as an asset unless its realization is assured beyond any reasonable doubt.



|(e) | RECEIVABLES
|--- | -----------



All trade debtors are recognized as the amounts receivable upon settlement. Collectibility of trade debtors is reviewed on an ongoing basis. Debts that
are known to be uncollectible are written off. A provision is raised when some doubt exists about collection.



|(f) | RECOVERABLE AMOUNT OF NON-CURRENT ASSETS
|--- | ----------------------------------------



The recoverable amount of an asset is the net amount expected to be recovered through the cash inflows and outflows arising from its continued use and
subsequent disposal.



Recoverable amounts of non-current
assets are assessed based on undiscounted future net cash flows expected to be generated from the assets. Where net cash inflows are derived from a group of assets working together, recoverable amount is determined on the basis of the relevant group
of assets. The values of assets are reviewed on an ongoing basis, and where the carrying amount exceeds recoverable amount, the carrying amounts of non-current assets are revalued downwards to the lower of their recoverable amount or market value.
The decrement in the carrying amount is recognized as an expense in the statement of financial performance in the reporting period in which the write down occurs.



|(g) | ACQUISITION OF ASSETS
|--- | ---------------------



The purchase method of accounting is used for all acquisitions of assets regardless of whether equity instruments or other assets are acquired. Cost is
measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of
the instruments is their market price as at the acquisition date, unless the notional price at which they could be placed in the market is a better indicator of fair value.



F - 12



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|1. | SUMMARY OF ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------



|(h) | INTANGIBLE ASSETS AND EXPENDITURE CARRIED FORWARD
|--- | -------------------------------------------------



(i) Goodwill



Where an entity or operation is acquired, the identifiable net assets acquired are measured at fair value. The excess of the fair value of the cost of
acquisition over the fair value of the identifiable net assets acquired, including any liability for restructuring costs, is brought to account as goodwill and amortised on a straight line basis over 20 years.



|(i) | DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
|--- | ---------------------------------------------



The cost of each item of property, plant and equipment is written off over its expected useful life to the group, in the establishment of which due regard
is given to the life of the related area of interest. None of the lives exceed thirty years. Freehold land is not depreciated.



Assets which are depreciated or amortised on a basis other than over the life of the related area of interest typically have the following economic lives:



|                                     |  |        
|------------------------------------ |  | -------
|Office furniture                     |  | 8 years
|Computers and other office equipment |  | 4 years



|(j) | LEASED NON-CURRENT ASSETS
|--- | -------------------------



The group has operating lease agreements under which the lessor effectively retains substantially all risks and benefits. Operating lease payments are
charged to the statement of financial performance in the periods in which they are incurred, as this represents the pattern of benefits derived from the leased assets.



The cost of improvements to or on leasehold properties is amortized over the unexpired period of the lease or five years,
whichever is the shorter.



|(k) | CURRENT ASSETS AND CURRENT LIABILITIES
|--- | --------------------------------------



For the purposes of balance sheet classification, assets and liabilities are categorised as current if they are expected to be realized in
cash, sold or consumed, or liquidated, as the case may be, within the groups normal operating cycle, which does not exceed one year for any activity.



|(l) | TRADE AND OTHER CREDITORS
|--- | -------------------------



These amounts represent liabilities for goods and services provided to the group prior to the end of the financial year and which are unpaid. These
amounts are unsecured and are usually paid within thirty days of recognition.



|(m) | BORROWING COSTS
|--- | ---------------



Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs relate to interest on short term borrowings and
certain exchange differences arising from foreign currency borrowings.



F - 13



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|1. | SUMMARY OF ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------



|(n) | EMPLOYEE ENTITLEMENTS
|--- | ---------------------



(i) Salaries and annual leave



Liabilities for salaries and annual leave are recognised in current provisions (i.e. expected to be settled in 12 months), and are measured as the amount
unpaid at the reporting date at expected pay rates in respect of employees services up to that date, including related on-costs.



(ii) Long service leave



Long service leave is an additional form of compensated leave to which Australian employees become entitled after a qualifying period of generally ten
years of continuous service. It accrues at the rate of 1.3 weeks leave per year of service.



A liability for long service leave is recognised in non-current provisions (i.e. not expected to be settled within 12 months), and is measured as the
nominal value based on expected pay rates in respect of services provided by employees up to the reporting date, including related on-costs.



(iii) Employee Shares, Options, Bonus and Stock Appreciation Plans



Liabilities for employee benefits in the form of employee share, bonus plan and stock appreciation plans are recognised in
other creditors at the earlier of when they fall due or where there is no realistic alternative but to settle the liability and at least one of the following conditions are met:



| |  | There are formal terms in the plan for determining the amount of the benefit
| | - | ----------------------------------------------------------------------------



| |  | The amount to be paid are determined before the completion of the financial report, or
| | - | --------------------------------------------------------------------------------------



| |  | Past practices gives clear evidence of the amount of the obligation
| | - | -------------------------------------------------------------------



Liabilities for employee share plans are expected to be settled within twelve months and are measured at the amounts expected to be paid when they are
settled.



(iv) Superannuation



Since 27 July 2001, all employer contributions and ongoing management of
employees superannuation entitlements have been managed by the WMC Superannuation Plan, an independently managed sub-plan of the Plum Superannuation Fund. Since the demerger Alumina employees have become members of a sub-plan of the WMC
Superannuation Plan, created specifically for Alumina. The plan is an accumulation category plan which offers a minimum company contribution (subject to certain cashing out options and legislation) of 9 per cent of basis salary to each members
account. Members also have the option to make voluntary contributions to their account. Employer contributions to these funds are recognised as an operating cost.



Plan membership is compulsory for all Australian resident employees and Australian expatriates, and provides lump sum
benefits on retirement, permanent disability, death, resignation and retrenchment.



|(o) | PROVISIONS
|--- | ----------



Provisions are recognized where there is a legal, equitable or constructive obligation as a result of a past event and it is probable that an outflow of
economic benefits will be required to settle the obligation.



(i) Workers Compensation



Provision is made
for amounts payable in relation to outstanding workers compensation claims when it is probable that an outflow of economic benefits will be required to settle the obligation. Amounts provided are reviewed regularly by actuaries or insurers in light
of the claims outstanding.



F - 14



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|1. | SUMMARY OF ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------



|(p) | INTEREST-BEARING LIABILITIES
|--- | ----------------------------



Loans are carried at their principal amounts which represent the present value of future cash flows associated with servicing the debt. Interest is
accrued over the period it becomes due and is recorded as part of other creditors.



|(q) | DIVIDENDS
|--- | ---------



Provision is made for the amount of any dividend declared, determined or publicly recommended by the directors on or before the end of the year but not
distributed at balance date.



|(r) | DERIVATIVE FINANCIAL INSTRUMENTS
|--- | --------------------------------



The group has used derivative financial instruments to hedge natural exposures to commodity prices, exchange rates and interest rates. The instruments
used include spot, forward, swap and option contracts.



|(s) | EARNINGS PER SHARE
|--- | ------------------



(i) Basic earnings per share



Basic earnings per share is determined by dividing net profit after income tax attributable to members of the company, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year.



(ii) Diluted earnings per share



Change in basis of determining earnings per share



In previous years diluted earnings per share was calculated by adjusting the figures used in the determination of basic earnings per share by taking into
account amounts unpaid on ordinary shares and earnings that would have arisen had the dilutive option been exercised during the financial year. Diluted earnings per share is now calculated by adjusting the weighted average number of shares to
include potential ordinary shares assumed to have been issued for no consideration.



The change in the basis for calculating earnings per share figures was made to comply with AASB 1027 Earnings per Share, issued in June 2001.



The earnings per share information for the year ended 31 December 2001 has been recalculated to present the comparative
amounts on a consistent basis with the current financial year.



|(t) | ROUNDING OF AMOUNTS
|--- | -------------------



The company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities & Investments Commission, relating to the
rounding off of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with Class Order to the nearest hundred thousand dollars.



|(u) | REVENUE RECOGNITION
|--- | -------------------



Sales revenue is measured at the fair value of the consideration received, and is recognized when each of the following conditions are met:



| | (i) | persuasive evidence of an arrangement exists, which is usually in the form of a contractual arrangement.
| | --- | --------------------------------------------------------------------------------------------------------



| | (ii) | title in the product has transferred to the buyer, which in most cases occurs when the product passes ships rail, at the port of loading.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------



F - 15



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|1. | SUMMARY OF ACCOUNTING POLICIES (continued)
|-- | ------------------------------------------



| | (iii) | the sellers price to the buyer is fixed or determinable. In the case of certain products sold by the company, including nickel concentrate, nickel matte and copper cathode,
revenue is recognized on a provisional basis at the time of title transfer, based on prevailing market prices and contained metal, and is subject to final adjustment at the end of periods ranging from 30 to 90 days in most cases, for movements in
market prices to the end of those periods. Revenue initially recognized is equal to the contained quantity of metal, measured at the forward price. At each subsequent period end date prior to final settlement, revenue is remeasured based on the
prevailing forward price. Refer to Note 2 for details of amounts of revenue recognized subject to final settlement. Revenue is considered determinable at the recognition point, due to the existence of an actively traded and widely quoted market on
the London Metal Exchange for the relevant metals. Market prices are the only aspect of recognized revenue subject to material change at the time of recognition. Final sales prices are determined based on contained metal and the market price at the
relevant quotation point stipulated in each contract, which is generally on or around the end of the settlement period.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | collectability is reasonably assured.
| | ---- | -------------------------------------



|(v) | EXPLORATION AND EVALUATION EXPENDITURE
|--- | --------------------------------------



Exploration and evaluation expenditure is written off as incurred, except when such costs are expected to be recouped through successful development and
exploitation, or sale, of an area of interest. In addition exploration assets recognised on acquisition of an entity are carried forward provided that exploration and/or evaluation activities in the area have not yet reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in relation to the area are continuing.



The expenditure carried forward when recovery is expected represents an accumulation of direct net exploration and
evaluation costs incurred by or on behalf of the group and applicable indirect costs, in relation to separate areas of interest for which rights of tenure are current.



If it is established subsequently that economically recoverable reserves exist in a particular area of interest, resulting
in the decision to develop a commercial mining operation, then in that year, the accumulated expenditure attributable to that area, to the extent that it does not exceed the recoverable amount for the area concerned, will be transferred to mine
development. As such it will be subsequently amortized against production from that area. Any excess of accumulated expenditure over recoverable amounts will be written off to the income statement.



The carry forward of exploration expenditure prior to development is not
consistent with US GAAP. Refer to Note 35(c) for the effect of any such expenditure.



|(w) | ASSET RETIREMENT OBLIGATIONS
|--- | ----------------------------



Alumina has changed its accounting policy by adopting FAS No. 143 Accounting for Asset Retirement Obligations (effective 1 January 2003).



The Company policy requires an asset retirement obligation
and a matching asset to be brought to account (calculated at a discounted present value) at the initial point the liability is incurred, generally when the mine is first commenced. The cost of the obligation is to be amortized over the life of a
long-lived asset. Increases in the obligation as a result of the reduction of time are to be treated as interest.



The cumulative impact on the statement of financial performance on adoption of SFAS 143 by Alumina Limited for both US GAAP and Australian GAAP was a once
off income in Aluminas equity share of investment in associates of A$11.1 million (US$7.3 million). Net income for the year of 2002 would not have been materially different if this standard had been adopted effective January 1, 2002.



F - 16



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|2. | REVENUES
|-- | --------



|                                                                 |  |       |     |  |                         |  |                         |   |  |                         |  
|---------------------------------------------------------------- |  | ----- | --- |  | ----------------------- |  | ----------------------- | - |  | ----------------------- | -
|                                                                 |  | Notes |     |  | Year to 31 Dec 2003 A$m |  | Year to 31 Dec 2002 A$m |   |  | Year to 31 Dec 2001 A$m |  
|                                                                 |  |       |     |  | A$m                     |  | A$m                     |   |  | A$m                     |  
|Sales revenue from core operating activities:                    |  |       |     |  |                         |  |                         |   |  |                         |  
|Sale of goods from discontinued operations1                      |  | 2     | (a) |  |                        |  | 2,220.9                 |   |  | 2,816.9                 |  
|Other income:                                                    |  |       |     |  |                         |  |                         |   |  |                         |  
|Interest received/receivable  continuing operations             |  | 3     | (b) |  | 2.4                     |  | 1.3                     |   |  | 2.8                     |  
|Profit on disposal of non-current assets  continuing operations |  |       |     |  |                        |  |                        |   |  | 3.2                     |  
|Guarantee fee received                                           |  |       |     |  | 2.4                     |  |                        |   |  |                        |  
|                                                                 |  |       |     |  |                         |  |                         |   |  |                         |  
|Other income from continuing operations                          |  |       |     |  | 4.8                     |  | 1.3                     |   |  | 6.0                     |  
|Other income from discontinued operations                        |  |       |     |  |                        |  | 186.3                   |   |  | 190.6                   |  
|Profit on sale of non-current assets  discontinued operations   |  |       |     |  |                        |  | 44.0                    |   |  | 271.9                   |  
|                                                                 |  |       |     |  |                         |  |                         |   |  |                         |  
|Total other income                                               |  |       |     |  | 4.8                     |  | 231.6                   |   |  | 468.5                   |  
|                                                                 |  |       |     |  |                         |  |                         |   |  |                         |  
|SUBTOTAL NET REVENUES                                            |  |       |     |  |                         |  | 2,452.5                 |   |  | 3,285.4                 |  
|Proceeds from sale of non-current assets                         |  |       |     |  |                        |  | 101.0                   |   |  | 685.9                   |  
|Less profit on disposal of non-current assets                    |  |       |     |  |                        |  | (44.0                   | ) |  | (275.1                  | )
|                                                                 |  |       |     |  |                         |  |                         |   |  |                         |  
|OPERATING REVENUE                                                |  |       |     |  | 4.8                     |  | 2,509.5                 |   |  | 3,696.2                 |  
|                                                                 |  |       |     |  |                         |  |                         |   |  |                         |  
|(a)    Net sales revenue includes:                               |  |       |     |  |                         |  |                         |   |  |                         |  
|Currency hedging losses                                          |  |       |     |  |                        |  | (108.3                  | ) |  | (328.2                  | )
|Commodity hedging gains/(losses)                                 |  |       |     |  |                        |  | (5.2                    | ) |  | 66.2                    |  
|                                                                 |  |       |     |  |                         |  |                         |   |  |                         |  
|                                                                 |  |       |     |  |                        |  | (113.5                  | ) |  | (262.0                  | )
|                                                                 |  |       |     |  |                         |  |                         |   |  |                         |  



|1 | Amounts included in revenue which were based on provisional pricing as described in accounting policy Note 1(u) were as follows:
|- | --------------------------------------------------------------------------------------------------------------------------------



|     |  |     
|---- |  | ----
|Year |  | A$m 
|2003 |  |    
|2002 |  | 63.4
|2001 |  | 60.5
|     |  |     



F - 17



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|3. | DISCLOSURES ABOUT ITEMS INCLUDED IN OPERATING INCOME/(LOSS) BEFORE INCOME TAX
|-- | -----------------------------------------------------------------------------



Australian GAAP requires specific disclosure of certain items included in the calculation of income. This note does not include all
costs.



|                                                                                    |  |       |     |  |                     |   |  |                     |   |  |                     |  
|----------------------------------------------------------------------------------- |  | ----- | --- |  | ------------------- | - |  | ------------------- | - |  | ------------------- | -
|                                                                                    |  | Notes |     |  | Year to 31 Dec 2003 |   |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001 |  
|                                                                                    |  |       |     |  | A$m                 |   |  | A$m                 |   |  | A$m                 |  
|                                                                                    |  |       |     | 
|Operating Income/(loss) before income tax includes the following specific expenses: |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Amortization and depreciation                                                       |  | 3     | (a) |  | 17.8                |   |  | 489.9               |   |  | 613.9               |  
|Borrowing costs                                                                     |  | 3     | (b) |  | 8.7                 |   |  | 140.6               |   |  | 295.2               |  
|Other charges against assets:                                                       |  |       |     |  |                     |   |  |                     |   |  |                     |  
|- bad debts written off/provided for                                                |  |       |     |  |                    |   |  | 0.3                 |   |  |                    |  
|- write down of inventories to net realizable value                                 |  |       |     |  |                    |   |  | 2.1                 |   |  | 7.7                 |  
|Stock written off                                                                   |  |       |     |  |                    |   |  | 31.9                |   |  | 20.5                |  
|Exploration expenditure written off:                                                |  |       |     |  |                     |   |  |                     |   |  |                     |  
|- grassroots                                                                        |  |       |     |  |                    |   |  | 17.1                |   |  | 57.2                |  
|- supporting existing operations                                                    |  |       |     |  |                    |   |  | 3.4                 |   |  | 19.3                |  
|- evaluation                                                                        |  |       |     |  |                    |   |  | 13.8                |   |  | 18.6                |  
|Government royalties on sales or production                                         |  |       |     |  |                    |   |  | 47.2                |   |  | 72.6                |  
|Provision for:                                                                      |  |       |     |  |                     |   |  |                     |   |  |                     |  
|- employee entitlements                                                             |  |       |     |  | 0.1                 |   |  | 8.9                 |   |  | 22.2                |  
|- rehabilitation                                                                    |  |       |     |  |                    |   |  | 14.2                |   |  | 14.8                |  
|- diminution in value of investments                                                |  |       |     |  |                    |   |  | (0.8                | ) |  | 0.2                 |  
|- obsolescence of stores                                                            |  |       |     |  |                    |   |  | 5.4                 |   |  | 4.0                 |  
|Research and development written off                                                |  |       |     |  |                    |   |  | 0.3                 |   |  | 0.4                 |  
|Foreign exchange loss/(gain)                                                        |  |       |     |  |                    |   |  | 20.2                |   |  | 20.6                |  
|Operating lease rentals                                                             |  |       |     |  | 0.1                 |   |  | 7.3                 |   |  | 12.6                |  
|Demerger costs                                                                      |  |       |     |  |                    |   |  | 46.0                |   |  |                    |  
|                                                                                    |  |       |     |  |                     |   |  |                     |   |  |                     |  
|                                                                                    |  |       |     | 
|(a)    Amortization and depreciation                                                |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Amortization:                                                                       |  |       |     |  |                     |   |  |                     |   |  |                     |  
|-government facilities                                                              |  |       |     |  |                    |   |  | 1.5                 |   |  | 1.7                 |  
|-mine properties and mine development                                               |  |       |     |  |                    |   |  | 128.9               |   |  | 248.3               |  
|-goodwill/intangibles                                                               |  |       |     |  |                    |   |  | 13.4                |   |  | 16.1                |  
|-research and development                                                           |  |       |     |  |                    |   |  | 0.5                 |   |  | 1.7                 |  
|Depreciation:                                                                       |  |       |     |  |                     |   |  |                     |   |  |                     |  
|-plant and equipment                                                                |  |       |     |  | 0.1                 |   |  | 304.3               |   |  | 301.2               |  
|-land and buildings                                                                 |  |       |     |  |                    |   |  | 23.6                |   |  | 27.2                |  
|                                                                                    |  |       |     |  |                     |   |  |                     |   |  |                     |  
|                                                                                    |  |       |     |  | 0.1                 |   |  | 472.2               |   |  | 596.2               |  
|-equity goodwill                                                                    |  |       |     |  | 17.7                |   |  | 17.7                |   |  | 17.7                |  
|                                                                                    |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Total amortization and depreciation charged to profit                               |  |       |     |  | 17.8                |   |  | 489.9               |   |  | 613.9               |  
|                                                                                    |  |       |     |  |                     |   |  |                     |   |  |                     |  
|                                                                                    |  |       |     | 
|(b)    Borrowing costs                                                              |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Interest and finance charges paid/payable                                           |  |       |     |  | 8.7                 |   |  | 143.7               |   |  | 295.2               |  
|Deferred to qualifying assets                                                       |  |       |     |  |                    |   |  | (3.1                | ) |  |                    |  
|                                                                                    |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Interest charged to income                                                          |  |       |     |  | 8.7                 |   |  | 140.6               |   |  | 295.2               |  
|                                                                                    |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Interest received/receivable                                                        |  |       |     |  |                     |   |  |                     |   |  |                     |  
|- continuing operations                                                             |  |       |     |  | (2.4                | ) |  | (1.3                | ) |  | (2.8                | )
|- discontinued operations                                                           |  |       |     |  |                    |   |  | (96.9               | ) |  | (151.5              | )
|                                                                                    |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Interest credited to income                                                         |  |       |     |  | (2.4                | ) |  | (98.2               | ) |  | (154.3              | )
|                                                                                    |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Net charge to income                                                                |  |       |     |  | 6.3                 |   |  | 42.4                |   |  | 140.9               |  
|                                                                                    |  |       |     |  |                     |   |  |                     |   |  |                     |  



F - 18



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|4. | EXCEPTIONAL ITEMS
|-- | -----------------



|                                                                                                                                            |  |                     |  |                     |   |  |                     |   
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- |  | ------------------- | - |  | ------------------- | --
|                                                                                                                                            |  | Year to 31 Dec 2003 |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001 |   
|                                                                                                                                            |  | A$m                 |  | A$m                 |   |  | A$m                 |   
|(a)    Gains/(Charges)                                                                                                                      |  |                     |  |                     |   |  |                     |   
|Discontinued Operations:                                                                                                                    |  |                     |  |                     |   |  |                     |   
|Demerger cost  advisors fees and other costs                                                                                               |  |                    |  | (46.0               | ) |  |                    |   
|Profit on disposal of Central Norseman Gold Corporation Limited                                                                             |  |                    |  | 25.1                |   |  |                    |   
|Profit on disposal of the right to gold royalty received from the sale of St Ives and Agnew operations                                      |  |                    |  | 15.4                |   |  |                    |   
|Profit on disposal of the Long/Victor mines at Kambalda                                                                                     |  |                    |  | 12.0                |   |  |                    |   
|Insurance proceeds (material damage and business interruption) received in relation to the fire at the Olympic Dam solvent extraction
plant |  |                    |  | 62.3                |   |  |                    |   
|Costs associated with lost production due to the fire at Olympic Dam solvent extraction plant                                               |  |                    |  | (92.5               | ) |  |                    |   
|Proceeds received from early termination of interest rate swaps                                                                             |  |                    |  | 75.9                |   |  |                    |   
|Profit on disposal of St Ives and Agnew gold operations                                                                                     |  |                    |  |                    |   |  | 238.82              |   
|Net loss on the early termination of commodity and currency hedging associated with the gold business                                       |  |                    |  |                    |   |  | (103.2              | ) 
|Profit on disposal of Three Springs Talc Operation                                                                                          |  |                    |  |                    |   |  | 18.6                |   
|Write off of assets and costs associated with the fire at Olympic Dam solvent extraction plant                                              |  |                    |  |                    |   |  | (71.8               | )1
|Profit on disposal of equity interest in Mondo Minerals                                                                                     |  |                    |  |                    |   |  | 61.2                |   
|Cost of redundancies and closure costs associated with the restructuring of the service and exploration functions                           |  |                    |  |                    |   |  | (21.5               | ) 
|                                                                                                                                            |  |                     |  |                     |   |  |                     |   
|                                                                                                                                            |  |                    |  | 52.2                |   |  | 122.1               |   
|Equity earnings of associates included the following exceptional item:                                                                      |  |                     |  |                     |   |  |                     |   
|Equity share of write down of AWAC refining and chemical assets and associated provisions                                                   |  |                    |  |                    |   |  | (88.0               | ) 
|                                                                                                                                            |  |                     |  |                     |   |  |                     |   
|Exceptional items before income tax                                                                                                         |  |                    |  | 52.2                |   |  | 34.1                |   
|                                                                                                                                            |  |                     |  |                     |   |  |                     |   



|1 | In late October 2001 the Copper/Uranium business unit suffered a fire at the Olympic Dam facility which caused considerable damage to the copper and uranium solvent
extraction circuits in the processing plant. The damaged plant required rebuilding and the carrying value of the impaired assets ($52.3 million) was written off as a part of exceptional items. The balance of the exceptional item for Olympic Dam was
a further charge of $19.5 million incurred in relation to costs associated with lower production of copper and uranium.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2 | An amount of $25 million is included in the profit on disposal relating to a right to future royalties that did not comply with all the criteria under US GAAP for
recognition in profit in 2001. Refer to Note 35.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F - 19



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|4. | EXCEPTIONAL ITEMS (continued)
|-- | -----------------------------



|                                                                                                                                            |  |                     |  |                     |   |  |                     |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- |  | ------------------- | - |  | ------------------- | -
|                                                                                                                                            |  | Year to 31 Dec 2003 |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001 |  
|                                                                                                                                            |  | A$m                 |  | A$m                 |   |  | A$m                 |  
|(a)    Gains/(Charges)                                                                                                                      |  |                     |  |                     |   |  |                     |  
|Income tax credits/(expenses) on:                                                                                                           |  |                     |  |                     |   |  |                     |  
|Demerger cost  advisors fees and other costs                                                                                               |  |                    |  | 13.8                |   |  |                    |  
|Profit on disposal of the Long/Victor mines at Kambalda                                                                                     |  |                    |  | (2.6                | ) |  |                    |  
|Insurance proceeds (material damage and business interruption) received in relation to the fire at the Olympic Dam solvent extraction
plant |  |                    |  | (18.7               | ) |  |                    |  
|Costs associated with lost production due to the fire at Olympic Dam solvent extraction plant                                               |  |                    |  | 27.8                |   |  |                    |  
|Proceeds received from early termination of interest rate swaps                                                                             |  |                    |  | (22.8               | ) |  |                    |  
|Profit on disposal of St Ives and Agnew gold operations                                                                                     |  |                    |  |                    |   |  | 3.4                 |  
|Net loss on the early termination of commodity and currency hedging associated with the gold business                                       |  |                    |  |                    |   |  | 31.0                |  
|Profit on disposal of Three Springs Talc Operation                                                                                          |  |                    |  |                    |   |  | 1.4                 |  
|Write off of assets and costs associated with the fire at Olympic Dam solvent extraction plant                                              |  |                    |  |                    |   |  | 21.5                |  
|Profit on disposal of equity interest in Mondo Minerals                                                                                     |  |                    |  |                    |   |  | (10.1               | )
|Cost of redundancies and closure costs associated with the restructuring of the service and exploration functions                           |  |                    |  |                    |   |  | 4.8                 |  
|Profit on sale of tenements at Kambalda                                                                                                     |  |                    |  |                    |   |  |                    |  
|Equity share of write down of AWAC refining and chemical assets and associated provisions                                                   |  |                    |  |                    |   |  | 7.1                 |  
|                                                                                                                                            |  |                     |  |                     |   |  |                     |  
|Income tax credit on above exceptional items:                                                                                               |  |                     |  |                     |   |  |                     |  
|-discontinued operations                                                                                                                    |  |                    |  | (2.5                | ) |  | 52.0                |  
|-earnings from associates                                                                                                                   |  |                    |  |                    |   |  | 7.1                 |  
|                                                                                                                                            |  |                     |  |                     |   |  |                     |  
|Gain on exceptional items after tax                                                                                                         |  |                    |  | 49.7                |   |  | 93.2                |  
|                                                                                                                                            |  |                     |  |                     |   |  |                     |  



F - 20



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|5. | INCOME TAX
|-- | ----------



|                                                                                                       |  |       |     |  |                     |   |  |                     |   |  |                     |  
|------------------------------------------------------------------------------------------------------ |  | ----- | --- |  | ------------------- | - |  | ------------------- | - |  | ------------------- | -
|                                                                                                       |  | Notes |     |  | Year to 31 Dec 2003 |   |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001 |  
|                                                                                                       |  |       |     |  | A$m                 |   |  | A$m                 |   |  | A$m                 |  
|(a)    Pre-tax operating (loss)/income                                                                 |  |       |     |  |                     |   |  |                     |   |  |                     |  
|(Loss)/income from continuing operations                                                               |  |       |     |  | (16.5               | ) |  | (6.9                | ) |  | 1.1                 |  
|Loss from discontinued operations                                                                      |  |       |     |  |                    |   |  | (100.0              | ) |  | (143.9              | )
|Gain on disposal of discontinued operations                                                            |  |       |     |  |                    |   |  | 40.5                |   |  | 215.4               |  
|                                                                                                       |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Pre-tax operating (loss)/income                                                                        |  |       |     |  | (16.5               | ) |  | (66.4               | ) |  | 46.3                |  
|                                                                                                       |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Prima facie tax credit/(expense) for the period at the rate of 30%                                     |  |       |     |  | 5.0                 |   |  | 19.9                |   |  | (13.9               | )
|The following tax effect on these items caused the total charge for income tax to vary from the above: |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Research and development                                                                               |  |       |     |  |                    |   |  | 2.2                 |   |  | 0.9                 |  
|Exchange gains from return of capital                                                                  |  |       |     |  |                    |   |  |                    |   |  | 2.3                 |  
|Non-taxable capital gains                                                                              |  |       |     |  |                    |   |  | 12.1                |   |  | 12.4                |  
|Depreciation and amortization                                                                          |  |       |     |  |                    |   |  | 0.7                 |   |  | 0.4                 |  
|Non-deductible expenses                                                                                |  |       |     |  | (3.0                | ) |  | (2.3                | ) |  | (2.2                | )
|Current year tax losses not available                                                                  |  |       |     |  |                    |   |  | (9.7                | ) |  |                    |  
|Future income tax benefits movements                                                                   |  |       |     |  |                     |   |  | (0.5                | ) |  | 67.8                |  
|Variance between Australian and foreign tax rates                                                      |  |       |     |  |                     |   |  | (0.5                | ) |  | 0.8                 |  
|Withholding tax                                                                                        |  |       |     |  | (1.4                | ) |  | 1.8                 |   |  | 0.5                 |  
|Attributable foreign source income                                                                     |  |       |     |  |                    |   |  |                    |   |  | (0.8                | )
|Exempt income                                                                                          |  |       |     |  |                     |   |  | 0.9                 |   |  | 1.6                 |  
|                                                                                                       |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Income tax credit for the period                                                                       |  |       |     |  | 0.6                 |   |  | 24.6                |   |  | 69.8                |  
|Adjustment for over provision in prior years                                                           |  |       |     |  | 4.1                 |   |  |                    |   |  | 6.5                 |  
|Tax losses from prior years brought to account                                                         |  |       |     |  | 4.6                 |   |  |                    |   |  |                    |  
|                                                                                                       |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Total income tax credit                                                                                |  |       |     |  | 9.3                 |   |  | 24.6                |   |  | 76.3                |  
|                                                                                                       |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Income tax credit comprises:                                                                           |  |       |     |  |                     |   |  |                     |   |  |                     |  
|Continuing Operations:                                                                                 |  |       |     |  |                     |   |  |                     |   |  |                     |  
|- Normal                                                                                               |  |       |     |  | 9.3                 |   |  | 0.3                 |   |  | 1.2                 |  
|Discontinued Operations:                                                                               |  |       |     |  |                     |   |  |                     |   |  |                     |  
|- Normal                                                                                               |  |       |     |  |                    |   |  | 26.8                |   |  | 23.1                |  
|- Exceptional  gains and losses                                                                       |  | 4     |     |  |                    |   |  | (2.5                | ) |  | 52.0                |  
|                                                                                                       |  |       |     |  |                     |   |  |                     |   |  |                     |  
|                                                                                                       |  | 5     | (d) |  | 9.3                 |   |  | 24.6                |   |  | 76.3                |  
|                                                                                                       |  |       |     |  |                     |   |  |                     |   |  |                     |  



F - 21



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|5. | INCOME TAX (continued)
|-- | ----------------------



|(b) | Future income tax benefits
|--- | --------------------------



The income tax provision is calculated under a policy of tax-effect accounting. Under this policy, the future benefits of tax losses and timing differences are brought to
account where:



|(i) | virtual certainty exists as to the ability of group companies to recoup such losses; or
|--- | ---------------------------------------------------------------------------------------



|(ii) | a provision for deferred income tax exists in the group company to which the tax losses relate but only to the extent that deferred income tax has already been provided in respect
of timing differences which will reverse within the period during which the tax losses will remain available as a deduction from assessable income; or
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(iii) | the reversal of all other timing differences comprising the balance of the account is assured beyond any reasonable doubt.
|----- | --------------------------------------------------------------------------------------------------------------------------



Realization of future benefits attributable to tax losses and timing differences will only
arise in the event that:



| |  | the company, or where applicable another Group company, derives future assessable income within the prescribed time limit of a nature and of an amount sufficient to enable the
benefit from the deductions from the losses to be realized;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the Group companies continue to comply with the conditions for deductibility imposed by the law; and
| | - | ----------------------------------------------------------------------------------------------------



| |  | no changes in tax legislation adversely affect the Group companies in realizing the benefit from the deductions for
| | - | -------------------------------------------------------------------------------------------------------------------

|the | losses.
|--- | -------



|                                                                         |  |       |     |  |                     |  |                     |   |  |                     |  
|------------------------------------------------------------------------ |  | ----- | --- |  | ------------------- |  | ------------------- | - |  | ------------------- | -
|                                                                         |  | Notes |     |  | Year to 31 Dec 2003 |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001 |  
|                                                                         |  |       |     |  | A$                  |  | A$                  |   |  | A$                  |  
|(c)    The components of operating profit/(loss) before income tax were: |  |       |     |  |                     |  |                     |   |  |                     |  
|Australian                                                               |  |       |     |  |                    |  |                    |   |  | 28.7                |  
|Other                                                                    |  |       |     |  |                    |  |                    |   |  | 21.0                |  
|                                                                         |  |       |     |  |                     |  |                     |   |  |                     |  
|                                                                         |  |       |     |  |                    |  |                    |   |  | 49.7                |  
|                                                                         |  |       |     |  |                     |  |                     |   |  |                     |  
|(d)    Income tax credit/(expense) is comprised of:                      |  |       |     |  |                     |  |                     |   |  |                     |  
|Current:                                                                 |  |       |     |  |                     |  |                     |   |  |                     |  
|Australian                                                               |  |       |     |  | 0.6                 |  | (3.8                | ) |  | (3.2                | )
|United States Federal                                                    |  |       |     |  |                    |  | 2.6                 |   |  |                    |  
|Other                                                                    |  |       |     |  |                    |  | (1.1                | ) |  | (0.1                | )
|                                                                         |  |       |     |  |                     |  |                     |   |  |                     |  
|                                                                         |  |       |     |  | 0.6                 |  | (2.3                | ) |  | (3.3                | )
|                                                                         |  |       |     |  |                     |  |                     |   |  |                     |  
|Deferred income tax:                                                     |  |       |     |  |                     |  |                     |   |  |                     |  
|Australian                                                               |  |       |     |  |                    |  | (26.8               | ) |  | (102.6              | )
|United States Federal                                                    |  |       |     |  |                    |  | 0.1                 |   |  |                    |  
|                                                                         |  |       |     |  |                     |  |                     |   |  |                     |  
|                                                                         |  | 5     | (e) |  |                    |  | (26.7               | ) |  | (102.6              | )
|                                                                         |  |       |     |  |                     |  |                     |   |  |                     |  
|Future income tax benefit:                                               |  |       |     |  |                     |  |                     |   |  |                     |  
|Australian                                                               |  |       |     |  |                    |  | 56.1                |   |  | 122.9               |  
|United States Federal                                                    |  |       |     |  |                    |  |                    |   |  | 0.8                 |  
|                                                                         |  |       |     |  |                     |  |                     |   |  |                     |  
|                                                                         |  |       |     |  |                    |  | 56.1                |   |  | 123.7               |  
|                                                                         |  |       |     |  |                     |  |                     |   |  |                     |  
|Tax credit/(expense) attributable to operating profit/(loss)             |  |       |     |  | 0.6                 |  | 27.1                |   |  | 17.8                |  
|Prior period adjustment                                                  |  |       |     |  | 8.7                 |  |                    |   |  | 6.5                 |  
|Income tax credit on exceptional items                                   |  | 4     |     |  |                    |  | (2.5                | ) |  | 52.0                |  
|                                                                         |  |       |     |  |                     |  |                     |   |  |                     |  
|Total income tax credit/(expense)                                        |  | 5     | (a) |  | 9.3                 |  | 24.6                |   |  | 76.3                |  
|                                                                         |  |       |     |  |                     |  |                     |   |  |                     |  



F - 22



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|5. | INCOME TAX (continued)
|-- | ----------------------



|                                                                                |  |                     |  |                     |   |  |                     |  
|------------------------------------------------------------------------------- |  | ------------------- |  | ------------------- | - |  | ------------------- | -
|                                                                                |  | Year to 31 Dec 2003 |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001 |  
|                                                                                |  | A$m                 |  | A$m                 |   |  | A$m                 |  
|                                                                                |  |                     | 
|(e)    The significant timing differences included in deferred income tax were: |  |                     |  |                     |   |  |                     |  
|Accelerated depreciation                                                        |  |                    |  | (13.1               | ) |  | (45.2               | )
|Stores                                                                          |  |                    |  | 3.6                 |   |  | 1.1                 |  
|Stock adjustment to market value                                                |  |                    |  | (6.5                | ) |  | (101.1              | )
|Amounts set aside to provision accounts                                         |  |                    |  | 0.4                 |   |  | 9.1                 |  
|Tax losses                                                                      |  |                    |  | (12.6               | ) |  | 52.2                |  
|Prepayments                                                                     |  |                    |  | 0.2                 |   |  | (0.4                | )
|Financial instruments accruals                                                  |  |                    |  | 11.9                |   |  | (18.5               | )
|Foreign exchange                                                                |  |                    |  | (14.5               | ) |  | 1.3                 |  
|Other                                                                           |  |                    |  | 3.9                 |   |  | (1.1                | )
|                                                                                |  |                     |  |                     |   |  |                     |  
|                                                                                |  |                    |  | (26.7               | ) |  | (102.6              | )
|                                                                                |  |                     |  |                     |   |  |                     |  



| | (f) | Operating tax losses carried forward expire as summarized below:
| | --- | ----------------------------------------------------------------



|                                  |  |               |  |      
|--------------------------------- |  | ------------- |  | -----
|                                  |  | Year ofExpiry |  | A$m  
|Australia                         |  | Indefinitely  |  | 2.3  
|United States of America          |  | 2007          |  | 1.4  
|                                  |  | 2008          |  | 6.3  
|                                  |  | 2009          |  | 8.3  
|                                  |  | 2010          |  | 21.8 
|                                  |  | 2019          |  | 9.5  
|                                  |  | 2020          |  | 1.6  
|                                  |  | 2021          |  | 55.5 
|                                  |  | 2022          |  | 38.2 
|                                  |  | 2023          |  | 60.5 
|                                  |  |               |  |      
|                                  |  |               |  |      
|                                  |  |               |  | 203.1
|                                  |  |               |  |      
|                                  |  |               |  |      
|Other countries                   |  | Indefinitely  |  | 0.2  
|                                  |  |               |  |      
|Total operating income tax losses |  |               |  | 205.6
|                                  |  |               |  |      



Capital losses and
timing differences relate mainly to losses which have not yet been realized or where they are realized and can be carried forward indefinitely.



F - 23



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|6. | EARNINGS PER SHARE
|-- | ------------------



|                                                                                                                                |  |                     |  |                     |   |  |                    
|------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- |  | ------------------- | - |  | -------------------
|                                                                                                                                |  | Year to 31 Dec 2003 |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001
|                                                                                                                                |  | Cents per share    
|Basic earnings per share calculated on Group equity accounted profit after income tax and minority interests(1)                 |  | 20.9                |  | 15.7                |   |  | 36.4               
|                                                                                                                                |  |                     |  |                     |   |  |                    
|Diluted earnings per share calculated on Group equity accounted profit after income tax and minority interests                  |  | 20.9                |  | 15.5                |   |  | 36.5               
|                                                                                                                                |  |                     |  |                     |   |  |                    
|Basic earnings per share calculated on net income in accordance with US GAAP (note 35)(2)                                       |  |                     |  |                     |   |  |                    
|-continuing operations                                                                                                          |  | 20.9                |  | 22.0                |   |  | 5.2                
|-discontinued operations                                                                                                        |  |                    |  | 8.8                 |   |  | 24.4               
|-transitional adjustment on adoption of new policy for asset retirement obligations (FAS143)                                    |  | 1.0                 |  |                    |   |  |                   
|-transitional adjustment on adoption of new policy for amortization of mine development and post-production waste removal
costs |  |                    |  | (3.5                | ) |  |                   
|-cumulative effect gain write off of negative goodwill                                                                          |  |                    |  | 0.3                 |   |  |                   
|                                                                                                                                |  |                     |  |                     |   |  |                    
|Basic earnings per share                                                                                                        |  | 21.9                |  | 27.6                |   |  | 29.6               
|                                                                                                                                |  |                     |  |                     |   |  |                    
|Diluted earnings per share calculated on net income in accordance with US GAAP (note 35):                                       |  |                     |  |                     |   |  |                    
|-continuing operations                                                                                                          |  | 20.8                |  | 21.7                |   |  | 5.3                
|-discontinued operations                                                                                                        |  |                    |  | 8.8                 |   |  | 24.4               
|-transitional adjustment on adoption of new policy for asset retirement obligations (FAS143)                                    |  | 1.0                 |  |                    |   |  |                   
|-transitional adjustment on adoption of new policy for amortization of mine development and post-production waste removal
costs |  |                    |  | (3.5                | ) |  |                   
|-cumulative effect gain write off of negative goodwill                                                                          |  |                    |  | 0.3                 |   |  |                   
|                                                                                                                                |  |                     |  |                     |   |  |                    
|Diluted earnings per share                                                                                                      |  | 21.8                |  | 27.3                |   |  | 29.7               
|                                                                                                                                |  |                     |  |                     |   |  |                    



|                     |  |                                                                                                                       |  |                                                                             |  |                                                                                                                                                           
|-------------------- |  | --------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|                     |  | Weighted averagenumber of ordinaryshares outstandingduring the year used inthe calculation
ofbasic earnings per share |  | Potential ordinaryshares from theconversion ofpartly paid sharesand options |  | Weighted average numberof ordinary sharesoutstanding during theyear including potentialordinary shares used inthe calculation of
dilutedearnings per share
|Year to 31 Dec, 2003 |  | 1,132,189,594                                                                                                         |  | 1,563,234                                                                   |  | 1,133,752,832                                                                                                                                             
|Year to 31 Dec, 2002 |  | 1,112,878,659                                                                                                         |  | 11,556,839                                                                  |  | 1,124,435,498                                                                                                                                             
|Year to 31 Dec, 2001 |  | 1,103,323,901                                                                                                         |  | 17,474,000                                                                  |  | 1,120,797,901                                                                                                                                             



|                                                      |  |                     |  |                     |   |  |                    
|----------------------------------------------------- |  | ------------------- |  | ------------------- | - |  | -------------------
|                                                      |  | Year to 31 Dec 2003 |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001
|                                                      |  | Cents per share    
|Australian GAAP                                       |  |                     |  |                     |   |  |                    
|(1)     Earnings per share from continuing operations |  | 20.9                |  | 18.8                |   |  | 25.5               
|Earnings per share from discontinued operations       |  |                    |  | (3.1                | ) |  | 10.9               
|                                                      |  |                     |  |                     |   |  |                    
|                                                      |  | 20.9                |  | 15.7                |   |  | 36.4               
|                                                      |  |                     |  |                     |   |  |                    
|US GAAP                                               |  |                     |  |                     |   |  |                    
|(2)     Earnings per share from continuing operations |  | 20.9                |  | 22.3                |   |  | 5.2                
|Earnings per share from discontinued operations       |  |                    |  | 5.3                 |   |  | 24.4               
|                                                      |  |                     |  |                     |   |  |                    
|                                                      |  | 20.9                |  | 27.6                |   |  | 29.6               
|                                                      |  |                     |  |                     |   |  |                    



F - 24



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|6. | EARNINGS PER SHARE (continued)
|-- | ------------------------------



| | (a) | Information concerning classification of securities
| | --- | ---------------------------------------------------



The partly paid shares carry the right to participate in dividends in proportion to the amount paid relative to the total issue price (for partly paid
shares issued in 1987, relative to the nominal value), and to that extent they have been recognized as equivalents of ordinary shares in the determination of basic earnings per share. At balance date there were nil, (December 2002: nil; December
2001: 629,000) partly paid shares, callable at the option of the holders and which at balance date were considered dilutive for the purpose of the calculation of diluted earnings per share. At balance date there were 8,059,600 (December 2002:
10,966,720; December 2001: 15,891,863) options which were considered potentially dilutive and therefore, were used in the calculation of diluted earnings per share.



| | (b) | Comparative information
| | --- | -----------------------



The basic earnings per share as presented and diluted earnings per share for the current and previous periods have been adjusted for the conversion of
partly paid shares. The adjustment is in accordance with the Australian Accounting Standard AASB 1027 Earnings Per Share.



| | (c) | Conversion, call, subscription or issue after 31 December 2003
| | --- | --------------------------------------------------------------



There have been no material conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary shares since the reporting date
and before completion of these financial statements.





|                                                                                            |  |                     |  |                     |   |  |                    
|------------------------------------------------------------------------------------------- |  | ------------------- |  | ------------------- | - |  | -------------------
|                                                                                            |  | Year to 31 Dec 2003 |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001
|                                                                                            |  | A$m                 |  | A$m                 |   |  | A$m                
|(d)    Reconciliation of earnings used in the calculation of earnings per share             |  |                     |  |                     |   |  |                    
|                                                                                            |  |                     | 
|Net Income                                                                                  |  | 236.9               |  | 174.5               |   |  | 401.7              
|Nominal interest from the conversion of partly paid shares and options                      |  |                    |  | 2.2                 |   |  | 7.5                
|                                                                                            |  |                     |  |                     |   |  |                    
|Potential diluted earnings                                                                  |  | 236.9               |  | 176.7               |   |  | 409.2              
|                                                                                            |  |                     |  |                     |   |  |                    
|US GAAP earnings before cumulative effect of accounting change (Note 35)                    |  | 237.1               |  | 342.5               |   |  | 326.5              
|Transitional adjustment on adoption of new policy for asset retirement obligations (FAS143) |  | 11.1                |  |                    |   |  |                   
|Prior years cumulative effect of change in accounting for start-up activities               |  |                    |  | (39.5               | ) |  |                   
|Cumulative effect gain write off of negative goodwill                                       |  |                    |  | 3.7                 |   |  |                   
|                                                                                            |  |                     |  |                     |   |  |                    
|Net US GAAP earnings                                                                        |  | 248.2               |  | 306.7               |   |  | 326.5              
|                                                                                            |  |                     |  |                     |   |  |                    



|7. | FINANCIAL REPORTING BY SEGMENT
|-- | ------------------------------



|                         |  |                             |  |  |  | 
|------------------------ |  | --------------------------- |  |  |  | 
|                         |  |                             | 
|(a)    Business segments |  |                             |  |  |  | 
|                         |  | Year ended 31 December 2003



As a result of the demerger, Alumina
Limiteds primary assets are its 40% interest in the series of operating entities forming AWAC. The company operates in the Alumina/aluminium business through its equity interests in AWAC.



F - 25



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|7. | FINANCIAL REPORTING BY SEGMENT (continued)
|-- | ------------------------------------------



|(b) | Business segments (continued)
|--- | -----------------------------



|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|----------------------------------------------------------------------------------- |  | --------------------------- | -- |  | ----------------- | - |  | --------- |  | ----------- | - |  | ------------ | -
|                                                                                    |  | Year ended 31 December 2002 |   
|                                                                                    |  | A$m                         |   
|Consolidated                                                                        |  | Copper/uranium              |    |  | Alumina/aluminium |   |  | Nickel    |  | Fertilizers |   |  | Consolidated |  
|Revenue                                                                             |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Segment revenues1, 6                                                                |  | 682.9                       |    |  |                  |   |  | 1,206.310 |  | 401.9       |   |  | 2,291.1      |  
|Unallocated revenue2                                                                |  |                             |    |  |                   |   |  |           |  |             |   |  | 107.4        |  
|Less insurance proceeds                                                             |  |                             |    |  |                   |   |  |           |  |             |   |  | (67.2        | )
|Less proceeds from sale of non-current assets                                       |  |                             |    |  |                   |   |  |           |  |             |   |  | (101.0       | )
|Less other sundry revenue                                                           |  |                             |    |  |                   |   |  |           |  |             |   |  | (9.4         | )
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Operating revenues                                                                  |  |                             |    |  |                   |   |  |           |  |             |   |  | 2,220.9      |  
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Result                                                                              |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Segment result                                                                      |  | (19.6                       | )4 |  | (6.3              | ) |  | 198.94    |  | (50.1       | ) |  | 122.9        |  
|Share of net profit or loss/result of equity accounted investments                  |  |                            |    |  | 216.3             |   |  |          |  |            |   |  | 216.3        |  
|Unallocated profit3                                                                 |  |                             |    |  |                   |   |  |           |  |             |   |  | 45.4         |  
|Unallocated corporate expenses:                                                     |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|New business8                                                                       |  |                             |    |  |                   |   |  |           |  |             |   |  | (32.0        | )
|Regional exploration7                                                               |  |                             |    |  |                   |   |  |           |  |             |   |  | (26.1        | )
|Corporate9                                                                          |  |                             |    |  |                   |   |  |           |  |             |   |  | (109.1       | )
|Finance and other costs                                                             |  |                             |    |  |                   |   |  |           |  |             |   |  | (25.1        | )
|Net borrowing costs                                                                 |  |                             |    |  |                   |   |  |           |  |             |   |  | (42.4        | )
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Profit from ordinary activities before income tax but after outside equity interest |  |                             |    |  |                   |   |  |           |  |             |   |  | 149.9        |  
|Income tax benefit                                                                  |  |                             |    |  |                   |   |  |           |  |             |   |  | 24.6         |  
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Net profit                                                                          |  |                             |    |  |                   |   |  |           |  |             |   |  | 174.5        |  
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Depreciation and amortization                                                       |  | 212.8                       |    |  | 17.7              |   |  | 195.9     |  | 56.5        |   |  | 482.9        |  
|Unallocated                                                                         |  |                             |    |  |                   |   |  |           |  |             |   |  | 7.0          |  
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Consolidated depreciation and amortization                                          |  |                             |    |  |                   |   |  |           |  |             |   |  | 489.9        |  
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Other non-cash expenses                                                             |  | 13.1                        |    |  |                  |   |  | 37.6      |  | 9.3         |   |  | 60.0         |  
|                                                                                    |  |                             |    |  |                  
|Assets                                                                              |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Segment assets                                                                      |  |                            |    |  | 26.4              |   |  |          |  |            |   |  | 26.4         |  
|Equity accounted investments                                                        |  |                            |    |  | 1,668.7           |   |  |          |  |            |   |  | 1,668.7      |  
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Consolidated total assets                                                           |  |                             |    |  |                   |   |  |           |  |             |   |  | 1,695.1      |  
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Liabilities                                                                         |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Segment liabilities                                                                 |  |                            |    |  | 541.6             |   |  |          |  |            |   |  | 541.6        |  
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Consolidated total liabilities                                                      |  |                             |    |  |                   |   |  |           |  |             |   |  | 541.6        |  
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Acquisitions of non-current assets                                                  |  | 189.3                       |    |  |                  |   |  | 174.7     |  | 43.0        |   |  | 407.0        |  
|Unallocated                                                                         |  |                             |    |  |                   |   |  |           |  |             |   |  | 9.7          |  
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  
|Total acquisitions of non-current assets                                            |  |                             |    |  |                   |   |  |           |  |             |   |  | 416.7        |  
|                                                                                    |  |                             |    |  |                   |   |  |           |  |             |   |  |              |  



F - 26



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|7. | FINANCIAL REPORTING BY SEGMENT (continued)
|-- | ------------------------------------------



|(a) | Business segments (continued)
|--- | -----------------------------



|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|----------------------------------------------------------------------------------- |  | --------------------------- |  | ----------------- | - |  | --------- |  | ----------- | - |  | ------------ | -
|                                                                                    |  | Year ended 31 December 2001 | 
|                                                                                    |  | A$m                         | 
|Consolidated                                                                        |  | Copper/uranium              |  | Alumina/aluminium |   |  | Nickel    |  | Fertilizers |   |  | Consolidated |  
|Revenue                                                                             |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Segment revenues1, 6                                                                |  | 812.8                       |  |                  |   |  | 1,217.410 |  | 379.1       |   |  | 2,409.3      |  
|Unallocated revenue                                                                 |  |                             |  |                   |   |  |           |  |             |   |  | 1,123.4      |  
|Less insurance proceeds                                                             |  |                             |  |                   |   |  |           |  |             |   |  | (23.1        | )
|Less proceeds from sale of non-current assets                                       |  |                             |  |                   |   |  |           |  |             |   |  | (685.9       | )
|Less other sundry revenue                                                           |  |                             |  |                   |   |  |           |  |             |   |  | (6.8         | )
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Operating revenues                                                                  |  |                             |  |                   |   |  |           |  |             |   |  | 2,816.9      |  
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Result                                                                              |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Segment result                                                                      |  | 47.9                        |  | (3.4              | ) |  | 147.44    |  | (89.4       | ) |  | 102.5        |  
|Share of net profit or loss/result of equity accounted investments                  |  |                            |  | 279.1             |   |  |          |  |            |   |  | 279.1        |  
|Unallocated profit                                                                  |  |                             |  |                   |   |  |           |  |             |   |  | 282.4        |  
|Unallocated corporate expenses:                                                     |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|New business8                                                                       |  |                             |  |                   |   |  |           |  |             |   |  | (43.7        | )
|Regional exploration7                                                               |  |                             |  |                   |   |  |           |  |             |   |  | (63.7        | )
|Corporate9                                                                          |  |                             |  |                   |   |  |           |  |             |   |  | (68.9        | )
|Finance and other costs                                                             |  |                             |  |                   |   |  |           |  |             |   |  | (21.4        | )
|Net borrowing costs                                                                 |  |                             |  |                   |   |  |           |  |             |   |  | (140.9       | )
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Profit from ordinary activities before income tax but after outside equity interest |  |                             |  |                   |   |  |           |  |             |   |  | 325.4        |  
|Income tax benefit                                                                  |  |                             |  |                   |   |  |           |  |             |   |  | 76.3         |  
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Net profit                                                                          |  |                             |  |                   |   |  |           |  |             |   |  | 401.7        |  
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Depreciation and amortization                                                       |  | 181.9                       |  | 17.7              |   |  | 222.5     |  | 66.0        |   |  | 488.1        |  
|Unallocated                                                                         |  |                             |  |                   |   |  |           |  |             |   |  | 125.8        |  
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Consolidated depreciation and amortization                                          |  |                             |  |                   |   |  |           |  |             |   |  | 613.9        |  
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Other non-cash expenses                                                             |  | 80.3                        |  | 6.0               |   |  | 36.0      |  | 21.9        |   |  | 144.2        |  
|                                                                                    |  |                             |  |                   |  
|Assets                                                                              |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Segment assets                                                                      |  | 2,811.1                     |  |                  |   |  | 1,691.1   |  | 1,137.3     |   |  | 5,639.5      |  
|Equity accounted investments                                                        |  |                            |  | 1,675.6           |   |  |          |  |            |   |  | 1,675.6      |  
|Unallocated corporate assets                                                        |  |                             |  |                   |   |  |           |  |             |   |  | 2,697.25     |  
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Consolidated total assets                                                           |  |                             |  |                   |   |  |           |  |             |   |  | 10,012.3     |  
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Liabilities                                                                         |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Segment liabilities                                                                 |  | 387.6                       |  |                  |   |  | 431.8     |  | 78.7        |   |  | 898.1        |  
|Unallocated corporate and other liabilities                                         |  |                             |  |                   |   |  |           |  |             |   |  | 4,260.8      |  
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Consolidated total liabilities                                                      |  |                             |  |                   |   |  |           |  |             |   |  | 5,158.9      |  
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Acquisitions of non-current assets                                                  |  | 75.3                        |  |                  |   |  | 227.1     |  | 42.3        |   |  | 344.7        |  
|Unallocated                                                                         |  |                             |  |                   |   |  |           |  |             |   |  | 112.2        |  
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  
|Total acquisitions of non-current assets                                            |  |                             |  |                   |   |  |           |  |             |   |  | 456.9        |  
|                                                                                    |  |                             |  |                   |   |  |           |  |             |   |  |              |  



F - 27



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|7. | FINANCIAL REPORTING BY SEGMENT (continued)
|-- | ------------------------------------------



Description of each business segment



|                  |  |                                                                                                                                                
|----------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|Alumina/aluminium |  | Share of net profit or loss/result of equity accounted investment in Alcoa World Alumina and Chemicals (AWAC), and alumina business unit costs.
|                  | 
|Copper/uranium    |  | Exploration, development, mining and refining of copper, uranium, silver and gold in South Australia.                                          
|                  | 
|Nickel            |  | Exploration, development, mining, smelting and refining of nickel in Western Australia.                                                        
|                  | 
|Fertilizers       |  | Production of fertilizer products in Phosphate Hill, Queensland and distribution of fertilizer products via Hi-Fert.                           



|(b) | Geographical segments
|--- | ---------------------



|                                         |  |                             |  |              |  |        |  |      |  |       |  |        
|---------------------------------------- |  | --------------------------- |  | ------------ |  | ------ |  | ---- |  | ----- |  | -------
|                                         |  | Year ended 31 December 2003
|                                         |  | A$m                        
|Consolidated                             |  | Australia                   |  | NorthAmerica |  | Europe |  | Asia |  | Other |  | Total  
|Segment revenue by location of customer  |  |                            |  |             |  |       |  |     |  |      |  |       
|Unallocated revenue                      |  |                             |  |              |  |        |  |      |  |       |  |       
|                                         |  |                             |  |              |  |        |  |      |  |       |  |        
|Consolidated revenue                     |  |                             |  |              |  |        |  |      |  |       |  |       
|                                         |  |                             |  |              |  |        |  |      |  |       |  |        
|Segment assets by location of assets     |  | 821.7                       |  | 365.2        |  | 162.6  |  |     |  | 449.6 |  | 1,799.1
|                                         |  |                             |  |              |  |        |  |      |  |       |  |        
|Consolidated total assets                |  |                             |  |              |  |        |  |      |  |       |  | 1,799.1
|                                         |  |                             |  |              |  |        |  |      |  |       |  |        
|Acquisitions of non-current assets       |  | 0.3                         |  |             |  |       |  |     |  |      |  | 0.3    
|                                         |  |                             |  |              |  |        |  |      |  |       |  |        
|Total acquisitions of non-current assets |  |                             |  |              |  |        |  |      |  |       |  | 0.3    
|                                         |  |                             |  |              |  |        |  |      |  |       |  |        



|                                         |  |                             |  |              |  |        |  |       |  |       |  |        
|---------------------------------------- |  | --------------------------- |  | ------------ |  | ------ |  | ----- |  | ----- |  | -------
|                                         |  | Year ended 31 December 2002
|                                         |  | A$m                        
|Consolidated                             |  | Australia                   |  | NorthAmerica |  | Europe |  | Asia  |  | Other |  | Total  
|Segment revenue by location of customer  |  | 482.3                       |  | 239.6        |  | 664.0  |  | 301.7 |  |      |  | 1,687.6
|Unallocated revenue                      |  |                             |  |              |  |        |  |       |  |       |  | 533.3  
|                                         |  |                             |  |              |  |        |  |       |  |       |  |        
|Consolidated revenue                     |  |                             |  |              |  |        |  |       |  |       |  | 2,220.9
|                                         |  |                             |  |              |  |        |  |       |  |       |  |        
|Segment assets by location of assets     |  | 595.2                       |  | 440.5        |  | 186.4  |  |      |  | 473.0 |  | 1,695.1
|                                         |  |                             |  |              |  |        |  |       |  |       |  |        
|Consolidated total assets                |  |                             |  |              |  |        |  |       |  |       |  | 1,695.1
|                                         |  |                             |  |              |  |        |  |       |  |       |  |        
|Acquisitions of non-current assets       |  | 407.3                       |  | 0.1          |  |       |  |      |  |      |  | 407.4  
|Unallocated                              |  |                             |  |              |  |        |  |       |  |       |  | 9.3    
|                                         |  |                             |  |              |  |        |  |       |  |       |  |        
|Total acquisitions of non-current assets |  |                             |  |              |  |        |  |       |  |       |  | 416.7  
|                                         |  |                             |  |              |  |        |  |       |  |       |  |        



F - 28



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|7. | FINANCIAL REPORTING BY SEGMENT (continued)
|-- | ------------------------------------------



|(b) | Geographical segments (continued)
|--- | ---------------------------------



|                                         |  |                             |  |              |  |        |  |       |  |       |  |         
|---------------------------------------- |  | --------------------------- |  | ------------ |  | ------ |  | ----- |  | ----- |  | --------
|                                         |  | Year ended 31 December 2001
|                                         |  | A$m                        
|Consolidated                             |  | Australia                   |  | NorthAmerica |  | Europe |  | Asia  |  | Other |  | Total   
|Segment revenue by location of customer  |  | 816.9                       |  | 366.2        |  | 788.7  |  | 478.9 |  |      |  | 2,450.7 
|Unallocated revenue                      |  |                             |  |              |  |        |  |       |  |       |  | 366.2   
|                                         |  |                             |  |              |  |        |  |       |  |       |  |         
|Consolidated revenue                     |  |                             |  |              |  |        |  |       |  |       |  | 2,816.9 
|                                         |  |                             |  |              |  |        |  |       |  |       |  |         
|Segment assets by location of assets     |  | 6,200.9                     |  | 626.0        |  | 175.4  |  |      |  |      |  | 7,002.3 
|Unallocated corporate and other assets   |  |                             |  |              |  |        |  |       |  |       |  | 3,010.05
|                                         |  |                             |  |              |  |        |  |       |  |       |  |         
|Consolidated total assets                |  |                             |  |              |  |        |  |       |  |       |  | 10,012.3
|                                         |  |                             |  |              |  |        |  |       |  |       |  |         
|Acquisitions of non-current assets       |  | 447.6                       |  | 0.2          |  |       |  |      |  |      |  | 447.8   
|Unallocated                              |  |                             |  |              |  |        |  |       |  |       |  | 9.1     
|                                         |  |                             |  |              |  |        |  |       |  |       |  |         
|Total acquisitions of non-current assets |  |                             |  |              |  |        |  |       |  |       |  | 456.9   
|                                         |  |                             |  |              |  |        |  |       |  |       |  |         



|1 | Segment revenues include intermediate product sales.
|- | ----------------------------------------------------



|2 | Unallocated revenue includes $33.5m from sale of CNGC and $45.0m from sale of the right to a gold royalty (refer to note 4).
|- | ----------------------------------------------------------------------------------------------------------------------------



|3 | Unallocated profit includes $25.1m from sale of CNGC and $15.4m from sale of the right to a gold royalty (refer to note 4).
|- | ---------------------------------------------------------------------------------------------------------------------------



|4 | Segment result for Copper/uranium and Nickel differs from note 34 due to unallocated interest.
|- | ----------------------------------------------------------------------------------------------



|5 | Includes deferred losses on hedging contracts of $1,345.9 million.
|- | ------------------------------------------------------------------



|6 | Segment revenues for each business unit includes currency and commodity hedging allocated as follows:
|- | -----------------------------------------------------------------------------------------------------



|               |  |      |  |        |   |  |        |  
|-------------- |  | ---- |  | ------ | - |  | ------ | -
|               |  | A$m  | 
|               |  | 2003 |  | 2002   |   |  | 2001   |  
|Copper/uranium |  |     |  | (41.6  | ) |  | (102.9 | )
|Nickel         |  |     |  | (58.3  | ) |  | (141.5 | )
|Fertilizer     |  |     |  | (12.3  | ) |  | (29.5  | )
|               |  |      |  |        |   |  |        |  
|               |  |     |  | (112.2 | ) |  | (273.9 | )
|               |  |      |  |        |   |  |        |  



|7 | Unallocated regional exploration expenditure
|- | --------------------------------------------



Alumina allocated its
expenditure on the search for and evaluation of new or additional mineral reserves over three headings; additional exploration, regional exploration and project exploration. Additional exploration is expenditure which, if successful, will define new
reserves at existing operations. These reserves will usually require new facilities for extraction, although they will probably utilise existing management and infrastructure. Exploration charges for additional exploration expenditure are allocated
to the appropriate business segment although such exploration is not necessarily directly related to segment production. Regional, project and evaluation exploration which cover expenditures in new areas up to the point where a decision is made
either to develop to the production stage or to abandon exploration in the area, are the responsibility of other management and are disclosed in those segments. Expenditure which extends reserves at existing operations, which would probably be
extracted with existing facilities, continues to be included with mine development expenditure.



|8 | New Business included identification, evaluation and implementation of new opportunities.
|- | -----------------------------------------------------------------------------------------



|9 | Corporate includes unallocated corporate overheads.
|- | ---------------------------------------------------



|10 | Includes US$137.0 million (A$267.1 million) from a significant customer in 2002 and US$137.0 million (A$267.1 million) in
2001.
|-- | -------------------------------------------------------------------------------------------------------------------------------



F - 29



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|8. | DIVIDENDS DECLARED AND PAID
|-- | ---------------------------



|                                                                                                                                                                                                                                             |  |                     |  |                     |  |                    
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- |  | ------------------- |  | -------------------
|                                                                                                                                                                                                                                             |  | Year to 31 Dec 2003 |  | Year to 31 Dec 2002 |  | Year to 31 Dec 2001
|                                                                                                                                                                                                                                             |  | A$m                 |  | A$m                 |  | A$m                
|Interim dividend No. 48 of 10 cents fully franked at 30% per fully paid share declared 24 July 2003 and paid 10 September 2003 (2002: 5 cents
fully franked at 30% per fully paid share declared 13 August 2002 and paid 10 September 2002). |  | 112.9               |  | 55.6                |  | 176.8              
|Final dividend No. 47 of 13 cents fully franked at 30% per fully paid share, paid on 8 April 2003 (2002: 13 cents fully franked at 30% per
fully paid share declared 26 February 2002 and paid 15 May 2002).                                 |  | 146.7               |  | 144.1               |  | 144.1              
|Special unfranked dividend of 73 cents distributed to effect the demerger.                                                                                                                                                                   |  |                    |  | 823.0               |  |                   
|                                                                                                                                                                                                                                             |  |                     |  |                     |  |                    
|                                                                                                                                                                                                                                             |  | 259.6               |  | 1,022.7             |  | 320.9              
|                                                                                                                                                                                                                                             |  |                     |  |                     |  |                    



|(a) | Dividends not recognized at year end
|--- | ------------------------------------



In addition to the above dividends, since year end the Directors have recommended the payment of a final dividend No. 49 of 10 cents fully franked at 30%
per fully paid share, declared 28 January 2004 and payable on 30 March 2004. The aggregate amount of the proposed dividend expected to be paid out of retained profits at 31 December 2003, but not recognized as a liability at year end as a result of
the change in accounting policy for providing for dividends is $115.9 million.



|(b) | Franking account
|--- | ----------------



|                                                                                                                                                                                       |  |       |  |       |  |        |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | ----- |  | ------ | -
|Balance of franking account adjusted for franking credits which will arise from the payment of income tax
provided for in these financial statements: Class C (30%) franking credits |  | 38.3  |  | 37.1  |  | (124.3 | )
|The fully franked dividends received from Alcoa of Australia Limited (AofA) in the financial year were                                                                               |  | 266.9 |  | 261.8 |  | 314.0  |  



Due to changes in the
Australian Tax Legislation, the franking account is maintained on a tax paid basis from 1 July 2002.



The shortfall between the balance of the franking account credits and the franking credits required for final dividend 49 is obtained from the proposed
dividend of $40.0 million (franked to 30%) from AofA due for payment on 29 March 2004.



|9. | CURRENT ASSETS  CASH ASSETS
|-- | ----------------------------



|                                                         |  |       |  |                   |  |     
|-------------------------------------------------------- |  | ----- |  | ----------------- |  | ----
|                                                         |  |       |  | As at 31 December
|                                                         |  | Notes |  | 2003              |  | 2002
|                                                         |  |       |  | A$m               |  | A$m 
|Cash at bank and on hand                                 |  |       |  | 41.7              |  | 15.0
|Short term deposits (maturity of three months or less)   |  |       |  |                  |  | 8.2 
|Money market deposits (maturity of three months or less) |  |       |  | 123.6             |  |    
|                                                         |  |       |  |                   |  |     
|                                                         |  |       |  | 165.3             |  | 23.2
|                                                         |  |       |  |                   |  |     



F - 30



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|10. | CURRENT ASSETS  RECEIVABLES
|--- | ----------------------------



|                                         |  |       |  |                   |  |     
|---------------------------------------- |  | ----- |  | ----------------- |  | ----
|                                         |  |       |  | As at 31 December
|                                         |  | Notes |  | 2003              |  | 2002
|                                         |  |       |  | A$m               |  | A$m 
|Loans to employees on share purchases    |  |       |  |                  |  | 1.2 
|Australian Taxation Office  tax refund* |  |       |  | 3.6               |  |    
|Other debtors                            |  |       |  | 0.4               |  | 1.1 
|                                         |  |       |  |                   |  |     
|                                         |  |       |  | 4.0               |  | 2.3 
|                                         |  |       |  |                   |  |     



* Receivable from
Australian Taxation Office relates to overpayment of taxes in prior periods. The refund is due to a retrospective change in legislation occurring with the passing of Australian ttaxation laws amendment bill No 5 (2003) in December 2003.



|11. | CURRENT ASSETS  OTHER
|--- | ----------------------



|            |  |     |  |    
|----------- |  | --- |  | ---
|Prepayments |  |    |  | 0.5
|Other       |  | 0.3 |  | 0.4
|            |  |     |  |    
|            |  | 0.3 |  | 0.9
|            |  |     |  |    



|12. | INVESTMENTS IN ASSOCIATES
|--- | -------------------------



| | (a) | Securities not quoted on a prescribed stock exchange
| | --- | ----------------------------------------------------



| | (i) | Securities in entities forming Alcoa World Alumina and Chemicals (AWAC) with Alcoa Inc.
| | --- | ---------------------------------------------------------------------------------------



|                                                  |  |       |        |  |                     |   |  |                     |   |  |                     |  
|------------------------------------------------- |  | ----- | ------ |  | ------------------- | - |  | ------------------- | - |  | ------------------- | -
|                                                  |  | Notes |        |  | Year to 31 Dec 2003 |   |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001 |  
|                                                  |  |       |        |  | A$m                 |   |  | A$m                 |   |  | A$m                 |  
|Securities at cost:                               |  |       |        |  |                     |   |  |                     |   |  |                     |  
|- balance brought forward                         |  |       |        |  | 1,220.9             |   |  | 1,192.5             |   |  | 1,148.4             |  
|- increase in investment in Halco and MRN         |  |       |        |  |                    |   |  | 72.9                |   |  |                    |  
|- foreign currency revaluation                    |  |       |        |  | (112.0              | ) |  | (44.5               | ) |  | 48.6                |  
|- sale of equity interest in Alcoa Moerdijk BV    |  |       |        |  |                    |   |  |                    |   |  | (4.5                | )
|- increase in investment in Alcoa of Australia*   |  |       |        |  | 108.4               |   |  |                    |   |  |                    |  
|                                                  |  |       |        |  |                     |   |  |                     |   |  |                     |  
|Equity accounted cost of AWAC                     |  |       |        |  | 1,217.3             |   |  | 1,220.9             |   |  | 1,192.5             |  
|Equity in retained profits of AWAC                |  | 12    | (c)(i) |  | 407.7               |   |  | 346.5               |   |  | 411.2               |  
|Equity in reserves of AWAC                        |  | 12    | (d)(i) |  |                    |   |  | 101.3               |   |  | 71.9                |  
|                                                  |  |       |        |  |                     |   |  |                     |   |  |                     |  
|Equity accounted carrying value of AWAC           |  |       |        |  | 1,625.0             |   |  | 1,668.7             |   |  | 1,675.6             |  
|                                                  |  |       |        |  |                     |   |  |                     |   |  |                     |  
|                                                  |  |       |        | 
|(ii) Other entities - Mondo Minerals Oy:          |  |       |        |  |                     |   |  |                     |   |  |                     |  
|                                                  |  |       |        | 
|Securities at cost:                               |  |       |        |  |                     |   |  |                     |   |  |                     |  
|- balance brought forward                         |  |       |        |  |                    |   |  |                    |   |  | 46.5                |  
|- foreign currency revaluation                    |  |       |        |  |                    |   |  |                    |   |  | 0.5                 |  
|                                                  |  |       |        |  |                     |   |  |                     |   |  |                     |  
|                                                  |  |       |        |  |                    |   |  |                    |   |  | 47.0                |  
|Equity in retained profits                        |  |       |        |  |                    |   |  |                    |   |  | 14.0                |  
|Sale of equity interest in Mondo Minerals**       |  |       |        |  |                    |   |  |                    |   |  | (61.0               | )
|                                                  |  |       |        |  |                     |   |  |                     |   |  |                     |  
|Equity accounted carrying value of other entities |  |       |        |  |                    |   |  |                    |   |  |                    |  
|                                                  |  |       |        |  |                     |   |  |                     |   |  |                     |  
|Total equity accounted investments                |  |       |        |  | 1,625.0             |   |  | 1,668.7             |   |  | 1,675.6             |  
|                                                  |  |       |        |  |                     |   |  |                     |   |  |                     |  



|* | On acquisition, Alumina deemed the carrying amounts of the identifiable assets and liabilities of AofA ($18.2 million for 3⁄4% interest share, at the purchase date) to be
appropriate. The excess of the fair value over the book value of the underlying assets (A$90.2 million) was assigned to the bauxite mineral rights and allocated pro rata between reserves and resources. The allocation to reserves will be depreciated
over the life of the reserves (currently 7.4 years) and the amount allocated to resources will be transferred to reserves as conversion occurs and the reserves depreciated as they are consumed in production.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|** | On 24 January 2001 Alumina Limited (previously WMC Limited) sold its 50 per cent equity interest in the Mondo Minerals Talc joint venture, effective 1 January 2001.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



F - 31



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|12. | INVESTMENTS IN ASSOCIATES (continued)
|--- | -------------------------------------



|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|-------------------------------------------------------------------------------------- |  | ----- |  | ------------------- | - |  | ------------------- | - |  | ------------------- | -
|                                                                                       |  | Notes |  | Year to 31 Dec 2003 |   |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001 |  
|                                                                                       |  |       |  | A$m                 |   |  | A$m                 |   |  | A$m                 |  
|(b)    Equity accounted share of profits and dividends                                 |  |       |  |                     |   |  |                     |   |  |                     |  
|Equity share of profits before tax and goodwill                                        |  |       |  | 383.5               |   |  | 370.6               |   |  | 494.2               |  
|Equity goodwill amortization                                                           |  |       |  | (17.7               | ) |  | (17.7               | ) |  | (17.7               | )
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|                                                                                       |  |       |  | 365.8               |   |  | 352.9               |   |  | 476.5               |  
|Equity share of tax                                                                    |  |       |  |                     |   |  |                     |   |  |                     |  
|-normal                                                                                |  |       |  | (121.7              | ) |  | (136.6              | ) |  | (204.5              | )
|-exceptional                                                                           |  | 4     |  |                    |   |  |                    |   |  | 7.1                 |  
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|                                                                                       |  |       |  | 244.1               |   |  | 216.3               |   |  | 279.1               |  
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|Equity share of profits - Continuing operations - Discontinuing operations             |  |       |  | 244.1              |   |  | 216.3              |   |  | 279.1              |  
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|                                                                                       |  |       |  | 244.1               |   |  | 216.3               |   |  | 279.1               |  
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|Dividends received/receivable by Alumina from continuing operations                    |  |       |  | (284.2              | ) |  | (281.0              | ) |  | (377.0              | )
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|(Shortfall)/surplus of equity profits over dividends received/receivable               |  |       |  | (40.1               | ) |  | (64.7               | ) |  | (97.9               | )
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|                                                                                       |  |       |  |                    
|(c) Share of retained profits  (i) AWAC                                                |  |       |  |                     |   |  |                     |   |  |                     |  
|                                                                                       |  |       |  |                    
|(Shortfall)/surplus of AWAC equity accounted profit over dividends received/receivable |  |       |  | (40.1               | ) |  | (64.7               | ) |  | (97.9               | )
|Transfer from reserves                                                                 |  |       |  | 101.3               |   |  |                    |   |  |                    |  
|Sale of equity interest in Alcoa Moerdijk BV                                           |  |       |  |                    |   |  |                    |   |  | (4.4                | )
|Balance brought forward                                                                |  |       |  | 346.5               |   |  | 411.2               |   |  | 513.5               |  
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|Balance of AWAC retained profits carried forward                                       |  |       |  | 407.7               |   |  | 346.5               |   |  | 411.2               |  
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|                                                                                       |  |       |  |                    
|* excludes amortization of equity carrying value realized in forming AWAC              |  |       |  |                     |   |  |                     |   |  |                     |  
|                                                                                       |  |       |  |                    
|(ii) Other entities  Mondo Minerals Oy:                                               |  |       |  |                     |   |  |                     |   |  |                     |  
|                                                                                       |  |       |  |                    
|Balance brought forward                                                                |  |       |  |                    |   |  |                    |   |  | 14.0                |  
|Sale of equity interest in Mondo Minerals                                              |  |       |  |                    |   |  |                    |   |  | (14.0               | )
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|Balance of Mondo Minerals retained profits carried forward                             |  |       |  |                    |   |  |                    |   |  |                    |  
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|Total equity share in retained profits carried forward                                 |  |       |  |                    |   |  | 346.5               |   |  | 411.2               |  
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|                                                                                       |  |       |  |                    
|(d) Equity accounted share of reserves of associated entities                          |  |       |  |                     |   |  |                     |   |  |                     |  
|                                                                                       |  |       |  |                    
|(i) AWAC                                                                               |  |       |  |                     |   |  |                     |   |  |                     |  
|                                                                                       |  |       |  |                    
|Opening balance                                                                        |  |       |  | 101.3               |   |  | 71.9                |   |  | 80.7                |  
|Transfer to retained profits                                                           |  |       |  | (101.3              | ) |  |                    |   |  |                     |  
|Movement during the year                                                               |  |       |  |                    |   |  | 29.4                |   |  | (8.8                | )
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  
|Total equity share of reserves                                                         |  |       |  |                    |   |  | 101.3               |   |  | 71.9                |  
|                                                                                       |  |       |  |                     |   |  |                     |   |  |                     |  



F - 32



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|12. | INVESTMENTS IN ASSOCIATES (continued)
|--- | -------------------------------------



|(e) | Accounting policies
|--- | -------------------



| | (i) | The audited consolidated financial statements of the entities forming AWAC are prepared in accordance with US Generally Accepted Accounting Principles (US GAAP). Except for Alcoa of
Australia Ltd (AofA), the reported profit after tax of AWAC is based on these US GAAP financial statements. Financial statements in US dollars have been translated to Australian dollars using average exchange rates for the period for
profit and loss items, and closing rates for balance sheet items. Adjustments are made for accounting policies not allowed under Australian Generally Accepted Accounting Principles (Aust GAAP). The principal adjustments are to the valuation of
inventories from last-in-first-out basis to a basis equivalent to weighted average cost, to treat the cost of stock options issued under the Alcoa employee long term incentive plan as a charge against profit and to reverse any excesses or shortfalls
of the superannuation fund assets over accrued membership benefits taken to the statement of financial performance.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | Included in the equity accounted carrying amount at which the equity investment in AWAC is recorded, are amounts for goodwill, including profits realized in forming AWAC, of A$175.0
million (Dec 2002: A$192.7 million, Dec 2001: A$210.4 million) which are being amortized over periods out to 2014.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(f) | On an equity accounted basis, the investment is recorded at net cost, and a share of profit is recognized after deduction of equity goodwill amortization.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



|(g) | Additional information on associated entities
|--- | ---------------------------------------------



|                                     |  |                                                 |  |                   |   |  |       |  |      
|------------------------------------ |  | ----------------------------------------------- |  | ----------------- | - |  | ----- |  | -----
|                                     |  |                                                 |  | Percentage equity
|Name                                 |  | Principal activities                            |  | 2003              |   |  | 2002  |  | 2001 
|(i) Entities forming AWAC            |  |                                                 |  |                   |   |  |       |  |      
|Alcoa of Australia Ltd               |  | Fully integrated aluminium production           |  | 40.00             | * |  | 39.25 |  | 39.25
|Alcoa Alumina & Chemicals LLC        |  | Production of alumina & alumina based chemicals |  | 40.00             |   |  | 40.00 |  | 40.00
|Alcoa Chemie Nederland BV**          |  | Production of alumina based chemicals           |  | 40.00             |   |  | 40.00 |  | 40.00
|Alcoa Moerdijk BV                    |  | Production of alumina based chemicals           |  |                  |   |  |      |  | 40.00
|Alcoa Chemie GmbH**                  |  | Production of alumina based chemicals           |  | 40.00             |   |  | 40.00 |  | 40.00
|Abalco S.A.                          |  | Production of bauxite and alumina               |  | 40.00             |   |  | 40.00 |  | 40.00
|Alcoa Caribbean Alumina Holdings LLC |  | Holding company                                 |  | 40.00             |   |  | 40.00 |  | 40.00
|Alumina Espanola S.A.                |  | Production of alumina & alumina based chemicals |  | 40.00             |   |  | 40.00 |  | 40.00
|(ii) Other associates                |  |                                                 |  |                   |   |  |       |  |      
|Agnew Pastoral Company Pty. Ltd      |  | Manage pastoral leases                          |  | 40.00             |   |  | 40.00 |  |     
|Weebo Pastoral Company Pty. Ltd      |  | Manage pastoral leases                          |  | 40.00             |   |  | 40.00 |  |     



|* | In December 2003, Alumina increased its interest in Alcoa of Australia through purchasing QBE Limiteds 0.75% interest by issuing 18,372,881 shares in Alumina. The acquisition
was accounted for based on Aluminas closing price on 12 December 2003 of $5.90 (the closing price on the trading day prior to the date when the purchase was agreed).
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|** | Both Alcoa Chemie Nederland BV and Alcoa Chemie GmbH will be sold subsequent to balance date (refer note 37)
|-- | ------------------------------------------------------------------------------------------------------------



AWAC has a governing strategic council of five members of which Alumina
appoints two, including the deputy chairman.



|                                                                                                        |  |         |  |         |  |        
|------------------------------------------------------------------------------------------------------- |  | ------- |  | ------- |  | -------
|                                                                                                        |  | 2003    |  | 2002    |  | 2001   
|                                                                                                        |  | A$m     |  | A$m     |  | A$m    
|(h)     Expenditure commitments and contingent liabilities                                              |  |         |  |         |  |        
|- other expenditure commitments contracted for, including long term commitments for gas and electricity |  | 1,930.9 |  | 3,027.4 |  | 2,506.0



F - 33



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



Unascertainable unsecured contingent liabilities



Various lawsuits and claims and proceedings have been, or may be, instituted
or asserted against entities within AWAC, including those pertaining to environmental, product liability, and safety and health matters. While the amounts claimed may be substantial, the ultimate liability cannot be determined now because of the
considerable uncertainties that exist. Therefore, it is possible that results of operations or liquidity in a particular period could be materially affected by certain contingencies. However, based on currently available facts, management believes
that the disposition of matters that are pending or asserted will not have a materially adverse effect on AWACs financial position.



Alcoa of Australia Ltd (AofA) is party to a number of natural gas and electricity contracts that expire between 2003 and 2022. Under these
take or pay contracts, AofA is obligated to pay for a minimum of natural gas or electricity even if these commodities are not required for operations.



During 2001, AWAC entered into a ten year agreement with a vendor to provide process control hardware and software.



Pursuant to the terms of the AWAC Formation Agreement, Alcoa and Alumina
have agreed to remain liable for Extraordinary Liabilities (as defined in the agreement) as well as for certain other pre-formation liabilities, such as existing environmental conditions, to the extent of their pre-formation ownership of the company
or asset with which the liability is associated.



|(i) | Aluminas share of aggregate incorporated joint ventures:
|--- | ---------------------------------------------------------



Exchange rates used to convert summarized financial data in Australian dollars:



|                       |  |        
|---------------------- |  | -------
|                       |  | AUD:USD
|Balance sheet items    |  | 0.7516 
|Income statement items |  | 0.6531 



|                         |  |                     |   |  |                     |   |  |                     |  
|------------------------ |  | ------------------- | - |  | ------------------- | - |  | ------------------- | -
|                         |  | Year to 31 Dec 2003 |   |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001 |  
|                         |  | A$m                 |   |  | A$m                 |   |  | A$m                 |  
|Current assets           |  | 499.4               |   |  | 600.2               |   |  | 736.7               |  
|Non-current assets       |  | 1,811.7             |   |  | 1,758.6             |   |  | 1,812.0             |  
|Current liabilities      |  | (379.2              | ) |  | (429.8              | ) |  | (591.4              | )
|Non-current liabilities  |  | (478.3              | ) |  | (449.0              | ) |  | (487.9              | )
|Minority interest        |  | (3.6                | ) |  | (4.0                | ) |  | (4.2                | )
|                         |  |                     |   |  |                     |   |  |                     |  
|Net assets               |  | 1,450.0             |   |  | 1,476.0             |   |  | 1,465.2             |  
|Goodwill                 |  | 175.0               |   |  | 192.7               |   |  | 210.4               |  
|                         |  |                     |   |  |                     |   |  |                     |  
|Carrying value           |  | 1,625.0             |   |  | 1,668.7             |   |  | 1,675.6             |  
|                         |  |                     |   |  |                     |   |  |                     |  
|Revenues                 |  | 2,041.7             |   |  | 2,093.2             |   |  | 2,385.4             |  
|Expenses                 |  | (1,658.2            | ) |  | (1,722.6            | ) |  | (1,891.2            | )
|                         |  |                     |   |  |                     |   |  |                     |  
|Profit before income tax |  | 383.5               |   |  | 370.6               |   |  | 494.2               |  
|Income tax expense       |  | (121.7              | ) |  | (136.6              | ) |  | (204.5              | )
|Exceptional tax credit   |  |                    |   |  |                    |   |  | 7.1                 |  
|                         |  |                     |   |  |                     |   |  |                     |  
|Profit after income tax  |  | *261.8              |   |  | *234.0              |   |  | *296.8              |  
|                         |  |                     |   |  |                     |   |  |                     |  



|* | excludes amortization of goodwill
|- | ---------------------------------



|                                               |  |          |   |  |          |   |  |          |  
|---------------------------------------------- |  | -------- | - |  | -------- | - |  | -------- | -
|(j)     Summarized AWAC financial information: |  |          |   |  |          |   |  |          |  
|Current assets                                 |  | 1,248.5  |   |  | 1,514.6  |   |  | 1,859.6  |  
|Non-current assets                             |  | 4,303.9  |   |  | 4,490.5  |   |  | 4,427.6  |  
|Current liabilities                            |  | (948.0   | ) |  | (1,085.2 | ) |  | (1,494.3 | )
|Non-current liabilities                        |  | (1,195.8 | ) |  | (1,144.7 | ) |  | (1,242.5 | )
|Minority interest                              |  | (9.1     | ) |  | (10.1    | ) |  | (8.6     | )
|                                               |  |          |   |  |          |   |  |          |  
|Total shareholders equity                     |  | 3,399.5  |   |  | 3,765.1  |   |  | 3,541.8  |  
|                                               |  |          |   |  |          |   |  |          |  
|Profit after income tax                        |  | 667.0    |   |  | 597.1    |   |  | 786.7    |  
|                                               |  |          |   |  |          |   |  |          |  



This summarized financial information
is prepared on a basis consistent with that described in Note 12(e).



F - 34



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|13. | NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT
|--- | --------------------------------------------------



|                                          |  |       |     |  |                   |  |        
|----------------------------------------- |  | ----- | --- |  | ----------------- |  | -------
|                                          |  |       |     |  | As at 31 December
|                                          |  | Notes |     |  | 2003A$m           |  | 2002A$m
|Plant and equipment                       |  | 13    | (a) |  | 0.4               |  |       
|                                          |  |       |     |  |                   |  |        
|(a)     Plant and equipment               |  |       |     |  |                   |  |        
|Cost                                      |  |       |     |  | 0.4               |  |       
|Provisions for depreciation and write-off |  |       |     |  |                  |  |       
|                                          |  |       |     |  |                   |  |        
|                                          |  |       |     |  | 0.4               |  |       
|                                          |  |       |     |  |                   |  |        



|(b) | Reconciliations
|--- | ---------------



Reconciliation of the carrying amount at the beginning and end of the current financial year is set out below.



|                                                              |  |                     |   |  |        |  
|------------------------------------------------------------- |  | ------------------- | - |  | ------ | -
|                                                              |  | Plant and equipment |   |  |        |  
|                                                              |  | A$m                 |   |  |        |  
|Carrying amount at 1 January 2003                             |  |                    |   |  |        |  
|Additions                                                     |  | 0.4                 |   |  |        |  
|Depreciation/amortization expense                             |  |                    |   |  |        |  
|                                                              |  |                     |   |  |        |  
|Carrying amount at 31 December 2003                           |  | 0.4                 |   |  |        |  
|                                                              |  |                     |   |  |        |  
|14.     NON-CURRENT ASSETS  DEFERRED TAX ASSETS              |  |                     |   |  |        |  
|Future income tax benefit                                     |  |                    |   |  |       |  
|                                                              |  |                     |   |  |        |  
|Future income tax benefit - US GAAP                           |  |                     |   |  |        |  
|Future income tax benefit before valuation allowance:         |  |                     |   |  |        |  
|- Income tax losses                                           |  | 65.3                |   |  | 58.5   |  
|- Income tax timing differences                               |  | (29.8               | ) |  | (36.3  | )
|- Capital losses                                              |  | 321.2               |   |  | 318.5  |  
|                                                              |  |                     |   |  |        |  
|                                                              |  | 356.7               |   |  | 340.7  |  
|                                                              |  |                     |   |  |        |  
|Valuation allowance:                                          |  |                     |   |  |        |  
|(Australian GAAP, Income tax benefits not brought to account) |  |                     |   |  |        |  
|- Income tax losses                                           |  | (65.3               | ) |  | (58.5  | )
|- Income tax timing differences                               |  | 29.8                |   |  | 36.3   |  
|- Capital losses                                              |  | (321.2              | ) |  | (318.5 | )
|                                                              |  |                     |   |  |        |  
|                                                              |  | (356.7              | ) |  | (340.7 | )
|                                                              |  |                     |   |  |        |  
|Future income tax benefit after valuation allowance:          |  |                     |   |  |        |  
|(Australian GAAP, future income tax benefits)                 |  |                     |   |  |        |  
|- Income tax losses                                           |  |                    |   |  |       |  
|- Income tax timing difference                                |  |                    |   |  |       |  
|                                                              |  |                     |   |  |        |  
|                                                              |  |                    |   |  |       |  
|                                                              |  |                     |   |  |        |  
|15.     CURRENT LIABILITIES  PAYABLES                        |  |                     |   |  |        |  
|Trade creditors                                               |  | 2.6                 |   |  | 0.1    |  
|Other creditors                                               |  | 0.6                 |   |  | 2.5    |  
|                                                              |  |                     |   |  |        |  
|                                                              |  | 3.2                 |   |  | 2.6    |  
|                                                              |  |                     |   |  |        |  



F - 35



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|                                                                                                                            |  |       |     |  |                   |  |       
|--------------------------------------------------------------------------------------------------------------------------- |  | ----- | --- |  | ----------------- |  | ------
|                                                                                                                            |  |       |     |  | As at 31 December
|                                                                                                                            |  | Notes |     |  | 2003              |  | 2002  
|                                                                                                                            |  |       |     |  | A$m               |  | A$m   
|16.     CURRENT LIABILITIES  INTEREST BEARING LIABILITIES                                                                  |  |       |     |  |                   |  |       
|Borrowings                                                                                                                  |  | 16    | (a) |  | 467.0             |  | 534.8 
|                                                                                                                            |  |       |     |  |                   |  |       
|                                                                                                                            |  |       |     |  | 467.0             |  | 534.8 
|                                                                                                                            |  |       |     |  |                   |  |       
|(a)     Description                                                                                                         |  |       |     |  |                   |  |       
|Bank loans at floating interest rates applicable in the United States of America (Weighted average rate of 1.4% (2002:1.7%) |  |       |     |  | 467.0             |  | 534.8 
|                                                                                                                            |  |       |     |  |                   |  |       
|(b)     Currencies                                                                                                          |  |       |     |  |                   |  |       
|The above borrowings are due in the following currency:                                                                     |  |       |     |  |                   |  |       
|US dollars                                                                                                                  |  |       |     |  | 351.0             |  | 303.0 
|                                                                                                                            |  |       |     |  |                   |  |       
|A$ equivalent of above currency                                                                                             |  |       |     |  | 467.0             |  | 534.8 
|                                                                                                                            |  |       |     |  |                   |  |       
|(c)     Exchange rates                                                                                                      |  |       |     |  |                   |  |       
|Exchange rates as at balance date used in translations:                                                                     |  |       |     |  |                   |  |       
|A$1 = US$                                                                                                                   |  |       |     |  | 0.7516            |  | 0.5666
|(d)     Analysis of repayments                                                                                              |  |       |     |  |                   |  |       
|Current liabilities:                                                                                                        |  |       |     |  |                   |  |       
|In one year or less                                                                                                         |  |       |     |  | 467.0             |  | 534.8 
|                                                                                                                            |  |       |     |  |                   |  |       



|(e) | Current liabilities - borrowings and overdrafts
|--- | -----------------------------------------------



|                                            |  |                       |  |                                                      |  |                                         |  |                                          |  |                                             
|------------------------------------------- |  | --------------------- |  | ---------------------------------------------------- |  | --------------------------------------- |  | ---------------------------------------- |  | --------------------------------------------
|Category of aggregate short term borrowings |  | Balance at endof year |  | Weightedaverageinterest rateon balancedateborrowings |  | Maximumamountoutstandingduringperiod(i) |  | Averageamountoutstandingduringperiod(ii) |  | Weightedaverageinterestrateduringperiod(iii)
|                                            |  | A$m                   |  | %                                                    |  | A$m                                     |  | A$m                                      |  | %                                           
|Year ended 31 December 2003                 |  |                       |  |                                                      |  |                                         |  |                                          |  |                                             
|Other loans                                 |  | 467.0                 |  | 1.4                                                  |  | 542.3                                   |  | 517.0                                    |  | 1.5                                         
|                                            |  |                       |  |                                                      |  |                                         |  |                                          |  |                                             
|                                            |  | 467.0                 |  |                                                      |  |                                         |  |                                          |  |                                             
|                                            |  |                       |  |                                                      |  |                                         |  |                                          |  |                                             
|Year ended 31 December 2002                 |  |                       |  |                                                      |  |                                         |  |                                          |  |                                             
|Other loans                                 |  | 534.8                 |  | 1.7                                                  |  | 662.7                                   |  | 544.9                                    |  | 3.7                                         
|                                            |  |                       |  |                                                      |  |                                         |  |                                          |  |                                             
|                                            |  | 534.8                 |  |                                                      |  |                                         |  |                                          |  |                                             
|                                            |  |                       |  |                                                      |  |                                         |  |                                          |  |                                             



|(i) | Based on bank statement balances.
|--- | ---------------------------------



|(ii) | Based on average monthly balances.
|---- | ----------------------------------



|(iii) | Based on weighted average monthly interest rates.
|----- | -------------------------------------------------



|(iv) | There are no significant unused committed lines of credit for short-term financing.
|---- | -----------------------------------------------------------------------------------



F - 36



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|                                                                                         |  |       |     |  |                   |  |      |  
|---------------------------------------------------------------------------------------- |  | ----- | --- |  | ----------------- |  | ---- | -
|                                                                                         |  |       |     |  | As at 31 December | 
|                                                                                         |  | Notes |     |  | 2003              |  | 2002 |  
|                                                                                         |  |       |     |  | A$m               |  | A$m  |  
|17.     CURRENT LIABILITIES  CURRENT TAX                                                |  |       |     |  |                   |  |      |  
|Current income tax                                                                       |  |       |     |  | 2.5               |  | 1.7  |  
|                                                                                         |  |       |     |  |                   |  |      |  
|18.     CURRENT LIABILITIES  PROVISIONS                                                 |  |       |     |  |                   |  |      |  
|Employee entitlements                                                                    |  |       |     |  | 0.1               |  | 0.1  |  
|Other                                                                                    |  |       |     |  |                  |  |     |  
|                                                                                         |  |       |     |  |                   |  |      |  
|                                                                                         |  |       |     |  | 0.1               |  | 0.1  |  
|                                                                                         |  |       |     |  |                   |  |      |  
|19.     NON-CURRENT LIABILITIES  DEFERRED TAX LIABILITIES                               |  |       |     |  |                   |  |      |  
|Deferred income tax                                                                      |  | 19    | (a) |  |                  |  | 2.2  |  
|                                                                                         |  |       |     |  |                   |  |      |  
|(a)     The timing differences represented by the provision for deferred income tax are: |  |       |     |  |                   |  |      |  
|Employee provisions                                                                      |  |       |     |  |                  |  | (0.1 | )
|Foreign exchange                                                                         |  |       |     |  |                  |  | 2.4  |  
|Other                                                                                    |  |       |     |  |                  |  | (0.1 | )
|                                                                                         |  |       |     |  |                   |  |      |  
|                                                                                         |  |       |     |  |                  |  | 2.2  |  
|                                                                                         |  |       |     |  |                   |  |      |  
|20.     NON-CURRENT LIABILITIES  PROVISIONS                                             |  |       |     |  |                   |  |      |  
|Employee entitlements                                                                    |  |       |     |  | 0.2               |  | 0.2  |  
|                                                                                         |  |       |     |  |                   |  |      |  



| | (i) | The aggregate of provisions for employee entitlements as shown in Notes 18 and 20 are $0.3 million(2002: $0.3 million).
| | --- | -----------------------------------------------------------------------------------------------------------------------



|21. | CONTRIBUTED EQUITY
|--- | ------------------



|                                                                 |  |       |  |          |  
|---------------------------------------------------------------- |  | ----- |  | -------- | -
|Share capital issued and fully paid                              |  |       |  |          |  
|Balance brought forward                                          |  | 220.2 |  | 3,190.9  |  
|Shares issued:                                                   |  |       |  |          |  
|- converted from partly paid                                     |  |      |  | 2.2      |  
|- options exercised                                              |  | 56.2  |  | 36.3     |  
|Shares issued to acquire Corridor Sands                          |  |      |  | 123.8    |  
|Shares issued to acquire QBEs 0.75% share of Alcoa of Australia |  | 108.4 |  |         |  
|Less: return of capital to effect the demerger                   |  |      |  | (3,133.0 | )
|                                                                 |  |       |  |          |  
|Total issued capital                                             |  | 384.8 |  | 220.2    |  
|                                                                 |  |       |  |          |  



|                                                      |  |                             |  |                             |  |      |  |          |  
|----------------------------------------------------- |  | --------------------------- |  | --------------------------- |  | ---- |  | -------- | -
|                                                      |  | Number of fully paid shares |  | Number of partlypaid shares | 
|Movements in issued shares                            |  | 2003                        |  | 2002                        |  | 2003 |  | 2002     |  
|Opening number of shares                              |  | 1,128,333,747               |  | 1,108,821,653               |  |     |  | 629,000  |  
|Issued under Employee Share Scheme                    |  | 13,071.920                  |  | 4,802,490                   |  |     |  |         |  
|Conversion of partly paid shares                      |  |                            |  | 629,000                     |  |     |  | (629,000 | )
|Allotment for purchase of Corridor Sands              |  |                            |  | 14,080,604                  |  |     |  |         |  
|Allotment for purchase of 0.75% of Alcoa of Australia |  | 18,372,881                  |  |                            |  |      |  |          |  
|                                                      |  |                             |  |                             |  |      |  |          |  
|Closing number of shares                              |  | 1,159,778,548               |  | 1,128,333,747               |  |     |  |         |  
|                                                      |  |                             |  |                             |  |      |  |          |  



F - 37



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|21. | CONTRIBUTED EQUITY (continued)
|--- | ------------------------------



|(a) | The demerger in 2002 incorporated a Share Scheme, consisting of a capital reduction and a dividend, under which:
|--- | ----------------------------------------------------------------------------------------------------------------



| |  | The share capital of Alumina was reduced by $3.1 billion (an amount of A$2.78 per share on issue at the Share Scheme record date);
| | - | ----------------------------------------------------------------------------------------------------------------------------------



| |  | Alumina paid a notional cash dividend of $A0.73 per share on issue at the Share Scheme record date; and
| | - | -------------------------------------------------------------------------------------------------------



| |  | The reduced share capital amount and the dividend were automatically applied by Alumina, on behalf of Alumina shareholders, to transfer to those shareholders one WMC Resources Ltd
share for each Alumina share held at the Share Scheme record date (except Ineligible Overseas Shareholders who had the WMC Resources Limited shares to which they were entitled sold and the net sale proceeds remitted to them).
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | 14,080,604 fully paid shares were allotted at $8.79 per share to facilitate WMC Resources Ltds acquisition of its interest in Corridor Sands.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------



|(c) | 18,372,881 fully paid shares were allotted at $5.90 per share to facilitate Alumina Limiteds acquisition of QBE Limiteds 0.75% interest in Alcoa of Australia in
December 2003.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(d) | Ordinary shares entitle the holder to participate in dividends in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary
shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(e) | The Dividend Reinvestment Plan remains suspended.
|--- | -------------------------------------------------



|(f) | Stock based compensation plans
|--- | ------------------------------



The establishment of the WMC Employee Share Scheme was approved by shareholders at the Annual General Meeting held on 12 December 1987. Under the Scheme a
number of share plans have operated. Fully paid shares, partly paid shares and share options have been granted to employees since establishment of the Scheme. From commencement of the WMC Employee Share Scheme to 31 December 2002, 10,354,645 fully
paid shares, 21,008,700 partly paid shares and 63,611,300 options for fully paid shares had been issued under the Share Scheme, of which 21,008,700 partly paid shares and 39,978,047 options had been converted to fully paid ordinary shares and
released from the Scheme. The fully paid shares of 10,354,645 have been issued to employees and are not considered as part of the current stock compensation calculation. A total of 15,573,653 options have lapsed.



|(i) | Employee option plan
|--- | --------------------



All permanent employees (including executive directors) of Alumina Limited and its subsidiaries who were employed by the company or a subsidiary were
eligible to participate in the WMC Employee Share Scheme and be offered options for fully paid shares. Existing options allotted to Alumina employees remain exercisable until such time as their exercise periods expire. There is no ongoing option
plan available to Alumina Limited directors or employees. Under the Scheme, the following issues have been made during the current and prior year:



| |  | 7 May 2002 - 600,000 options for fully paid shares at an exercise price of $9.35 (4 employees).
| | - | -----------------------------------------------------------------------------------------------



The May 2002 issue had an exercise price of $9.35 per share as they were issued on terms equivalent to the 2001 WMC Option
Plan The major provisions of the option plans provide that the employee may request that the options be converted after one year from the date of allotment. Options are exercisable at their issue price. Restrictions exist for certain employees on
the number of options which can be exercised in any year. If the request to convert the options to shares has not been made, the Company must make the call at the completion of five years from the date of issue or termination of employment. Certain
designated officers are not permitted to exercise options or buy and sell shares in the period between the end of the companys half or full financial year and the release of the respective result.



F - 38



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|21. | CONTRIBUTED EQUITY (continued)
|--- | ------------------------------



|(ii) | Stock Appreciation Plan
|---- | -----------------------



In various years since approval of the Employee Share Scheme in 1987, the company has established Stock Appreciation Plans (SAPs) for the benefit of
employees in countries outside Australia. The purpose of the SAPs was to provide such employees, who due to securities law constraints are not eligible to participate under the Options Plans, with benefits similar to those conferred by the Option
Plans.



Under the terms of the Alumina Limited Stock
Appreciation Plan (SAP), employees are invited to apply for the grant by Alumina Limited. The employees are not required to pay any amount for the grant, but each Alumina Limited SAP will have a notional allotment exercise price, equal to the
weighted average sale price of Alumina Limited shares on the ASX on the trading day that the invitation to apply for the Alumina Limited SAP is made to the employee. Subject to certain exceptions, the Alumina Limited SAP will not be able to be
redeemed until after a period of 12 months from the date of allotment and will lapse on the fifth anniversary of the date of allotment. Upon redemption of an Alumina Limited SAP before its expiry by the holder, the holder will be entitled to a
payment equal to the difference between the closing price of Alumina Limited share on the ASX on the trading day immediately before redemption, and the notional allotment price (assuming the former is higher).



Prior to the name change to Alumina Limited and demerger of WMC Resources,
employees of WMC Limited (Alumina) participated in the stock-based compensation plans of WMC Limited, which included stock options and stock appreciation rights granted in WMC Limited common stock.



Additionally, prior to the demerger, WMC Limited had granted WMC Limited
Stock Appreciation Rights to WMC Resources employees. After the demerger as noted below, the SAP rights were split in to Alumina Limited and WMC Resources Ltd SAPs.



|(iii) | Partly Paid Share Plan
|----- | ----------------------



The partial paid shares were granted to a select few employees which makes the plan a compensatory plan under US GAAP. This results in stock compensation
expense to the company when the market price is greater than the exercise price on date of grant. As a result of non interest bearing notes granted to the employees to purchase the partially paid shares, the shares were considered variable grants.
Variable grants require the shares to be marked to market and compensation expense to be recognized for the difference between the fair value and the exercise price at each balance sheet date. All partly paid shares were converted to fully paid
during 2002, prior to demerger. Compensation expense as a result of the mark to market recognition for the year ended 2002 $0.1 million (2001: $1.2 million).



|(iv) | Impact of demerger on plans
|---- | ---------------------------



As a result of the demerger, each WMC Limited employee option become an Alumina Limited option and entitled the holder to subscribe for one Alumina
Limited share. The exercise prices of the options were amended so that an Alumina Limited employee option has an exercise price less than the exercise price of the corresponding WMC Limited option prior to the demerger. The exercise price of an
Alumina Limited option was determined by reference to the exercise price of the corresponding WMC Limited option prior to the demerger and a factor of 0.537. The exercise price of the 11,773,500 options issued on 30 November 2001 and 7 May 2002 was
amended as a result of the demerger from $9.35 to $5.02. The Stock Appreciation Plan was treated in the same manner as the Share Scheme as detailed above.



|(v) | Alumina Employee Share Plan
|--- | ---------------------------



In 2003, the Company established an employee long term incentive plan which involves the on market purchase of the companys shares which can vest to
employees provided certain performance tests are achieved. The criteria are the Companys share performance against a comparator group of 50 Australian-listed entities and a comparator group of 30 international entities listed on stock
exchanges inside and Outside Australia. The maximum number of shares which could be awarded under the plan annually are purchased through a fully consolidated trust. The shares vest in December, provided the performance criteria are achieved. The
compensation charge is recorded in the period when the shares vest with the employee as the liability is determined on that date. If all of the performance criteria are not achieved then the shares are treated as treasury shares in shareholder
equity. In 2003, all performance criteria were achieved and 91,300 shares representing 0.008% of shares on issue were vested in the period.



F - 39



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|21. | CONTRIBUTED EQUITY (continued)
|--- | ------------------------------



As at 31 December 2003, the market price per ordinary share was $6.57 and 8,059,600 options remained
exercisable as follows:



|              |  |                |  |                  |  |                                               |  |                |      |             |                 
|------------- |  | -------------- |  | ---------------- |  | --------------------------------------------- |  | -------------- | ---- | ----------- | ----------------
|Year of issue |  | Grantedin 2003 |  | Exercised in2003 |  | Exercisable/ Outstandingas at 31 December2003 |  | Exercise Price |      | Expiry Date
|1998          |  |               |  | 902,920          |  |                                              |  | $              | 2.62 |             | 21 December 2003
|1998          |  |               |  | 375,000          |  |                                              |  | $              | 2.88 |             | 21 December 2003
|1999          |  |               |  | 2,196,400        |  | 1,495,600                                     |  | $              | 4.52 |             | 20 December 2004
|2000          |  |               |  | 3,941,400        |  | 1,986,400                                     |  | $              | 4.04 |             | 18 December 2005
|2001          |  |               |  | 5,056,200        |  | 4,577,600                                     |  | $              | 5.02 |             | 30 November 2006
|2002          |  |               |  | 600,000          |  |                                              |  | $              | 5.02 |             | 30 November 2006
|Total         |  |               |  | 13,071,920       |  | 8,059,600                                     |  |                |      |             |                 



For the year ended 31
December 2003, there were the following SAP movements:



|              |  |                |  |                  |  |                                               |  |                |      |             |                 
|------------- |  | -------------- |  | ---------------- |  | --------------------------------------------- |  | -------------- | ---- | ----------- | ----------------
|Year of issue |  | Grantedin 2003 |  | Convertedin 2003 |  | Exercisable/ Outstandingas at 31 December2003 |  | Allotmentprice |      | Expiry Date
|1998          |  |               |  | 59,300           |  |                                              |  | $              | 2.62 |             | 21 December 2003
|1999          |  |               |  | 172,200          |  | 11,000                                        |  | $              | 4.52 |             | 20 December 2004
|2000          |  |               |  | 251,600          |  | 58,300                                        |  | $              | 4.04 |             | 18 December 2005
|2001          |  |               |  | 283,700          |  | 197,600                                       |  | $              | 5.02 |             | 30 November 2006
|2002          |  |               |  |                 |  | 650,000                                       |  | $              | 5.02 |             | 30 November 2006
|Total         |  |               |  | 766,800          |  | 916,900                                       |  |                |      |             |                 



Summary of
Alumina Common Stock Options and Stock Appreciation Plan



The following table is a summary of Alumina stock option transactions:



|                           |  |                         |   |  |                                   |      |                         |        |   |                                   |   |      |  
|-------------------------- |  | ----------------------- | - |  | --------------------------------- | ---- | ----------------------- | ------ | - | --------------------------------- | - | ---- | -
|                           |  | Options inThousands2003 |   |  | Weighted-AverageExercisePrice2003 |      | Options inThousands2002 |        |   | Weighted-AverageExercisePrice2002 |  
|Outstanding at January 1   |  |                         |   |  |                                   |      |                         |        |   |                                   |   |      |  
|Options                    |  | 21,549                  |   |  | $                                 | 4.52 |                         | 27,065 |   |                                   | $ | 8.18 | *
|SAPs                       |  | 1,684                   |   |  | $                                 | 4.70 |                         | 1,512  |   |                                   | $ | 8.04 | *
|Movements during the year: |  |                         |   |  |                                   |      |                         |        |   |                                   |   |      |  
|Options                    |  |                         |   |  |                                   |      |                         |        |   |                                   |   |      |  
|- Granted                  |  |                        |   |  |                                   |     |                         | 600    |   |                                   | $ | 5.02 |  
|- Exercised                |  | (13,072                 | ) |  | $                                 | 4.41 |                         | (4,802 | ) |                                   | $ | 3.75 |  
|- Canceled or forfeited    |  | (417                    | ) |  | $                                 | 4.43 |                         | (1,314 | ) |                                   | $ | 4.91 |  
|SAPs                       |  |                         |   |  |                                   |      |                         |        |   |                                   |   |      |  
|- Granted                  |  |                        |   |  |                                   |     |                         | 650    |   |                                   | $ | 5.02 |  
|- Exercised                |  | (767                    | ) |  | $                                 | 4.40 |                         | (470   | ) |                                   | $ | 3.93 |  
|- Canceled or forfeited    |  |                        |   |  |                                   |     |                         | (8     | ) |                                   | $ | 3.30 |  
|Outstanding at December 31 |  |                         |   |  |                                   |      |                         |        |   |                                   |   |      |  
|Options                    |  | 8,060                   |   |  | $                                 | 4.69 |                         | 21,549 |   |                                   | $ | 4.52 |  
|SAPs                       |  | 917                     |   |  | $                                 | 4.95 |                         | 1,684  |   |                                   | $ | 4.70 |  



|* | Amounts are pre demerger. See (iv) for explanation of impact of demerger on options and SAPs.
|- | ---------------------------------------------------------------------------------------------



F - 40



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|21. | CONTRIBUTED EQUITY (continued)
|--- | ------------------------------



The following table summarizes information about the Alumina stock options and SAPs outstanding at
December 31, 2003:



|                         |  |                                             |  |                                          |  |                               |      |                                             |       |                               |   |     
|------------------------ |  | ------------------------------------------- |  | ---------------------------------------- |  | ----------------------------- | ---- | ------------------------------------------- | ----- | ----------------------------- | - | ----
|                         |  | Options / SAPs Outstanding                  |  | Options / SAPsExercisable               
|Range of Exercise Prices |  | NumberOutstandingat Dec. 31,2003(thousands) |  | Weighted-AverageRemainingContractualLife |  | Weighted-AverageExercisePrice |      | NumberExercisableat Dec. 31,2003(thousands) |       | Weighted-AverageExercisePrice
|$4.52                    |  | 1,507                                       |  | 0.9                                      |  | $                             | 4.52 |                                             | 1,507 |                               | $ | 4.52
|$4.04                    |  | 2,045                                       |  | 1.9                                      |  | $                             | 4.04 |                                             | 2,045 |                               | $ | 4.04
|$5.02                    |  | 4,775                                       |  | 2.9                                      |  | $                             | 5.02 |                                             | 4,775 |                               | $ | 5.02
|$5.02                    |  | 650                                         |  | 2.9                                      |  | $                             | 5.02 |                                             | 650   |                               | $ | 5.02
|                         |  |                                             |  |                                          |  |                               |      |                                             |       |                               |   |     
|                         |  | 8,977                                       |  | 2.3                                      |  | $                             | 4.53 |                                             | 8,977 |                               | $ | 4.53
|                         |  |                                             |  |                                          |  |                               |      |                                             |       |                               |   |     



|22. | MINORITY INTERESTS
|--- | ------------------



|                                                                           |  |       |  |                   |  |                   |   |  |                  
|-------------------------------------------------------------------------- |  | ----- |  | ----------------- |  | ----------------- | - |  | -----------------
|                                                                           |  | Notes |  | Year to31 Dec2003 |  | Year to31 Dec2002 |   |  | Year to31 Dec2001
|                                                                           |  |       |  | A$m               |  | A$m               |   |  | A$m              
|Outside equity interest in controlled entities comprises:                  |  |       |  |                   |  |                   |   |  |                  
|Share capital                                                              |  |       |  |                  |  |                  |   |  | 2.6              
|Reserves                                                                   |  |       |  |                  |  |                  |   |  | 0.7              
|Retained profits                                                           |  | 22(a) |  |                  |  |                  |   |  | 5.7              
|                                                                           |  |       |  |                   |  |                   |   |  |                  
|                                                                           |  |       |  |                  |  |                  |   |  | 9.0              
|                                                                           |  |       |  |                   |  |                   |   |  |                  
|(a)    Retained profits reconciliation                                     |  |       |  |                   |  |                   |   |  |                  
|Outside equity interests in operating (profit)/loss after income tax       |  |       |  |                  |  | (0.7              | ) |  | 2.2              
|Retained profits brought forward                                           |  |       |  |                  |  | 5.7               |   |  | 3.5              
|                                                                           |  |       |  |                   |  |                   |   |  |                  
|Total available for appropriation                                          |  |       |  |                  |  | 5.0               |   |  | 5.7              
|Transfer to profits attributable to members of Alumina Limited on disposal |  |       |  |                  |  | (5.0              | ) |  |                 
|                                                                           |  |       |  |                   |  |                   |   |  |                  
|Retained profits at the end of the financial year                          |  |       |  |                  |  |                  |   |  | 5.7              
|                                                                           |  |       |  |                   |  |                   |   |  |                  



F - 41



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|23. | NOTES TO THE STATEMENTS OF CASH FLOWS
|--- | -------------------------------------



|                                                                                                                                 |  |       |  |                   |   |  |                   |   |  |                   |  
|-------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | ----------------- | - |  | ----------------- | - |  | ----------------- | -
|                                                                                                                                 |  | Notes |  | Year to31 Dec2003 |   |  | Year to31 Dec2002 |   |  | Year to31 Dec2001 |  
|                                                                                                                                 |  |       |  | A$m               |   |  | A$m               |   |  | A$m               |  
|(a)    Reconciliation of operating profit after income tax to net cash provided by operating
activities                          |  |       |  |                   |   |  |                   |   |  |                   |  
|Operating profit after income tax and earnings of associates                                                                     |  |       |  | 236.9             |   |  | 173.8             |   |  | 403.9             |  
|Shortfall/(excess) of equity accounted profits over dividends received (net of goodwill amortization)                            |  |       |  | 22.3              |   |  | 47.0              |   |  | 80.2              |  
|Depreciation and amortization                                                                                                    |  | 3     |  | 17.8              |   |  | 489.9             |   |  | 613.9             |  
|Borrowing cost amortization                                                                                                      |  |       |  |                  |   |  |                  |   |  | (5.4              | )
|Research and development written off                                                                                             |  |       |  |                  |   |  | 0.3               |   |  | 0.4               |  
|(Profit)/loss on disposal of non-current assets                                                                                  |  |       |  |                  |   |  | (43.1             | ) |  | (275.1            | )
|Provision for diminution in investments and loans                                                                                |  |       |  |                  |   |  | (0.8              | ) |  | 0.2               |  
|Unrealized exchange losses/(gains)                                                                                               |  |       |  | (4.8              | ) |  | (4.1              | ) |  | 0.6               |  
|Write down in value of inventory                                                                                                 |  | 3     |  |                  |   |  | 2.1               |   |  | 7.7               |  
|                                                                                                                                 |  |       |  |                   |   |  |                   |   |  |                   |  
|Sub total                                                                                                                        |  |       |  | 272.2             |   |  | 665.1             |   |  | 826.4             |  
|Change in assets and liabilities adjusted for effects of purchase and disposal of controlled entities during the financial
year: |  |       |  |                   |   |  |                   |   |  |                   |  
|(Increase)/decrease in:                                                                                                          |  |       |  |                   |   |  |                   |   |  |                   |  
|-inventories                                                                                                                     |  |       |  |                  |   |  | (84.4             | ) |  | (20.8             | )
|-receivables                                                                                                                     |  |       |  | (1.7              | ) |  | (300.5            | ) |  | 278.5             |  
|-current tax assets                                                                                                              |  |       |  | (4.1              | ) |  |                  |   |  |                  |  
|-deferred tax assets                                                                                                             |  |       |  |                  |   |  | 53.0              |   |  | (121.9            | )
|-other assets                                                                                                                    |  |       |  | 0.6               |   |  | 401.6             |   |  | (194.4            | )
|(Decrease)/increase in:                                                                                                          |  |       |  |                   |   |  |                   |   |  |                   |  
|-payables                                                                                                                        |  |       |  | 0.6               |   |  | (88.1             | ) |  | 156.0             |  
|-current tax liabilities                                                                                                         |  |       |  | 0.8               |   |  | 24.2              |   |  | 3.3               |  
|-deferred tax liabilities                                                                                                        |  |       |  | (2.2              | ) |  | (86.1             | ) |  | 22.4              |  
|-provisions                                                                                                                      |  |       |  |                  |   |  | 12.2              |   |  | 16.6              |  
|-other liabilities                                                                                                               |  |       |  | 2.3               |   |  | 5.6               |   |  | (11.4             | )
|                                                                                                                                 |  |       |  |                   |   |  |                   |   |  |                   |  
|Net cash provided by operating activities                                                                                        |  |       |  | 268.5             |   |  | 602.6             |   |  | 954.7             |  
|                                                                                                                                 |  |       |  |                   |   |  |                   |   |  |                   |  



|(b) | Acquisition of controlled entities
|--- | ----------------------------------



During the year the Company did not acquire any material controlled entities.



|(c) | Disposal of controlled entities
|--- | -------------------------------



During the year the Company did not dispose of any material controlled entities.



|(d) | Financing facilities
|--- | --------------------



Refer to Note 24.



|(e) | Non cash financing and investing activities
|--- | -------------------------------------------



Consideration of 18,372,881 shares in Alumina Limited was issued to acquire 0.75% of Alcoa of Australia (refer note 12(g)).



F - 42



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|24. | FINANCING FACILITIES
|--- | --------------------



|                                                                |  |       |      |                  |      |      
|--------------------------------------------------------------- |  | ----- | ---- | ---------------- | ---- | -----
|                                                                |  | Notes |      | As at 31December
|                                                                |  |       | 2003 |                  | 2002
|                                                                |  |       |      | A$m              |      | A$m  
|The total facilities available at balance date were as follows: |  |       |      |                  |      |      
|Bank overdrafts                                                 |  |       |      |                 |      |     
|Bank loan facilities                                            |  |       |      |                 |      |     
|Short term loan facilities                                      |  | 24(b) |      | 700.0            |      | 700.0
|Medium term loan facilities                                     |  |       |      |                 |      |     
|Long term loan facilities                                       |  |       |      |                 |      |     
|                                                                |  |       |      |                  |      |      
|                                                                |  |       |      | 700.0            |      | 700.0
|                                                                |  |       |      |                  |      |      
|Used at balance date:                                           |  |       |      |                  |      |      
|Bank overdrafts                                                 |  |       |      |                 |      |     
|Bank loan facilities                                            |  |       |      |                 |      |     
|Short term loan facilities                                      |  | 24(b) |      | 467.0            |      | 534.8
|Medium term loan facilities                                     |  |       |      |                 |      |     
|Long term loan facilities                                       |  |       |      |                 |      |     
|                                                                |  |       |      |                  |      |      
|                                                                |  |       |      | 467.0            |      | 534.8
|                                                                |  |       |      |                  |      |      
|Available at balance date:                                      |  |       |      |                  |      |      
|Bank loan facilities                                            |  |       |      |                 |      |     
|Short term loan facilities                                      |  | 24(b) |      | 233.0            |      | 165.2
|                                                                |  |       |      |                  |      |      
|                                                                |  |       |      | 233.0            |      | 165.2
|                                                                |  |       |      |                  |      |      



|(a) | The loan facilities are denominated in currencies as follows:-
|--- | --------------------------------------------------------------



|                       |  |       |  |      
|---------------------- |  | ----- |  | -----
|Short term facilities  |  |       |  |      
|Australian dollars     |  |      |  |     
|United States dollars  |  | 351.0 |  | 303.0
|Medium term facilities |  |       |  |      
|United States dollars  |  |      |  |     
|Long term facilities   |  |       |  |      
|Australian dollars     |  |      |  |     
|United States dollars  |  |      |  |     



|(b) | The short term bank loan facilities are available for general corporate purposes. All facilities are 364 day facilities.
|--- | ------------------------------------------------------------------------------------------------------------------------



F - 43



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|25. | FINANCIAL INSTRUMENTS
|--- | ---------------------



|A. | Interest rate risk
|-- | ------------------



The group is exposed to interest rate risk on its outstanding interest bearing liabilities and investments.



| | (a) | Interest rate risk exposure
| | --- | ---------------------------



The consolidated entitys exposure to interest rate risk and the effective weighted interest rate for classes of financial assets and liabilities is
set out below:



As at 31 December 2003



|                               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|------------------------------ |  | --------------------------- |  | ---------------------- | - |  | ------------ |  | --------------- |  | -------------- |  | ------------------- | - |  | ------ | -
|                               |  | Fixed interest maturing in: | 
|$ million                      |  | Note                        |  | Floatinginterestrate % |   |  | 1 yearorless |  | Over 1to5 years |  | Morethan5years |  | Non-interestbearing |   |  | Total  |  
|Financial Assets               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|Cash assets                    |  | 9                           |  | 165.3                  |   |  |             |  |                |  |               |  |                    |   |  | 165.3  |  
|Receivables                    |  | 10                          |  |                       |   |  |             |  |                |  |               |  | 4.0                 |   |  | 4.0    |  
|                               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|                               |  |                             |  | 165.3                  |   |  |             |  |                |  |               |  | 4.0                 |   |  | 169.3  |  
|                               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|Weighted average interest rate |  |                             |  | 5.4                    | % |  |              |  |                 |  |                |  |                     |   |  |        |  
|Financial Liabilities          |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|Payables                       |  | 15                          |  |                       |   |  |             |  |                |  |               |  | 3.2                 |   |  | 3.2    |  
|Bank loans                     |  | 16                          |  | 467.0                  |   |  |             |  |                |  |               |  |                    |   |  | 467.0  |  
|                               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|                               |  |                             |  | 467.0                  |   |  |             |  |                |  |               |  | 3.2                 |   |  | 470.2  |  
|                               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|Weighted average interest rate |  |                             |  | 1.4                    | % |  |              |  |                 |  |                |  |                     |   |  |        |  
|Net financial (liabilities)    |  |                             |  | (301.7                 | ) |  |             |  |                |  |               |  | 0.8                 |   |  | (300.9 | )
|                               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|                               |  |                             |  |                        |   |  |             
|As at 31 December 2002         |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|                               |  | Fixed interest maturing in: | 
|$ million                      |  | Note                        |  | Floatinginterestrate % |   |  | 1 yearorless |  | Over 1to 5years |  | Morethan5years |  | Non-interestbearing |   |  | Total  |  
|Financial Assets               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|Cash assets                    |  | 9                           |  | 23.2                   |   |  |             |  |                |  |               |  |                    |   |  | 23.2   |  
|Receivables                    |  | 10                          |  |                       |   |  |             |  |                |  |               |  | 2.3                 |   |  | 2.3    |  
|                               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|                               |  |                             |  | 23.2                   |   |  |             |  |                |  |               |  | 2.3                 |   |  | 25.5   |  
|                               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|Weighted average interest rate |  |                             |  | 1.7                    | % |  |              |  |                 |  |                |  |                     |   |  |        |  
|Financial Liabilities          |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|Payables                       |  | 15                          |  |                       |   |  |             |  |                |  |               |  | 2.6                 |   |  | 2.6    |  
|Bank loans                     |  | 16                          |  | 534.8                  |   |  |             |  |                |  |               |  |                    |   |  | 534.8  |  
|                               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|                               |  |                             |  | 534.8                  |   |  |             |  |                |  |               |  | 2.6                 |   |  | 537.4  |  
|                               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  
|Weighted average interest rate |  |                             |  | 1.7                    | % |  |              |  |                 |  |                |  |                     |   |  |        |  
|Net financial (liabilities)    |  |                             |  | (511.6                 | ) |  |             |  |                |  |               |  | (0.3                | ) |  | (511.9 | )
|                               |  |                             |  |                        |   |  |              |  |                 |  |                |  |                     |   |  |        |  



F - 44



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|25. | FINANCIAL INSTRUMENTS (continued)
|--- | ---------------------------------



|B. | Carrying amounts and estimated fair values of financial instruments
|-- | -------------------------------------------------------------------



The carrying amounts and estimated fair values of the companys financial instruments, referred to in Note 25A above were as follows:



|                                                  |  |       |  |                 |  |            |  |                |  |           
|------------------------------------------------- |  | ----- |  | --------------- |  | ---------- |  | -------------- |  | ----------
|                                                  |  |       |  | Consolidated   
|                                                  |  |       |  | Carrying amount |  | Fair value |  | Carryingamount |  | Fair Value
|                                                  |  |       |  | A$m             |  | A$m       
|                                                  |  | Notes |  | 2003            |  | 2003       |  | 2002           |  | 2002      
|Recognized in the statement of financial position |  |       |  |                 |  |            |  |                |  |           
|Financial assets                                  |  |       |  |                 |  |            |  |                |  |           
|Cash assets                                       |  | 9     |  | 165.3           |  | 165.3      |  | 23.2           |  | 23.2      
|Current receivables                               |  | 10    |  | 4.0             |  | 4.0        |  | 2.3            |  | 2.3       
|Financial liabilities                             |  |       |  |                 |  |            |  |                |  |           
|Current payables                                  |  | 15    |  | 3.2             |  | 3.2        |  | 2.6            |  | 2.6       
|Short term interest bearing liabilities           |  | 16    |  | 467.0           |  | 467.0      |  | 534.8          |  | 534.8     
|                                                  |  |       |  |                 |  |            |  |                |  |           



The following methods
and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate a value:



Cash assets and current other financial assets



The carrying amount approximates fair value because of the short maturity of these instruments.



Debtors and creditors



Other current debtors and creditors mainly represent financial obligations
incurred in exchange for goods and services provided and received by the group in the normal course of its operations, net of provisions for doubtful debts. Due to the short term nature of these financial obligations, their carrying values are
estimated to equal their fair values.



F - 45



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|26. | PARTICULARS RELATING TO ENTITIES CONSOLIDATED IN THE ECONOMIC ENTITY
|--- | --------------------------------------------------------------------



|                                                                     |  |       |  |                      
|-------------------------------------------------------------------- |  | ----- |  | ---------------------
|Entities consolidated                                                |  | Notes |  | Place ofincorporation
|NAME                                                                 |  |       |  |                      
|Alumina Limited                                                      |  |       |  | VIC, Australia       
|All controlled entities are wholly owned, unless otherwise indicated |  |       |  |                      
|                                                                     |  |       |  |                      
|Controlled entities                                                  |  |       |  |                      
|Albion Downs Pty. Ltd.                                               |  | D,H   |  | WA, Australia        
|Alumina Holdings (USA) Inc.                                          |  | A,B,E |  | Delaware, USA        
|Alumina International Holdings Pty. Ltd.                             |  | C,F,I |  | VIC, Australia       
|Alumina (U.S.A.) Inc.                                                |  | A,B,E |  | Delaware, USA        
|Westminer (Investments) B.V.                                         |  | A,E   |  | Netherlands          
|Westminer Acquisition (U.K.) Limited                                 |  | E     |  | UK                   
|WMC Participacoes Limitada                                           |  | A,G   |  | Brazil               
|Westminer International (U.K.) Limited                               |  | E     |  | UK                   



These controlled
entities:



| | A) | have not prepared audited accounts as they are non-operating or audited accounts are not required in their country of incorporation;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------



| | B) | Alumina Holdings (U.S.A.) Inc. changed its name from Western Mining Corporation (U.S.A.). Alumina (U.S.A.) Inc. changed its name from WMC Alumina (U.S.A.) Inc. Both name changes
were effective from 2 December 2002;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | C) | has been granted relief from the necessity to prepare accounts pursuant to Australian Securities and Investment Commission (ASIC) Class Order 98/1418. This company,
which is also referred to in the Directors Declaration, is, with Alumina Limited, a member of a Closed Group as defined in the Class Order and are parties to a deed of cross guarantee which has been lodged with and approved by
ASIC. Under the deed of cross guarantee, each of these companies guarantees the debts of the other companies party to the deed of cross guarantee. The aggregate assets and liabilities of these companies, and their aggregate net profits after tax for
the year then ended (after eliminating inter-company investments and other inter-company transactions), are set out in the table overleaf;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | D) | as small proprietary corporations, are not required to prepare financial reports;
| | -- | ---------------------------------------------------------------------------------



| | E) | has been translated as a self-sustaining entity;
| | -- | ------------------------------------------------



| | F) | this company, while a small proprietary company, is included on the deed of cross guarantee;
| | -- | --------------------------------------------------------------------------------------------



| | G) | this company is in the process of being liquidated;
| | -- | ---------------------------------------------------



| | H) | this company is deemed to be a controlled entity because of an option held by Alumina Limited to purchase all of the shares in the Company;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------



| | I) | Alumina International Holdings Pty Ltd, changed its name from Westminer International Holdings Pty Ltd on 16 May 2003.
| | -- | ----------------------------------------------------------------------------------------------------------------------



F - 46



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|26. | PARTICULARS RELATING TO ENTITIES CONSOLIDATED IN THE ECONOMIC ENTITY (continued)
|--- | --------------------------------------------------------------------------------



Deed of cross guarantee



Entities which are party to a Deed of Cross Guarantee, entered into in accordance with ASIC Class Order 98/1418 are
indicated above in this note. A consolidated statement of financial position is set out below:



|                                                                                                                                  |  |                     |   |  |                     |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | - |  | ------------------- | -
|                                                                                                                                  |  | Closed group        |  
|                                                                                                                                  |  | Year to 31 Dec 2003 |   |  | Year to 31 Dec 2002 |  
|                                                                                                                                  |  | A$m                 |   |  | A$m                 |  
|Consolidated statements of financial position of closed group                                                                     |  |                     |   |  |                     |  
|Current Assets                                                                                                                    |  |                     |   |  |                     |  
|Cash assets                                                                                                                       |  | 153.6               |   |  | 8.5                 |  
|Receivables                                                                                                                       |  | 18.1                |   |  | 2.3                 |  
|Deferred tax asset                                                                                                                |  | 8.7                 |   |  |                    |  
|Other                                                                                                                             |  |                    |   |  | 0.8                 |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Total current assets                                                                                                              |  | 180.4               |   |  | 11.6                |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Non-Current Assets                                                                                                                |  |                     |   |  |                     |  
|Investments in associates/subsidiaries                                                                                            |  | 1,101.7             |   |  | 1,442.2             |  
|Property, plant and equipment                                                                                                     |  | 0.4                 |   |  |                    |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Total non-current assets                                                                                                          |  | 1,102.1             |   |  | 1,442.2             |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Total assets                                                                                                                      |  | 1,282.5             |   |  | 1,453.8             |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Current Liabilities                                                                                                               |  |                     |   |  |                     |  
|Payables                                                                                                                          |  | 2.8                 |   |  | 2.4                 |  
|Interest-bearing liabilities                                                                                                      |  | 467.0               |   |  | 534.8               |  
|Current income tax liabilities                                                                                                    |  | 9.2                 |   |  |                    |  
|Provisions                                                                                                                        |  | 0.1                 |   |  | 2.0                 |  
|Other                                                                                                                             |  | 2.2                 |   |  |                    |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Total current liabilities                                                                                                         |  | 481.3               |   |  | 539.2               |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Non-Current Liabilities                                                                                                           |  |                     |   |  |                     |  
|Payables                                                                                                                          |  | 22.2                |   |  | 25.1                |  
|Deferred tax liabilities                                                                                                          |  |                    |   |  | 2.2                 |  
|Provisions                                                                                                                        |  | 0.2                 |   |  | 0.2                 |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Total non-current liabilities                                                                                                     |  | 22.4                |   |  | 27.5                |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Total liabilities                                                                                                                 |  | 503.7               |   |  | 566.7               |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Net assets                                                                                                                        |  | 778.8               |   |  | 887.1               |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Equity                                                                                                                            |  |                     |   |  |                     |  
|Contributed equity                                                                                                                |  | 384.8               |   |  | 207.5               |  
|Reserves                                                                                                                          |  | 240.2               |   |  | 240.2               |  
|Retained profits                                                                                                                  |  | 153.8               |   |  | 439.4               |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Total equity                                                                                                                      |  | 778.8               |   |  | 887.1               |  
|                                                                                                                                  |  |                     |   |  |                     |  
|                                                                                                                                  |  |                    
|Set out below is a consolidated statement of financial performance for the closed group:                                          |  |                     |   |  |                     |  
|Revenue from ordinary activities                                                                                                  |  | 451.9               |   |  | 2,745.2             |  
|General and administrative                                                                                                        |  | (11.3               | ) |  | (5.9                | )
|Other expenses from ordinary activities                                                                                           |  | (449.0              | ) |  | (2,889.4            | )
|Borrowing costs                                                                                                                   |  | (9.0                | ) |  | (279.9              | )
|Loss from ordinary activities before income tax                                                                                   |  | (17.4               | ) |  | (430.0              | )
|Income tax expense                                                                                                                |  | 4.1                 |   |  | (80.3               | )
|                                                                                                                                  |  |                     |   |  |                     |  
|Net Loss                                                                                                                          |  | (13.3               | ) |  | (510.3              | )
|                                                                                                                                  |  |                     |   |  |                     |  
|Total revenues, expenses and valuation adjustments attributable to members of the parent entity and recognised directly in
equity |  |                    |   |  |                    |  
|                                                                                                                                  |  |                     |   |  |                     |  
|Total changes in equity other than from those resulting from transactions with owners as owners                                   |  | (13.3               | ) |  | (510.3              | )
|                                                                                                                                  |  |                     |   |  |                     |  
|                                                                                                                                  |  |                    
|Set out below is a summary of movements in consolidated retained profits of the closed group:                                     |  |                     |   |  |                     |  
|Retained profits at the beginning of the financial year                                                                           |  | 426.7               |   |  | 1,573.5             |  
|Net loss                                                                                                                          |  | (13.3               | ) |  | (510.3              | )
|Transfer of entities during the year                                                                                              |  |                    |   |  | 242.1               |  
|Dividend provided for or paid                                                                                                     |  | (259.6              | ) |  | (878.6              | )
|                                                                                                                                  |  |                     |   |  |                     |  
|Retained profits at the end of the financial year                                                                                 |  | 153.8               |   |  | 426.7               |  
|                                                                                                                                  |  |                     |   |  |                     |  



F - 47



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|27. | CONTINGENT LIABILITIES
|--- | ----------------------



|                                                                                                                                  |  |                  |  |     
|--------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- |  | ----
|                                                                                                                                  |  | As at 31December
|                                                                                                                                  |  | 2003             |  | 2002
|                                                                                                                                  |  | A$m              |  | A$m 
|(a)    Ascertainable, unsecured                                                                                                   |  |                  |  |     
|Guarantees, insurance bonds and other liabilities including performance bonds for minimum work commitments in exploration blocks. |  |                 |  | 0.1 



|(b) | Unascertainable unsecured contingent liabilities/asset
|--- | ------------------------------------------------------



Alumina Limited provided a guarantee in 1998 for foreign exchange transactions and in 2000 for gold derivative transactions undertaken by its wholly owned
subsidiary at that time, WMC Finance Limited (WMCF). WMCF was sold to WMC Resources Ltd as part of the demerger and is no longer a subsidiary of Alumina Limited. On 4 December 2003, WMC Resources announced that it had closedout its
currency hedge book for the period 2005 to 2008 eliminating that portion of Aluminas contingent liability. The guarantee remains applicable for foreign exchange transactions entered by WMCF and Union Bank of Switzerland with 2004 maturity
dates and gold derivative transactions with maturity dates in 2005. The outstanding transactions have a negative mark to market value of $0.6 million at 31 December 2003. Alumina Limited has rights to obtain additional credit support if WMC
Resources Ltds credit rating is lower than BBB (and it would not cause a breach of WMC Resources Ltds debt obligations). Alumina Limited is also indemnified by WMC Resources in relation to the guarantee.



Prior to the demerger, WMC Finance (USA) Limited (Finance USA)
(a wholly-owned subsidiary of WMC Resources) had approximately US$800 million of long dated bonds issued in four separate tranches (having maturities in 2003, 2006, 2013 and 2026), on issue (the US Bonds). The obligations of Finance
(USA) under the US Bonds were guaranteed by Alumina. In connection with the demerger, Finance USA tendered to repurchase the US Bonds remaining outstanding. The aggregate amount of outstanding bonds not repurchased was comprised as follows of:



| |  | US Bond due December 1, 2006  US$750,000
| | - | -----------------------------------------



| |  | US Bonds due November 15 2013  US$3,658,000
| | - | --------------------------------------------



| |  | US Bonds due December 1, 2026  US$115,000
| | - | ------------------------------------------



These outstanding US Bonds continue to be guaranteed by Alumina. The duration of the guarantee is unlimited, and continues as long as amounts are
outstanding under the US Bonds.



Under the demerger deed,
Alumina and WMC Resources indemnify each other in respect for certain liabilities. Alumina would be entitled to reimbursement from WMC Resources for amounts paid by Alumina under the guarantee in respect of the US Bonds.



Pursuant to a Power Purchase Agreement dated 27 November 1998 between WMC
Resources, WMC Limited (as it then was) and Southern Cross Energy, Alumina has undertaken to provide Southern Cross Energy with a guarantee or letter of credit for WMCRs payment for power in the event that WMCRs gross assets fall below
$250 million in any year.



|(c) | Contingencies and Litigation
|--- | ----------------------------



There were no contingent liabilities of Alumina Group companies arising from guarantees related to obligations of group companies at December 31, 2003
(2002:A$2,262.5 million).



F - 48



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|28. | COMMITMENTS FOR EXPENDITURE
|--- | ---------------------------



|                                                                                                                                                                                                                                                                                                               |  |                   |  |     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ----
|                                                                                                                                                                                                                                                                                                               |  | As at 31 December
|                                                                                                                                                                                                                                                                                                               |  | 2003              |  | 2002
|                                                                                                                                                                                                                                                                                                               |  | A$m               |  | A$m 
|(a)    Lease commitments contracted for operating leases                                                                                                                                                                                                                                                       |  |                   |  |     
|The company and certain of its subsidiaries lease plant, warehouse and office facilities and motor vehicles for varying periods. Operating
leases that expire generally are expected to be renewed or replaced by other leases. The following is the rental expense and the future minimum rental commitments. |  |                   |  |     
|                                                                                                                                                                                                                                                                                                               |  |                  
|Lease commitments payable at balance date Within one year                                                                                                                                                                                                                                                      |  | 0.1               |  | 0.1 
|Later than one year but not later than 5 years                                                                                                                                                                                                                                                                 |  |                  |  | 0.1 
|Later than 5 years                                                                                                                                                                                                                                                                                             |  |                  |  |    
|                                                                                                                                                                                                                                                                                                               |  |                   |  |     
|                                                                                                                                                                                                                                                                                                               |  | 0.1               |  | 0.2 
|                                                                                                                                                                                                                                                                                                               |  |                   |  |     



|29. | SUPERANNUATION BENEFITS
|--- | -----------------------



Since 27 July 2001, all employer contributions and ongoing management of employees superannuation entitlements have been managed by the WMC
Superannuation Plan, an independently managed sub-plan of the Plum Superannuation Fund. Since the demerger, Alumina employees have become members of a sub-plan of the WMC Superannuation Plan, created specifically for Alumina.



The plan is an accumulation category plan which offers a minimum company
contribution (subject to certain cashing out options and legislation) of 9 per cent of basis salary to each members account. Members also have the option to make voluntary contributions to their account. Employer contributions to these funds
are recognised as an operating cost.



Plan membership is
compulsory for all Australian resident employees and Australian expatriates, and provides lump sum benefits on retirement, permanent disability, death, resignation and retrenchment.



F - 49



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|29. | SUPERANNUATION BENEFITS (continued)
|--- | -----------------------------------



|                                                                                                     |  |                   |  |                     |   |  |                     |  
|---------------------------------------------------------------------------------------------------- |  | ----------------- |  | ------------------- | - |  | ------------------- | -
|                                                                                                     |  | Year to31 Dec2003 |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001 |  
|                                                                                                     |  | A$m               |  | A$m                 |   |  | A$m                 |  
|WESTMINER SUPERANNUATION FUND                                                                        |  |                   |  |                     |   |  |                     |  
|                                                                                                     |  |                   | 
|(a)    Change in benefit obligation                                                                  |  |                   |  |                     |   |  |                     |  
|Benefit obligation at end of prior year                                                              |  |                  |  | 222.4               |   |  | 193.9               |  
|Benefit obligation restated at beginning of year                                                     |  |                  |  | 204.3               |   |  |                    |  
|Service cost                                                                                         |  |                  |  | 32.3                |   |  | 26.1                |  
|Interest cost                                                                                        |  |                  |  | 11.8                |   |  | 10.2                |  
|Actuarial (gains) losses                                                                             |  |                  |  | (19.4               | ) |  | 12.9                |  
|Members transferring from other funds                                                                |  |                  |  | 8.3                 |   |  | 1.7                 |  
|Benefits and expenses paid                                                                           |  |                  |  | (57.6               | ) |  | (23.7               | )
|Plan participants contributions                                                                      |  |                  |  | 4.3                 |   |  | 1.3                 |  
|Transferred to WMC Resources Ltd on demerger                                                         |  |                  |  | (184.0              | ) |  |                    |  
|                                                                                                     |  |                   |  |                     |   |  |                     |  
|Benefit obligation at end of period                                                                  |  |                  |  |                    |   |  | 222.4               |  
|                                                                                                     |  |                   |  |                     |   |  |                     |  
|                                                                                                     |  |                   | 
|(b)    Change in plan assets                                                                         |  |                   |  |                     |   |  |                     |  
|Fair value of plan assets at end of prior year                                                       |  |                  |  | 204.0               |   |  | 202.3               |  
|Fair value of plan assets restated at beginning of year                                              |  |                  |  | 197.5               |   |  |                    |  
|Actual return on plan assets                                                                         |  |                  |  | (16.0               | ) |  | (0.7                | )
|Transfers in from other funds                                                                        |  |                  |  | 8.3                 |   |  | 1.7                 |  
|Employer contributions                                                                               |  |                  |  | 22.4                |   |  | 23.1                |  
|Plan participants contributions                                                                     |  |                  |  | 4.3                 |   |  | 1.3                 |  
|Benefits and expenses paid                                                                           |  |                  |  | (57.6               | ) |  | (23.7               | )
|Transferred to WMC Resources Ltd on demerger                                                         |  |                  |  | (158.9              | ) |  |                    |  
|                                                                                                     |  |                   |  |                     |   |  |                     |  
|Fair value of plan assets at end of period                                                           |  |                  |  |                    |   |  | 204.0               |  
|                                                                                                     |  |                   |  |                     |   |  |                     |  
|                                                                                                     |  |                   | 
|Reconciliation of funded status                                                                      |  |                   |  |                     |   |  |                     |  
|(c)    Funded status                                                                                 |  |                  |  | (25.1               | ) |  | (18.3               | )
|Unrecognized net gain                                                                                |  |                  |  | (18.5               | ) |  | (24.3               | )
|Unamortized prior service cost                                                                       |  |                  |  |                    |   |  | 0.1                 |  
|Unrecognized net transition asset                                                                    |  |                  |  |                    |   |  | (1.6                | )
|Transferred to WMC Resources Ltd on demerger                                                         |  |                  |  | 43.6                |   |  |                    |  
|                                                                                                     |  |                   |  |                     |   |  |                     |  
|Accrued pension cost                                                                                 |  |                  |  |                    |   |  | (44.1               | )
|                                                                                                     |  |                   |  |                     |   |  |                     |  
|                                                                                                     |  |                   | 
|(d)    Components of net periodic benefit costs                                                      |  |                   |  |                     |   |  |                     |  
|Service cost                                                                                         |  |                  |  | 32.3                |   |  | 26.1                |  
|Interest cost                                                                                        |  |                  |  | 11.8                |   |  | 10.2                |  
|Expected return on plan assets                                                                       |  |                  |  | (14.2               | ) |  | (15.3               | )
|Amortization of prior service cost                                                                   |  |                  |  | 0.1                 |   |  | 0.1                 |  
|Amortization of gain                                                                                 |  |                  |  | (1.3                | ) |  | (3.0                | )
|Amortization of unrecognized net transition asset                                                    |  |                  |  | (1.6                | ) |  | (3.3                | )
|FAS 88 adjustment                                                                                    |  |                  |  | (5.3                | ) |  |                    |  
|                                                                                                     |  |                   |  |                     |   |  |                     |  
|Net periodic benefit costs                                                                           |  |                  |  | 21.8                |   |  | 14.8                |  
|                                                                                                     |  |                   |  |                     |   |  |                     |  
|                                                                                                     |  |                   | 
|(e)    Weighted average assumptions                                                                  |  |                   |  |                     |   |  |                     |  
|Discount rate (%)                                                                                    |  |                  |  | 6.0                 |   |  | 6.0                 |  
|Expected long-term return on plan assets (%)                                                         |  |                  |  | 7.0                 |   |  | 7.5                 |  
|Rate of compensation increase (%)                                                                    |  |                  |  | 3.5                 |   |  | 3.5                 |  
|                                                                                                     |  |                   |  |                     |   |  |                     |  
|(f)Alumina are sponsors of defined contribution pension plans. Expenses relating to those plans
were |  | 0.1               |  | 0.3                 |   |  | 23.1                |  
|                                                                                                     |  |                   |  |                     |   |  |                     |  



F - 50



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|30. | RELATED PARTY TRANSACTIONS
|--- | --------------------------



Related parties of the group fall under the following categories:



|(a) | Wholly-owned group
|--- | ------------------



The wholly-owned group consists of Alumina Limited and its wholly owned controlled entities as disclosed in note 26. Transactions between Alumina Limited
and other entities in the wholly-owned group during the years ended 31 December 2003 and 2002 consisted of:



| |  | loan advanced/repaid to/by Alumina Limited
| | - | ------------------------------------------



| |  | interest paid/received on the above loans (refer notes 2 and 3)
| | - | ---------------------------------------------------------------



| |  | the payment of dividends to Alumina Limited (refer notes 2 and 3)
| | - | -----------------------------------------------------------------



| |  | payment of administrative/general expenses on behalf of Alumina Limited
| | - | -----------------------------------------------------------------------



| |  | sale of non-AWAC entities to WMC Resources Ltd as part of the demerger.
| | - | -----------------------------------------------------------------------



The above transactions were made on normal commercial terms and conditions and at market rates.



|(b) | Associated bodies corporate
|--- | ---------------------------



Information relating to investments in associates is set out in Note 12.



|(c) | Superannuation funds
|--- | --------------------



The Directors receive a company contribution equating to 9% of their fee.



|(d) | Directors
|--- | ---------



| | (i) | The names of each person holding the position of director of the parent entity during the financial year are:
| | --- | -------------------------------------------------------------------------------------------------------------



|             |  |                          
|------------ |  | -------------------------
|D M Morley   |  | (Chairman)               
|J Marlay     |  | (Chief Executive Officer)
|P A F Hay    |  |                          
|R J McNeilly |  |                          
|M R Rayner   |  | (Alternate R D J Davies) 



| | (ii) | Details of directors remuneration, superannuation and retirement payments are set out in Note 31.
| | ---- | --------------------------------------------------------------------------------------------------



Apart from the details disclosed in this note, no director has entered into a material contract with the Company or the
group since the end of the previous financial year, and there were no material contracts involving directors interests existing at balance date.



|(e) | Loans to directors
|--- | ------------------



There were no loans made to directors during the reporting period.



|
|
|



|                                                                                        |  |              |  |       |  
|--------------------------------------------------------------------------------------- |  | ------------ |  | ----- | -
|                                                                                        |  | A$ thousands | 
|                                                                                        |  | 2003         |  | 2002  |  
|Reconciliation of movement in loans to directors                                        |  |              |  |       |  
|Loans to directors at 1 January                                                         |  |             |  | 4.9   |  
|New loan granted to J Balkau during the financial year (repaid in full during the year) |  |             |  | 93.0  |  
|Loan repayments received                                                                |  |             |  | (93.4 | )
|Loan repayments forgiven                                                                |  |             |  | (3.6  | )
|Other movements                                                                         |  |             |  | (0.9  | )
|                                                                                        |  |              |  |       |  
|Loan to directors at 31 December                                                        |  |             |  |      |  
|                                                                                        |  |              |  |       |  



F - 51



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|(f) | Stock appreciation plan
|--- | -----------------------



In May 2002, Mr Morley received an allocation of 250,000 units under WMC Limiteds stock appreciation plan (SAP) that expires on 31
October 2004. The allotment had a notional price of $9.35 per share as they were issued on terms equivalent to the 2001 WMC Option Plan. On demerger, Mr Morleys WMC Limited SAPs converted into units of Alumina SAPs and WMC Resources SAPs at
the proportionate market value of each Company share value on demerger, resulting in a notional price of $5.02 for the Alumina SAPs. Upon redemption of an Alumina SAP before its expiry, Mr Morley is entitled to a payment equal to the difference
between the closing price of Alumina shares on the ASX on the trading day immediately before the redemption, and the notional allotment price of the Alumina SAP. Based on Aluminas closing share price on 31 December 2003 of $6.57, Alumina has
provided $387,263 for Mr Morleys SAP for the year end 31 December 2003 (2002: $nil).



|(g) | Shareholding transactions of directors
|--- | --------------------------------------



Where a director of Alumina Limited was a shareholder in Alumina Limited, their transactions include:



| |  | the purchase and/or sale of shares; and/or
| | - | ------------------------------------------



| |  | the receipt of dividends.
| | - | -------------------------



All these transactions were conducted on a commercial basis, on conditions no more favorable than those available to other shareholders.



Some directors of Alumina Limited, who were also employees of the Alumina
Limited group, were eligible to participate in the companys Employee Share Scheme, and were issued with options, priced at market value (refer Note 21(f) for details of the Employee Share Scheme). These transactions were conducted on a
commercial basis on conditions no more beneficial than those available to other eligible employees.



|                                                                                                                                                                          |  |                  |  |               
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- |  | --------------
|                                                                                                                                                                          |  | Number of shares
|                                                                                                                                                                          |  | 2003             |  | 2002          
|The aggregate number of shares purchased by directors of the parent entity or their director related entities was:                                                        |  | 71,000           |  | 5,000         
|                                                                                                                                                                          |  |                 
|The aggregate number of shares allotted to directors of the parent entity or their director related entities as a result of the exercise of
options was:                  |  | 140,000          |  | 240,000       
|                                                                                                                                                                          |  |                 
|The aggregate number of options allotted to directors of the parent entity or their director related entities through participation in the WMC
Employee Share Scheme was: |  |                 |  | 150,000       
|                                                                                                                                                                          |  |                 
|The aggregate number of shares vested to Mr Marlay and Mr Davies through participation in the Alumina Employee Share Plan                                                 |  | 103,324          |  |              
|                                                                                                                                                                          |  |                 
|The aggregate number of shares disposed of by directors of the parent entity or their director related entities was:                                                      |  |                  |  |               
|- fully paid shares - options (shares exercised and sold)                                                                                                                 |  | 125,00052,000    |  |   250,000    
|                                                                                                                                                                          |  |                 
|The aggregate number of partly paid shares paid up by directors of the parent entity or their director related entities was:                                              |  |                 |  | 331,000       
|                                                                                                                                                                          |  |                 
|The aggregate number of shares disposed of by directors of the parent entity or their director related entities on retirement
was:                                        |  |                  |  |               
|- fully paid shares - options (shares exercised and sold)                                                                                                                 |  |                |  | 594,829980,000
|                                                                                                                                                                          |  |                 
|Details of shares and share options held by directors of the parent entity or their director related entities at 31 December are as
follows:                              |  |                  |  |               
|- Alumina Limited, fully paid shares - Alumina Limited, options for ordinary shares                                                                                       |  | 531,490320,000   |  | 342,166512,000



All other
transactions relating to shares and options of Alumina Limited, including the payment and receipt of dividends, were on the same basis as similar transactions with other shareholders.



F - 52



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|30. | RELATED PARTY TRANSACTIONS (continued)
|--- | --------------------------------------



|(h) | Other transactions of directors and director related entities
|--- | -------------------------------------------------------------



A number of the directors of Alumina Limited are also directors of other public companies that may have transactions with the Alumina group. The relevant
directors do not believe that they have the capacity to control or significantly influence the financial or operating policies of either those companies or the Alumina group in their dealings with one another. Those companies are therefore not
considered to be director-related entities for the disclosure requirements of Accounting Standard AASB 1017: Related Party Disclosures.



|(i) | Legal/financial service fees
|--- | ----------------------------



A director Mr P A F Hay, is the Chief Executive Officer of Freehills. Freehills has provided legal services to Alumina Limited and a number of Alumina
Limited controlled entities for several years on normal commercial terms and conditions. The total of those services for 2003 amounts to $106,149 (2002: $722,997).



Mr J Meck and Ms A E Seneshen are shareholders in a US based law firm Welborn Sullivan Meck & Tooley, P.C and are
directors of a number of Alumina Limiteds controlled entities. Welborn Sullivan Meck & Tooley, P.C has provided legal services for several years on normal commercial terms and conditions. The total of those services for 2003 amounts to
$14,031 (2002: $327,815).



During 2002 there were transactions
with directors of WMC Limited controlled entities, which became WMC Resources controlled entities after the de-merger. These transactions totaled $438,858 and were on normal commercial terms and conditions.



|31. | REMUNERATION OF DIRECTORS
|--- | -------------------------



|                                                          |  |             |     |  |                    |  |                    |  |                   
|--------------------------------------------------------- |  | ----------- | --- |  | ------------------ |  | ------------------ |  | ------------------
|                                                          |  | A$ thousand
|                                                          |  | Notes       |     |  | Year to 31 Dec2003 |  | Year to 31 Dec2002 |  | Year to 31 Dec2001
|(a)    Total income received, or due and receivable from: |  |             |     |  |                    |  |                    |  |                   
|Parent entity                                             |  |             |     |  |                    |  |                    |  |                   
|-Executive directors*:                                    |  |             |     |  | 1,943              |  | 13,314             |  | 3,480             
|-Non-executive directors:                                 |  | 30          | (f) |  | 900                |  | 1,062              |  | 884               
|Controlled entities                                       |  |             |     |  |                    |  |                    |  |                   
|-Executive directors                                      |  |             |     |  |                   |  | 5,097              |  | 10,895            
|-Non-executive directors                                  |  |             |     |  |                   |  | 69                 |  | 259               
|                                                          |  |             |     |  |                    |  |                    |  |                   
|CONSOLIDATED TOTAL                                        |  |             |     |  | 2,843              |  | 19,542             |  | 15,518            
|                                                          |  |             |     |  |                    |  |                    |  |                   



The aggregate amounts
listed in the above table include any retiring allowances given during the financial year.



|* | Executive directors include the remuneration of Mr Davies, an executive who is the alternate director for Mr Rayner.
|- | --------------------------------------------------------------------------------------------------------------------



| | (b) | Certain directors may also receive options under the Employee Share Scheme, refer to Note 21(f).
| | --- | ------------------------------------------------------------------------------------------------



F - 53



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|31. | REMUNERATION OF DIRECTORS (continued)
|--- | -------------------------------------



| | (c) | The number of directors of the parent entity whose income from the parent entity or related bodies corporate falls within the following bands:
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------



|                                 |  |       |     |  |                     |  |      |  |     
|-------------------------------- |  | ----- | --- |  | ------------------- |  | ---- |  | ----
|                                 |  | Notes |     |  | Number of Directors
|                                 |  |       |     |  | 2003                |  | 2002 |  | 2001
|$              0 -
$       9,999 |  |       |     |  |                    |  | 3    |  |    
|$     50,000 - $     59,999      |  |       |     |  |                    |  | 1    |  |    
|$     60,000 - $     69,999      |  |       |     |  |                    |  | 1    |  |    
|$     70,000 - $     79,999      |  |       |     |  |                    |  |     |  | 2   
|$     80,000 - $     89,999      |  |       |     |  |                    |  | 4    |  | 2   
|$     90,000 - $     99,999      |  |       |     |  | 3                   |  |     |  |    
|$   100,000 - $   109,999        |  |       |     |  |                    |  |     |  | 1   
|$   130,000 - $   139,999        |  |       |     |  |                    |  |     |  | 1   
|$   140,000 - $   149,999        |  |       |     |  |                    |  | 1    |  |    
|$   200,000 - $   209,999        |  |       |     |  |                    |  |     |  | 2   
|$   230,000 - $   239,999        |  |       |     |  |                    |  | 1    |  |    
|$   270,000 - $   279,999        |  |       |     |  |                    |  | 1    |  |    
|$   340,000 - $   349,999        |  |       |     |  |                    |  | 1    |  |    
|$   610,000 - $   619,999        |  | 30    | (f) |  | 1                   |  |     |  |    
|$   640,000 - $   649,999        |  |       |     |  | 1                   |  | 1    |  |    
|$1,290,000 - $1,299,999          |  |       |     |  | 1                   |  |     |  |    
|$1,410,000 - $1,419,999          |  |       |     |  |                    |  |     |  | 1   
|$2,060,000 - $2,069,999          |  |       |     |  |                    |  |     |  | 1   
|$3,460,000 - $3,469,999          |  |       |     |  |                    |  | 1    |  |    
|$8,790,000 - $8,799,999          |  |       |     |  |                    |  | 1    |  |    
|                                 |  |       |     |  |                     |  |      |  |     
|                                 |  |       |     |  | 6                   |  | 16   |  | 10  
|                                 |  |       |     |  |                     |  |      |  |     



Executive directors
do not receive directors fees, but are remunerated on the same basis (i.e. salary and benefits) as executive officers, as indicated in Note 32.



|32. | REMUNERATION OF EXECUTIVES
|--- | --------------------------



|                                                                                                                                                                                                                     |  |              |  |       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | ------
|                                                                                                                                                                                                                     |  | A$ thousands
|                                                                                                                                                                                                                     |  | 2003         |  | 2002  
|(a)    Total income received, or due and receivable, from entities in the group and related bodies corporate by all
executive officers (including directors) working within Australia whose income exceeded $100,000 |  | 2,412        |  | 36,198
|                                                                                                                                                                                                                     |  |              |  |       
|-        of which the total income received, or due and receivable, by 3 (2002: 3) currently employed
executive officers (including directors) whose income exceeded $100,000 was                                    |  | 2,412        |  | 5,322 
|-        of which the total income received or due and receivable by 48 former executive officers of
the WMC Limited group whose income exceeded $100,000 was                                                        |  |             |  | 30,876
|                                                                                                                                                                                                                     |  |              |  |       
|                                                                                                                                                                                                                     |  | 2,412        |  | 36,198
|                                                                                                                                                                                                                     |  |              |  |       



F - 54



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|32. | REMUNERATION OF EXECUTIVES (continued)
|--- | --------------------------------------



| | (b) | The number of executive officers, (including directors) based in Australia, and outside of Australia, whose income from the group and related bodies corporate falls within the
following bands:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                          |  |                               |  |                                  |  |            |  |            
|------------------------- |  | ----------------------------- |  | -------------------------------- |  | ---------- |  | -----------
|                          |  | Number of executive officers 
|                          |  | Working within AustraliaGroup |  | Working outsideof AustraliaGroup
|                          |  | 2003Current                   |  | 2002Current                      |  | 2002Former |  | 2002 Former
|$   180,000 - $   189,999 |  |                               |  |                                  |  | 1          |  |            
|$   190,000 - $   199,999 |  |                               |  |                                  |  | 1          |  |            
|$   220,000 - $   229,999 |  |                               |  |                                  |  | 1          |  |            
|$   230,000 - $   239,999 |  |                               |  |                                  |  | 3          |  |            
|$   240,000 - $   249,999 |  |                               |  |                                  |  | 5          |  |            
|$   250,000 - $   259,999 |  |                               |  |                                  |  | 3          |  |            
|$   260,000 - $   269,999 |  |                               |  |                                  |  |            |  | 1          
|$   270,000 - $   279,999 |  |                               |  |                                  |  | 1          |  | 1          
|$   290,000 - $   299,999 |  |                               |  |                                  |  | 2          |  |            
|$   310,000 - $   319,999 |  |                               |  |                                  |  | 1          |  |            
|$   330,000 - $   339,999 |  |                               |  |                                  |  | 1          |  | 1          
|$   340,000 - $   349,999 |  |                               |  |                                  |  |            |  | 1          
|$   350,000 - $   359,999 |  |                               |  |                                  |  |            |  | 1          
|$   360,000 - $   369,999 |  |                               |  |                                  |  | 1          |  |            
|$   370,000 - $   379,999 |  |                               |  |                                  |  | 1          |  |            
|$   380,000 - $   389,999 |  |                               |  | 1                                |  |            |  |            
|$   400,000 - $   409,999 |  |                               |  |                                  |  | 3          |  |            
|$   410,000 - $   419,999 |  |                               |  |                                  |  | 1          |  |            
|$   430,000 - $   439,999 |  |                               |  |                                  |  | 5          |  |            
|$   440,000 - $   449,999 |  |                               |  |                                  |  | 1          |  |            
|$   460,000 - $   469,999 |  | 1                             |  |                                  |  |            |  |            
|$   480,000 - $   489,999 |  |                               |  |                                  |  | 3          |  |            
|$   490,000 - $   499,999 |  |                               |  |                                  |  | 1          |  | 1          
|$   500,000 - $   509,999 |  |                               |  |                                  |  | 1          |  |            
|$   530,000 - $   539,999 |  |                               |  |                                  |  | 1          |  |            
|$   580,000 - $   589,999 |  |                               |  |                                  |  | 1          |  |            
|$   590,000 - $   599,999 |  |                               |  |                                  |  | 1          |  |            
|$   640,000 - $   649,999 |  | 1                             |  |                                  |  | 1          |  |            
|$   660,000 - $   669,999 |  |                               |  |                                  |  | 1          |  |            
|$   670,000 - $   679,999 |  |                               |  |                                  |  | 1          |  |            
|$   770,000 - $   779,999 |  |                               |  | 1                                |  | 1          |  |            
|$   810,000 - $   819,999 |  |                               |  |                                  |  | 1          |  |            
|$1,230,000 - $1,239,999   |  |                               |  |                                  |  | 1          |  |            
|$1,290,000 - $1,299,999   |  | 1                             |  |                                  |  | 1          |  |            
|$1,350,000 - $1,359,999   |  |                               |  |                                  |  | 1          |  |            
|$1,410,000 - $1,419,999   |  |                               |  |                                  |  | 1          |  |            
|$1,450,000 - $1,459,999   |  |                               |  |                                  |  | 1          |  |            
|$1,770,000 - $1,779,999   |  |                               |  |                                  |  | 1          |  |            
|$2,060,000 - $2,069,999   |  |                               |  |                                  |  | 1          |  |            
|$4,150,000 - $4,159,999   |  |                               |  |                                  |  | 1          |  |            
|$8,790,000 - $8,799,999   |  |                               |  |                                  |  | 1          |  |            
|                          |  |                               |  |                                  |  |            |  |            
|                          |  | 3                             |  | 2                                |  | 48         |  | 6          
|                          |  |                               |  |                                  |  |            |  |            



F - 55



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|33. | REMUNERATION OF AUDITORS
|--- | ------------------------



|                                                                                                                                |  |                   |  |                    
|------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | -------------------
|                                                                                                                                |  | A$ thousands     
|                                                                                                                                |  | Year to31 Dec2003 |  | Year to 31 Dec 2002
|(a)    Remuneration for audit or review of the financial reports of the parent entity or any entity in the consolidated
entity: |  |                   |  |                    
|Auditors of parent entity  PricewaterhouseCoopers                                                                              |  |                   |  |                    
|- parent entity                                                                                                                 |  | 269               |  | 365                
|fee for the annual audit                                                                                                        |  |                   |  |                    
|additional 2002 costs incurred in 2003                                                                                          |  | 147               |  |                   
|- controlled entities                                                                                                           |  |                  |  | 287                
|                                                                                                                                |  |                   |  |                    
|                                                                                                                                |  | 416               |  | 652                
|                                                                                                                                |  |                   |  |                    
|(b)    Remuneration for audit related services                                                                                  |  |                   |  |                    
|Annual report on US Form 20-F                                                                                                   |  | 93                |  | 52                 
|Additional 2002 costs incurred in 2003                                                                                          |  | 100               |  |                   
|                                                                                                                                |  |                   |  |                    
|                                                                                                                                |  | 193               |  | 52                 
|                                                                                                                                |  |                   |  |                    
|(c)    Remuneration for taxation services:                                                                                      |  |                   |  |                    
|Australian tax services                                                                                                         |  |                  |  | 232                
|Overseas tax services                                                                                                           |  | 205               |  | 181                
|                                                                                                                                |  |                   |  |                    
|                                                                                                                                |  | 205               |  | 413                
|                                                                                                                                |  |                   |  |                    
|(d)    Remuneration for other services:                                                                                         |  |                   |  |                    
|Risk Management services                                                                                                        |  |                  |  | 684                
|Independent accountants report and other due diligence services in connection with the demerger                                 |  |                  |  | 3,315              
|                                                                                                                                |  |                   |  |                    
|                                                                                                                                |  |                  |  | 3,999              
|                                                                                                                                |  |                   |  |                    
|                                                                                                                                |  | 814               |  | 5,116              
|                                                                                                                                |  |                   |  |                    



It is the
consolidated entitys policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where PricewaterhouseCoopers expertise and experience with the consolidated entity are important or where
PricewaterhouseCoopers is awarded assignments on a competitive basis.



F - 56



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|34. | DISCONTINUED OPERATIONS
|--- | -----------------------



|(a) | Gold business unit
|--- | ------------------



In the first quarter of 2001, the company decided to focus on its core portfolio of large low cost businesses of nickel, alumina, copper/uranium and
fertilizer businesses. As a result, the company began a strategic evaluation of its options for the gold business. The plan was finalized on 19 September 2001 when a final decision was made to sell the gold business unit in its entirety, including
St Ives and Agnew Gold operations, the 50.48% stake in Central Norseman Gold Corporation Limited and the 56% interest in the Meliadine West Joint Venture (Meliadine).



The Group disposed of its gold operations in 2001 except for its 50.48% controlling interest in Central Norseman Gold
Corporation Limited (CNGC) and Meliadine. The sale of CNGC was completed in January 2002 (refer to Note 4). The groups interest in Meliadine was sold to WMC Resources Ltd as part of the demerger (refer to Note 34(b)).



The only remaining assets and liabilities relating to discontinued
operations of Gold as at 31 December 2001 were assets of $124.9 million and liabilities of $58.3 million.



The companys rights to a royalty from the sale of the St Ives and Agnew Gold operations, was sold in June 2002 (refer to Note 4).



|(b) | Minerals business
|--- | -----------------



Following approval by the shareholders at the Scheme Meeting held on 29 November 2002, Alumina Limited demerged its interest in the Alcoa World Alumina
and Chemicals Venture (AWAC) from its other interests on 2 December 2002. As a result of the demerger, Alumina Limited continues to hold its interest in AWAC (and changed its name to Alumina Limited). WMC Resources Ltd, which prior to
the demerger was a wholly owned subsidiary of Alumina Limited, holds the nickel, copper/uranium and fertilizer businesses and exploration and development interests previously held within the Alumina Limited Group. Alumina Limited distributed to its
shareholders all of its interest in WMC Resources Ltd through a scheme of arrangement and capital reduction and dividend.



Prior to effecting the demerger, through a series of transactions internal to the WMC Limited Group, WMC Resources Ltd acquired Alumina Limiteds
shares in the legal entities which held the copper/uranium and fertilizer businesses, WMC Finance Limited, WMC Finance (USA) Limited as well as Alumina Limiteds exploration and development interests (including Meliadine) other than those
relating to AWAC. These acquisitions were made at fair value in return for shares in WMC Resources Ltd. To consummate the demerger, Alumina Limited effected a capital reduction and dividend to its shareholders in an amount equivalent to the value of
WMC Resources Ltd after the internal transfers were completed. The entitlement of Alumina Limiteds shareholders to the capital reduction and dividend was ultimately satisfied in the demerger through the distribution to Alumina Limiteds
shareholders of shares in WMC Resources Ltd on a one-for-one basis.



F - 57



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|34. | DISCONTINUED OPERATIONS (continued)
|--- | -----------------------------------



|(b) | Minerals business (continued)
|--- | -----------------------------



Financial information relating to the discontinuing operations for the period to the date of disposal is set out below.



|                                                                           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|-------------------------------------------------------------------------- |  | --------------------------- | - |  | -------- | - |  | ---------- | - |  | ------- | - |  | ----------- | - |  | ------ | - |  | -------- | -
|                                                                           |  | Year ended 31 December 2002 |  
|                                                                           |  | A$m                         |  
|                                                                           |  | Copper/uranium              |   |  | Nickel   |   |  | Fertilizer |   |  | Finance |   |  | Exploration |   |  | Other  |   |  | Total    |  
|Financial performance information for the 11 months ended 30 November 2002 |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Revenues                                                                   |  | 682.9                       |   |  | 1,206.3  |   |  | 401.9      |   |  | 90.0    |   |  | 0.3         |   |  | 126.8  |   |  | 2,508.2  |  
|Expenses                                                                   |  | (699.4                      | ) |  | (1,007.2 | ) |  | (452.0     | ) |  | (72.8   | ) |  | (26.4       | ) |  | (309.9 | ) |  | (2,567.7 | )
|                                                                           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Profit/(loss) from ordinary activities before income tax                   |  | (16.5                       | ) |  | 199.1    |   |  | (50.1      | ) |  | 17.2    |   |  | (26.1       | ) |  | (183.1 | ) |  | (59.5    | )
|Income tax benefit/(expense)                                               |  | 7.9                         |   |  | (58.3    | ) |  | 16.4       |   |  | 8.0     |   |  | 3.7         |   |  | 46.6   |   |  | 24.3     |  
|                                                                           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Net profit/(loss)                                                          |  | (8.6                        | ) |  | 140.8    |   |  | (33.7      | ) |  | 25.2    |   |  | (22.4       | ) |  | (136.5 | ) |  | (35.2    | )
|                                                                           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Carrying amount of assets and liabilities as at 30 November 2002           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Total assets                                                               |  | 2,819.1                     |   |  | 1,744.0  |   |  | 1,127.8    |   |  | 1,727.1 |   |  | 236.2       |   |  | 351.2  |   |  | 8,005.4  |  
|Total liabilities                                                          |  | 454.3                       |   |  | 365.5    |   |  | 80.8       |   |  | 3,420.9 |   |  | 5.2         |   |  | (328.8 | ) |  | 3,997.9  |  
|Cash flow information for the 11 months ended 30 November 2002             |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Net cash flow attributable to:                                             |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Operating activities                                                       |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  | 330.0    |  
|Investing activities                                                       |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  | (405.1   | )
|Financing activities                                                       |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  | (87.4    | )
|                                                                           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Total                                                                      |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  | (162.5   | )
|                                                                           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  



F - 58



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|34. | DISCONTINUED OPERATIONS (continued)
|--- | -----------------------------------



|(b) | Minerals business (continued)
|--- | -----------------------------



|                                                                           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|-------------------------------------------------------------------------- |  | --------------------------- | - |  | -------- | - |  | ---------- | - |  | ------- | - |  | ----------- | - |  | ------ | - |  | -------- | -
|                                                                           |  | Year ended 31 December 2001 |  
|                                                                           |  | A$m                         |  
|                                                                           |  | Copper/uranium              |   |  | Nickel   |   |  | Fertilizer |   |  | Finance |   |  | Exploration |   |  | Other  |   |  | Total    |  
|Financial performance information for the 12 months ended 31 December 2001 |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Revenues                                                                   |  | 812.8                       |   |  | 1,217.4  |   |  | 379.1      |   |  | 485.3   |   |  | 8.7         |   |  | 778.0  |   |  | 3,681.3  |  
|Expenses                                                                   |  | (764.9                      | ) |  | (1,070.0 | ) |  | (468.5     | ) |  | (418.7  | ) |  | (72.4       | ) |  | (841.6 | ) |  | (3,636.1 | )
|                                                                           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Profit/(loss) from ordinary activities before income tax                   |  | 47.9                        |   |  | 147.4    |   |  | (89.4      | ) |  | 66.6    |   |  | (63.7       | ) |  | (63.6  | ) |  | 45.2     |  
|Income tax benefit/(expense)                                               |  | 0.8                         |   |  | (52.9    | ) |  | 28.5       |   |  | (4.5    | ) |  | 9.9         |   |  | 93.3   |   |  | 75.1     |  
|                                                                           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Net profit/(loss)                                                          |  | 48.7                        |   |  | 94.5     |   |  | (60.9      | ) |  | 62.1    |   |  | (53.8       | ) |  | 29.7   |   |  | 120.3    |  
|                                                                           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Carrying amount of assets and liabilities as at 31 December 2001           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Total assets                                                               |  | 2,811.1                     |   |  | 1,691.1  |   |  | 1,137.3    |   |  | 2,931.8 |   |  | 15.4        |   |  | (345.7 | ) |  | 8,241.0  |  
|Total liabilities                                                          |  | 387.6                       |   |  | 431.8    |   |  | 78.7       |   |  | 4,610.4 |   |  | 9.1         |   |  | (504.1 | ) |  | 5,013.5  |  
|Cash flow information for the 12 months ended 31 December 2001             |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Net cash flow attributable to:                                             |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Operating activities                                                       |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  | 581.1    |  
|Investing activities                                                       |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  | 279.1    |  
|Financing activities                                                       |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  | (779.3   | )
|                                                                           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  
|Total                                                                      |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  | 80.9     |  
|                                                                           |  |                             |   |  |          |   |  |            |   |  |         |   |  |             |   |  |        |   |  |          |  



F - 59



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|35. | RECONCILIATION TO US GAAP
|--- | -------------------------



The accounting policies and accounting standards under which the consolidated financial statements of the Group are prepared are in accordance with
Australian GAAP. The major differences between Australian GAAP and US GAAP are summarized and reconciled below.



|A. | GAAP differences relating to businesses spun-off as part of WMC Resources Ltd
|-- | -----------------------------------------------------------------------------



The following differences between Australian and US GAAP relate to the nickel, copper-uranium and fertilizer businesses, WMC
Finance Limited, WMC Finance (USA) Limited as well as WMC Limiteds exploration and development interests other than those relating to Alcoa World Alumina and Chemicals (AWAC). As these entities have now been spun-off from Alumina Limited as
part of the demerger, the following US GAAP adjustments have been reflected for the period during which the businesses were owned by Alumina Limited.



|(a) | Research and development
|--- | ------------------------



Expenditure incurred on research and development may be capitalized and deferred in Australia to the extent that such expenditure is expected to be
recoverable. Under US GAAP, all such expenditure is expensed as incurred. In addition, payments for research and development are included in cash flows from operating activities for US GAAP, while for Australian GAAP, they are investing activities.



|(b) | Pension funds
|--- | -------------



The applicable Australian accounting standard relates only to disclosure. The accepted practice is to account for Company contributions on a cash rather
than an accruals basis. The Company does not account for excesses or shortfalls of the Superannuation Fund assets over accrued membership benefits. As this is contrary to US GAAP, the Group has adopted the recognition provisions of FAS 87
Employers Accounting for Pensions, for US GAAP reconciliation purposes. Note 29 should be referred to for an explanation of the effect on the financial statements, including disclosures in accordance with FAS 132 Employers
Disclosures about Pensions and Other Post retirement Benefits. WMC Limited did not sponsor post retirement defined-benefits other than pensions. There are no defined benefit superannuation plans relating to Alumina Limited, as these funds were
transferred to WMC Resources Ltd. This liability formed part of the net assets of WMC Resources Ltd spun off as part of the demerger. There is no shortfall in superannuation funds for Alumina Limited to recognize a liability for on an ongoing basis.



|(c) | Exploration and evaluation expenditure
|--- | --------------------------------------



Expenditure incurred on the exploration and evaluation of minerals properties may be capitalized and deferred in Australia provided that such expenditure
meets the criteria disclosed in Note 1(v). Under US GAAP geological and geophysical costs and costs of carrying and retaining undeveloped properties are charged to expense as incurred. Consequently any such costs incurred and capitalized in
Australia as exploration and evaluation are expensed as incurred under US GAAP.



In 2001 capitalized exploration and expenditures included $27.1 million for the acquisition of a prospective nickel property resulting from the acquisition of Yakabindie Nickel Pty. Limited. Under both Australian GAAP
and US GAAP the cost of purchasing unproven property is capitalized when incurred, and either transferred to proved properties when proven or written off as impaired. Accordingly, this expenditure has not been included as a reconciling item. In
2002, prior to demerger, a $123.8 million first tranche payment for the acquisition of the Corridor Sands titanium dioxide project has been capitalized, and was subsequently sold as part of the demerger. Accordingly, this expenditure has not been
included as a reconciling item.



|(d) | Start up costs
|--- | --------------



Under Statement of Position 98-5, Reporting on the Costs of start-up activities, the costs of start-up activities including organizational
costs, are required to be expensed as incurred. Under Australian GAAP start up costs are capitalized and deferred as part of the mineral extraction or processing facilities being developed or constructed. These deferred costs are then amortized from
the start of production over the life of the facilities concerned.



|(e) | Real estate profit recognition
|--- | ------------------------------



In late 2000 WMC Limited contracted to sell Tenements and Tenement assets at Kambalda to a third party. This sale was recognized under Australian GAAP in
2000. However consideration was not due under the contract until 2001, and some minor conditions precedent to closing had not been performed at 31 December 2000. Consequently under US GAAP the sale and profit were not recognized until 2001.



|(f) | Option payment capitalized
|--- | --------------------------



An option payment for the right to participate in the Corridor Sands bankable feasibility study and earn an interest in any resultant development has been
deferred and amortized over the period during which the study is undertaken. Under US GAAP the payment has been expensed when incurred.



F - 60



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|35. | RECONCILIATION TO US GAAP (continued)
|--- | -------------------------------------



|(g) | The right to Royalties received from the sale of gold operations not recognized
|--- | -------------------------------------------------------------------------------



The right to royalties received in consideration for the gold mines sold during 2001 has been recognized at fair value under
Australian GAAP and included in the determination of the gain on disposal. Under US GAAP, since the royalty received had not been realized at 31 December 2001, WMC retained an amount of the carrying value of the mines on the balance sheet at 31
December 2001 in the proportion that the value of the right to the royalties bears to the total value of the consideration received. The increase in net income for US GAAP represents the difference in carrying value when the royalty was sold during
the year ended 31 December 2002.



|(h) | Fair value accounting for derivatives
|--- | -------------------------------------



Following the demerger, Alumina Limited no longer holds any derivative instruments. The disclosures below relate to the first 11 months of 2002 prior to
demerger, and to prior years.



Adoption of FAS 133



The Company adopted Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities as amended by Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging Activities  Deferral of the
Effective Date of FASB Statement No. 133, an amendment of FASB Statement No. 133, and Statement of Financial Accounting Standards No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment
of FASB Statement No. 133 (referred to hereafter as FAS 133), on 1 January 2001. In accordance with the transition provisions of FAS 133, the Company recorded the following net-of-tax cumulative effect adjustments in earnings as of 1
January 2001:



|                                                                   |  |       |  
|------------------------------------------------------------------ |  | ----- | -
|                                                                   |  | A$m   |  
|Related to previously designated fair value hedging relationships: |  |       |  
|Fair value of hedging instruments                                  |  | 36.0  |  
|Offsetting changes in fair value of hedged items                   |  | (36.0 | )
|                                                                   |  |       |  
|Total adjustment net of tax                                        |  |      |  
|                                                                   |  |       |  



In addition, the
Company recorded the following net-of-tax cumulative-effect adjustments in other comprehensive income as of 1 January 2001.



|                                                                   |  |        |  
|------------------------------------------------------------------ |  | ------ | -
|                                                                   |  | A$m    |  
|Related to previously designated fair value hedging relationships: |  |        |  
|Fair value of hedging instruments                                  |  | 29.2   |  
|Previously deferred hedging gains and losses                       |  | (647.9 | )
|                                                                   |  |        |  
|Total adjustment net of tax                                        |  | (618.7 | )
|                                                                   |  |        |  



Accounting for
Derivatives and Hedging Activities



The Company formally
documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as
fair-value, cash flow, or foreign-currency hedges to (1) specific assets and liabilities on the balance sheet or (2) specific firm commitments or forecasted transactions. The Company also formally assesses (both at the hedges inception and on
an ongoing basis) whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the fair value or cash flows of hedged items and whether those derivatives may be expected to remain highly effective
in future periods. When it is determined that a derivative is not (or has ceased to be) highly effective as a hedge, the Company discontinues hedge accounting prospectively, as discussed below.



The Company discontinues hedge accounting prospectively when (1) it
determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of a hedged item (including hedged items such as firm commitments or forecasted transactions); (2) it is probable that the forecasted
transaction will not occur; (3) a hedged firm commitment no longer meets the definition of a firm commitment; or (4) management determines that designating the derivative as a hedging instrument is no longer appropriate.



F - 61



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|35. | RECONCILIATION TO US GAAP (continued)
|--- | -------------------------------------



|(h) | Fair value accounting for derivatives (continued)
|--- | -------------------------------------------------



Fair-Value Hedges



The Company uses interest rate swaps to convert a portion of its non pre payable fixed-rate debt into variable-rate debt. Under the interest rate swap
contracts, the Company agrees with other parties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts, which is calculated based on an agreed-upon notional amount.



Cash Flow Hedges



The Companys sales are denominated in the United States dollars. The
Company enters into foreign-exchange options and forward-exchange contracts as hedges of anticipated sales denominated in foreign currencies. The Company enters into these contracts to protect itself against the risk that the eventual
dollar-net-cash inflows resulting from direct-foreign-export sales will be adversely affected by changes in exchange rates.



For US GAAP, for the year ended December 31, 2002 the company recognized a net gain of $0.2 million up to the date of demerger, representing the change in
time value on certain of the companys forward contracts that had been excluded from the assessment of hedge effectiveness. A further net loss of $6.2 million was recorded for the ineffective portion of certain options designated as cash flow
hedges.



The revaluation of foreign currency debt which is not
treated as a hedge for accounting purposes under US GAAP resulted in a net gain after tax of $87.5 million.



The total of the adjustments referred to in the preceding two paragraphs on a pre-tax basis was $146.5 million.



Subsequent gains and losses on cash flow hedges are taken to other
comprehensive income and are reclassified to profit and loss in the same period the hedged transaction is recognized. Gains and losses on fair value hedges continue to be taken to profit and loss in subsequent periods, as offsetting gains and losses
on hedged liabilities. In both cases, these gains and losses are not recognized under Australian GAAP until the hedged transaction is recognized.



FAS 133 requires that any component of the gain or loss which is deemed to be ineffective be taken to the Income Statement immediately. For Australian
GAAP any ineffectiveness is recognized over the term of the derivative.



|(i) | Accounting change  Depreciation and Amortization
|--- | -------------------------------------------------



Effective January 1, 2002 the company changed its methodology for the determination of amortization of mine development assets (including post production
waste removal costs) under US GAAP. Prior to January 1, 2002 the company amortized mining development on a composite basis. Total historical capitalized costs and estimated future development costs relating to its developed and undeveloped reserves
were depreciated using the units-of-production method based on total developed and undeveloped proven and probable reserves.



After considering the inherent uncertainties and subjectivity relating to the long time frame over which these estimated costs would be incurred,
management decided to revise its amortization methodology prospectively. Effective January 1, 2002 depreciation for mine development assets (including post-production waste removal costs) excludes consideration of future development costs. Refer to
Note 35(j) for details of the new policy for amortization of mine development and Note 35(k) for amortization of post-production waste removal costs. The cumulative effect recorded on January 1, 2002 of changing to the new accounting policy was
A$39.5 million (post-tax).



F - 62



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|35. | RECONCILIATION TO US GAAP (continued)
|--- | -------------------------------------



|(j) | Amortization of mine development and deferred post-production waste removal costs
|--- | ---------------------------------------------------------------------------------



For US GAAP purposes, amortization of the deferred costs of mine development is calculated on a units-of-production basis
over the proven and probable reserves which relate to the particular category of development, either life of mine plan or fully developed area. No future development costs are taken into account in calculating the
amortization charge. The life of mine waste-to-metal stripping ratio used for this purpose was: Mt Keith 2002: 691, 2001: 699, Harmony 2002: 570, 2001: 503. Stripping expenditure, which for Australian GAAP purposes is shown as an investing cash
flow, is considered an operating cash flow for US GAAP.



Life
of mine plan development comprises capital expenditures that will be utilized in the extraction of all the proven and probable ore reserves in the current detailed mine plan. These expenditures are predominantly incurred up-front and in advance of
any ore extraction or during major expansions. The types of development included in this category are ore haulage shafts, initial decline, ore passes and chutes and underground ore crusher cavities and are intended to be used for the extraction of
all ore within the current mine plan. These costs are amortized on a units-of-production basis over the total proven and probable reserves in the current mine plan.



Fully developed area development comprises capital expenditure to provide access to various areas within the mine to allow
the extraction of ore to commence. The types of development included within this category are: access and perimeter drives, ventilation drives and rises, and progressive declining subsequent to initial contact with the ore body. These costs are
amortized on a units-of-production basis over the proven and probable reserves that can be currently accessed without future capital development costs being incurred.



|(k) | Postproduction waste removal costs
|--- | -----------------------------------



Under Australian GAAP, expenditure incurred on post-production waste removal (stripping) is accumulated and deferred on the balance sheet as part of Mine
properties and mine development. For US GAAP, these deferred production costs are classified in the balance sheet as other non-current assets. Amortization of post-production waste removal costs is included in cost of goods sold in the income
statement. The US GAAP movements and closing balances of post-production waste removal costs are as follows:



|                             |  |        |   |  |       |  
|---------------------------- |  | ------ | - |  | ----- | -
|                             |  | 2002   |   |  | 2001  |  
|                             |  | A$m    |   |  | A$m   |  
|Opening balance              |  | 161.5  |   |  | 140.7 |  
|Cumulative effect adjustment |  | (38.1  | ) |  |      |  
|Costs capitalized            |  | 98.3   |   |  | 102.1 |  
|Amortization charge          |  | (73.3  | ) |  | (81.3 | )
|Disposed of at demerger      |  | (148.4 | ) |  |      |  
|                             |  |        |   |  |       |  
|Closing balance              |  |       |   |  | 161.5 |  
|                             |  |        |   |  |       |  



For US GAAP, the
amortization of deferred post-production waste removal costs is determined by applying a life-of-mine waste-to-metal stripping ratio. The stripping ratio is calculated by comparing the recoverable metal included in the proven and probable reserves
to be extracted over the life of the mine to the total volume of waste to be extracted over the same period. This ratio is then applied to the production of metal for the period to determine the amortization charge. The full amount of
post-production waste removal costs incurred will not be expensed until the end of the mine life. Based on the current mine plans, the deferred stripping asset would be expected to be extinguished during 2018 for Mount Keith and 2004 for the Harmony
Mine at Leinster.



The accounting for stripping costs smoothes
the cost of waste-rock removal over the life of the mine rather than expensing the actual waste removal cost incurred in each period. As evidenced by the table above, the deferred stripping accounting resulted in a decrease to production costs as
compared to actual costs incurred for each period presented.



There is mixed accounting practice in this area and that some mining companies expense waste removal costs as incurred, which policy, if followed, may result in the reporting of greater volatility in period to period results of operations.



Stripping expenditure, which for Australian GAAP purposes is
shown as an investing cash flow, is considered an operating cash flow for US GAAP.



As waste removal activities are an integral part of the mining operation, the deferred stripping asset is grouped with the other assets at the mine site or other level which represents the lowest level of separately
identifiable cash flows in order to assess recoverable amount.



F - 63



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|35. | RECONCILIATION TO US GAAP (continued)
|--- | -------------------------------------



|B. | GAAP differences relating to demerger transactions
|-- | --------------------------------------------------



Prior to effecting the demerger, through a series of transactions internal to the WMC Limited Group, WMC Resources Ltd acquired WMC Limiteds shares
in the legal entities that held its copper-uranium and fertilizer businesses, WMC Finance Limited, WMC Finance (USA) Limited as well as WMC Limiteds exploration and development interests other than those relating to Alcoa World Alumina and
Chemicals (AWAC). Under Australian GAAP, these acquisitions were made at the fair value of the net assets acquired, in return for shares in WMC Resources Ltd. Under US GAAP, these acquisitions are accounted for in accordance with Financial
Accounting Standard No 141 Business Combinations, as transfers of net assets and exchanges of shares between entities under common control, which requires that all such transactions are recorded at the historic carrying amounts.



Consequently, the carrying value of WMC Resources Ltd
immediately prior to demerger differs from US GAAP due to the different basis of accounting as well as the other US GAAP differences. Under Australian GAAP, the loss on the spin-off of WMC Resources from Alumina Limited was taken directly to equity.
Under US GAAP, this is taken through equity as a dividend distribution from WMC Resources Ltd on demerger.



|C. | Other GAAP differences relating to the continuing Alumina Limited business
|-- | --------------------------------------------------------------------------



|(l) | Associates
|--- | ----------



The major associated companies accounted for using the equity method of accounting are those entities forming Alcoa World Alumina and Chemicals (AWAC)
which prepares its financial statements in U.S. dollars in accordance with US GAAP. However, one of those entities is an Australian based company which Alumina accounts for using as a basis its Australian domestic financial statements. The net
income and shareholders equity concerned have been adjusted to conform to US GAAP.



Effective 1 January 2002, Alumina adopted SFAS No. 142, Goodwill and Other Intangible Assets for existing goodwill assets. This resulted in a cumulative adjustment.



The principal differences between Australian GAAP and US GAAP that affect
Aluminas net income for associates, as well as its shareholders equity, either directly or through its share of associates on a continuing basis relate to the treatment of the following items:



| |  | inventory valuation;
| | - | --------------------



| |  | compensation expense of employee share plans;
| | - | ---------------------------------------------



| |  | fair value of accounting for derivatives;
| | - | -----------------------------------------



| |  | goodwill amortisation;
| | - | ----------------------



| |  | pension liabilities.
| | - | --------------------



Under Australian GAAP, in 2003, the Company adopted AASB 1028 Accounting for Employee Entitlements. AASB 1028 requires the Company to
recognize a liability in the current period for the expected benefits to be paid to employees in the future. In the case of Aluminas Investment in AWAC (equity method), certain employees within AWAC have stock options of another entity.
In accordance with the management agreement between Alumina and the other entity, any stock options of the other entity that are exercised while the employee is employed by AWAC are treated as a management fee to AWAC for the difference between
market price and exercise price. Alumina has recorded its share of the current liability associated with these options. The recognition of this liability creates an expense and a reduction of the investment in AWAC in the current period for Alumina.
At each balance sheet date Alumina recognizes the current liability for the difference between the exercise price and current market price of the options. Under US GAAP, no liability is recognized prior to exercising of the options and the
management charge for these options is recorded only when the employee exercises the option and a management charge is passed down to AWAC from the other entity.



|(m) | Compensation expense of employee share plans
|--- | --------------------------------------------



Under US GAAP, the Share Plan disclosed under Note 21 which until April 1995 offered partly paid shares to Senior Officers is considered to be a
compensatory plan. As such, compensation expense is required to be charged to income based on the difference between the issue price of the shares and the market price at the date of measurement. This calculation excludes the value of share options
which under APB25 are non compensatory, except prospectively from I July 2000 if the status of the employees concerned or the terms of the award change.



F - 64



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|35. | RECONCILIATION TO US GAAP (continued)
|--- | -------------------------------------



|(n) | Cash flow
|--- | ---------



Under US GAAP bank overdrafts are not considered to be part of the net cash equivalents and so changes in bank overdrafts (net) are included in cash flows
from financing activities. Other differences in the US GAAP statement of cashflows relate to those items capitalized under A GAAP that would be expensed under US GAAP and would be included in the US GAAP cashflow from operating activities.



|(o) | Income tax
|--- | ----------



Under Australian GAAP, deferred taxes are provided for using the liability method on a similar basis to FAS 109, therefore there has been no adjustment to
the method by which income taxes have been calculated. Under US GAAP, the recognition and carry forward of future income tax benefits differs from Australian GAAP in the following areas:



| |  | Tax assets and liabilities relating to temporary (timing) differences are all classed as non-current under Australian GAAP. Under US GAAP the future income tax benefits and
liabilities would be required to be allocated in the balance sheet between current and non-current items. This allocation would not have a significant effect. Refer also to Note 5.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Tax assets relating to tax losses are not brought to account under Australian GAAP unless their ultimate realization is virtually certain. Under US GAAP, tax assets relating to tax
losses are all brought to account and a valuation allowance raised against the asset if it is more likely than not that some portion or all of the deferred tax asset will not be realized.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(p) | Stock Options
|--- | -------------



Alumina Limited accounts for the Option Scheme as a non-compensatory plan for purposes of US GAAP in accordance with Accounting Principles Board Opinion
No. 25, under which no compensation expense has been recognized for share options because the exercise price equals the market price on the date of the grant.



The SAP scheme is accounted for as a variable plan in accordance with APB 25, under which a compensation charge is recognized for the difference
between exercise price and market value at each balance sheet date.



Pro forma information regarding net income and earnings per share is required by SFAS 123, and has been determined as if the Group had accounted for its employee stock options under the fair value method of SFAS 123. No options were granted
in 2003, the weighted average fair value of options granted during the year ended December 2002 was A$ 4.33 per option and year ended December 2001 was A$4.00 per option respectively. The fair value for these options was estimated as at the date of
the grants using a Black-Scholes Option Valuation model with the weighted average assumptions as set out below. For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense on a straight line basis over the
options vesting period.



|                                                  |  |                     |   |  |                     |   |  |                     |  
|------------------------------------------------- |  | ------------------- | - |  | ------------------- | - |  | ------------------- | -
|                                                  |  | Year to 31 Dec 2003 |   |  | Year to 31 Dec 2002 |   |  | Year to 31 Dec 2001 |  
|                                                  |  | A$m                 |   |  | A$m                 |   |  | A$m                 |  
|The Groups pro forma information is as follows : |  |                     |   |  |                     |   |  |                     |  
|Net Income                                        |  |                     |   |  |                     |   |  |                     |  
|As reported US GAAP                               |  | 248.2               |   |  | 306.7               |   |  | 326.5               |  
|Pro forma                                         |  | 248.2               |   |  | 305.3               |   |  | 279.9               |  
|Basic earnings per share                          |  |                     |   |  |                     |   |  |                     |  
|As reported US GAAP                               |  | 0.22                |   |  | 0.28                |   |  | 0.30                |  
|Pro forma                                         |  | 0.22                |   |  | 0.28                |   |  | 0.25                |  
|Earnings per share on a diluted basis             |  |                     |   |  |                     |   |  |                     |  
|As reported US GAAP                               |  | 0.22                |   |  | 0.27                |   |  | 0.30                |  
|Pro forma                                         |  | 0.22                |   |  | 0.27                |   |  | 0.26                |  
|Assumptions :                                     |  |                     |   |  |                     |   |  |                     |  
|Risk free interest rates                          |  | 4.75                | % |  | 4.66                | % |  | 4.95                | %
|Dividend yield                                    |  | 4.06                | % |  | 4.00                | % |  | 4.33                | %
|Volatility                                        |  | 29.78               | % |  | 29.78               | % |  | 47.12               | %
|Expected life in years                            |  | 2.37                |   |  | 3.16                |   |  | 3.98                |  



F - 65



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|35. | RECONCILIATION TO US GAAP (continued)
|--- | -------------------------------------



|(q) | Goodwill
|--- | --------



Included in the Australian GAAP equity accounted carrying amount at which the equity investment in AWAC is recorded, are amounts for goodwill of A$175.0
million (2002: A$192.7 million) which are being amortized over periods out to 2014. Effective 1 January 2002, Alumina adopted SFAS No. 142, Goodwill and Other Intangible Assets for existing goodwill assets. This standard eliminates the
amortization of goodwill and intangible assets with indefinite useful lives and requires annual testing for impairment. This standard requires the assignment of assets acquired and liabilities assumed, including goodwill, to reporting units for
purposes of goodwill impairment testing.



|                                                                                                 |  |                     |  |                     |  |                    
|------------------------------------------------------------------------------------------------ |  | ------------------- |  | ------------------- |  | -------------------
|                                                                                                 |  | Year to 31 Dec 2003 |  | Year to 31 Dec 2002 |  | Year to 31 Dec 2001
|The Groups pro forma information is as follows :                                                |  |                     |  |                     |  |                    
|Net Income in accordance with US GAAP before cumulative effect of change in accounting principle |  | 237.1               |  | 303.0               |  | 326.5              
|Cumulative effect of adopting new policy for asset retirement obligations FAS143                 |  | 11.1                |  |                    |  |                   
|Cumulative effect gain write off of negative goodwill                                            |  |                    |  | 3.7                 |  |                   
|Goodwill amortization                                                                            |  |                    |  |                    |  | 17.7               
|                                                                                                 |  |                     |  |                     |  |                    
|Adjusted net income                                                                              |  | 248.2               |  | 306.7               |  | 344.2              
|                                                                                                 |  |                     |  |                     |  |                    
|Basic earnings per share:                                                                        |  |                     |  |                     |  |                    
|Net income                                                                                       |  | 0.21                |  | 0.28                |  | 0.30               
|Cumulative effect of adopting new policy for asset retirement obligations FAS143                 |  | 0.01                |  |                    |  |                   
|Cumulative effect gain write off of negative goodwill                                            |  |                    |  |                    |  |                   
|Goodwill amortization                                                                            |  |                    |  |                    |  | 0.02               
|                                                                                                 |  |                     |  |                     |  |                    
|Adjusted basic earnings per share                                                                |  | 0.22                |  | 0.28                |  | 0.32               
|                                                                                                 |  |                     |  |                     |  |                    
|Dilutive Earnings per share:                                                                     |  |                     |  |                     |  |                    
|Net income                                                                                       |  | 0.21                |  | 0.27                |  | 0.30               
|Cumulative effect of adopting new policy for asset retirement obligations FAS143                 |  | 0.01                |  |                    |  |                   
|Cumulative effect gain write off of negative goodwill                                            |  |                    |  |                    |  |                   
|Goodwill amortization                                                                            |  |                    |  |                    |  | 0.02               
|                                                                                                 |  |                     |  |                     |  |                    
|Adjusted diluted earnings per share                                                              |  | 0.22                |  | 0.27                |  | 0.32               
|                                                                                                 |  |                     |  |                     |  |                    



F - 66



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|35. | RECONCILIATION TO US GAAP (continued)
|--- | -------------------------------------



INCOME AND COMPREHENSIVE INCOME STATEMENT  US GAAP RECONCILIATION



|                                                                                                                                                                |  |                   |   |  |                   |   |  |                   |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | - |  | ----------------- | - |  | ----------------- | -
|                                                                                                                                                                |  | Year to31 Dec2003 |   |  | Year to31 Dec2002 |   |  | Year to31 Dec2001 |  
|                                                                                                                                                                |  | A$m               |   |  | A$m               |   |  | A$m               |  
|                                                                                                                                                                |  |                   |   |  |                   |   |  |                   |  
|Net income attributable to members of the holding company as reported under Australian GAAP                                                                     |  | 236.9             |   |  | 174.5             |   |  | 401.7             |  
|                                                                                                                                                                |  |                   |   |  |                   |   |  |                   |  
|Adjustments required to conform with US GAAP:                                                                                                                   |  |                   |   |  |                   |   |  |                   |  
|A      GAAP differences relating to businesses spun-off as part of WMC Resources Ltd                                                                            |  |                   |   |  |                   |   |  |                   |  
|- Research and development costs expensed immediately under US GAAP but deferred and subsequently expensed under Australian GAAP
(a)                            |  |                  |   |  | 0.1               |   |  | 1.9               |  
|- Pension funds (b)                                                                                                                                             |  |                  |   |  | 0.5               |   |  | 8.2               |  
|- Exploration expenditure capitalized (c)                                                                                                                       |  |                  |   |  | 5.4               |   |  | (3.7              | )
|- Start up costs  amortization written back (d)                                                                                                                |  |                  |   |  | 6.5               |   |  | 7.0               |  
|- Real estate profit recognition  sale of Kambalda tenements (e)                                                                                               |  |                  |   |  |                  |   |  | 20.2              |  
|- Option payment capitalized  amortization written back (f)                                                                                                    |  |                  |   |  | 11.4              |   |  | 11.4              |  
|- Royalty received from the sale of gold operations (g)                                                                                                         |  |                  |   |  | 13.6              |   |  | (13.6             | )
|- Fair value of accounting for derivatives (h)                                                                                                                  |  |                  |   |  | 146.5             |   |  | (164.4            | )
|- Amortization of mine development and post-production waste removal cost (j),(k)                                                                               |  |                  |   |  | (4.2              | ) |  |                  |  
|C      Other reconciling items relating to the continuing Alumina Limited business                                                                              |  |                   |   |  |                   |   |  |                   |  
|- Equity in US GAAP adjustments of associates (net of tax) (l)                                                                                                  |  | (18.2             | ) |  | 17.0              |   |  | 14.6              |  
|- Compensation credit/(expense) of employee share plan (m)                                                                                                      |  |                  |   |  | (0.1              | ) |  | (1.2              | )
|- Amortization of goodwill written back (q)                                                                                                                     |  | 17.7              |   |  | 17.7              |   |  |                  |  
|- Impact of adopting new policy for asset retirement obligations FAS143                                                                                         |  | (11.1             | ) |  |                  |   |  |                  |  
|- Impact of adopting new policy for Associates employee stock options*                                                                                         |  | 11.8              |   |  |                  |   |  |                  |  
|Income tax effect of above adjustments (excluding tax of associates)                                                                                            |  |                  |   |  | (46.4             | ) |  | 44.4              |  
|                                                                                                                                                                |  |                   |   |  |                   |   |  |                   |  
|Total adjustments                                                                                                                                               |  | 0.2               |   |  | 168.0             |   |  | (75.2             | )
|                                                                                                                                                                |  |                   |   |  |                   |   |  |                   |  
|Net income in accordance with US GAAP before cumulative effect of change in accounting principle                                                                |  | 237.1             |   |  | 342.5             |   |  | 326.5             |  
|Cumulative effect on adoption of new policy for amortization of mine development and post-production waste removal costs
(post-tax)-discontinued operations (i) |  |                  |   |  | (39.5             | ) |  |                  |  
|Cumulative effect gain write off of negative goodwill-continuing operations (l)                                                                                 |  |                  |   |  | 3.7               |   |  |                  |  
|Cumulative effect of adopting new policy for asset retirement obligations FAS143**                                                                              |  | 11.1              |   |  |                  |   |  |                  |  
|                                                                                                                                                                |  |                   |   |  |                   |   |  |                   |  
|Net income in accordance with US GAAP                                                                                                                           |  | 248.2             |   |  | 306.7             |   |  | 326.5             |  
|                                                                                                                                                                |  |                   |   |  |                   |   |  |                   |  
|This is represented by:                                                                                                                                         |  |                   |   |  |                   |   |  |                   |  
|Net income from continuing operations                                                                                                                           |  | 237.1             |   |  | 244.3             |   |  | 294.8             |  
|Net income from discontinued operations                                                                                                                         |  |                  |   |  | 98.2              |   |  | 31.7              |  
|Cumulative effect of change in accounting policies                                                                                                              |  | 11.1              |   |  | (35.8             | ) |  |                  |  
|                                                                                                                                                                |  |                   |   |  |                   |   |  |                   |  



|* | Alumina has taken account of stock options in the equity accounting of its investment in AWAC. The accounting policy is described in Note 1(n)(iii) with USGAAP discussion in Note 35
(l) .
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|** | Alumina has taken account of FAS143 in the equity accounting of its investment in AWAC. The accounting policy is described in Note 1(w).
|-- | ----------------------------------------------------------------------------------------------------------------------------------------



F - 67



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|35. | RECONCILIATION TO US GAAP (continued)
|--- | -------------------------------------



INCOME AND COMPREHENSIVE INCOME STATEMENT  US GAAP RECONCILIATION (continued)



|                                                         |  |                     |  |                     |  |                     |  
|-------------------------------------------------------- |  | ------------------- |  | ------------------- |  | ------------------- | -
|                                                         |  | Year to 31 Dec 2003 |  | Year to 31 Dec 2002 |  | Year to 31 Dec 2001 |  
|                                                         |  | A$m                 |  | A$m                 |  | A$m                 |  
|Comprehensive Income                                     |  |                     |  |                     |  |                     |  
|Net income in accordance with US GAAP as reported        |  | 248.2               |  | 306.7               |  | 326.5               |  
|Other comprehensive income as reported                   |  |                    |  | 35.4                |  | 19.8                |  
|Transitional adjustment on adoption of FAS 133           |  |                    |  |                    |  | (618.7              | )
|FAS 133 adjustment for current year                      |  |                    |  | 190.7               |  | (209.6              | )
|FX Translation                                           |  | 13.7                |  |                    |  |                    |  
|Equity share of other comprehensive income of associates |  | 36.7                |  | 69.0                |  | (106.5              | )
|                                                         |  |                     |  |                     |  |                     |  
|Comprehensive income in accordance with US GAAP          |  | 298.6               |  | 601.8               |  | (588.5              | )
|                                                         |  |                     |  |                     |  |                     |  



Accumulated other comprehensive
income reconciliation



|                  |  |                |   |  |              |  |                |  
|----------------- |  | -------------- | - |  | ------------ |  | -------------- | -
|2003              |  | Openingbalance |   |  | 2003movement |  | Closingbalance |  
|Equity Accounting |  | (37.5          | ) |  | 36.7         |  | (0.8           | )
|FX translation    |  | 51.8           |   |  | 13.7         |  | 65.5           |  
|                  |  |                |   |  |              |  |                |  
|                  |  | 14.3           |   |  | 50.4         |  | 64.7           |  
|                  |  |                |   |  |              |  |                |  



|                  |  |                |   |  |              |  |                                        |   |  |                |  
|----------------- |  | -------------- | - |  | ------------ |  | -------------------------------------- | - |  | -------------- | -
|2002              |  | Openingbalance |   |  | 2002movement |  | Transfer toRetainedearningson demerger |   |  | ClosingBalance |  
|FAS 133           |  | (828.3         | ) |  | 190.7        |  | 637.6                                  |   |  |               |  
|Equity Accounting |  | (106.5         | ) |  | 69.0         |  |                                       |   |  | (37.5          | )
|FX translation    |  | 79.1           |   |  | 6.0          |  | (33.3                                  | ) |  | 51.8           |  
|Other             |  | (35.4          | ) |  | 35.4         |  |                                       |   |  |               |  
|                  |  |                |   |  |              |  |                                        |   |  |                |  
|                  |  | (891.1         | ) |  | 301.1        |  | 604.3                                  |   |  | 14.3           |  
|                  |  |                |   |  |              |  |                                        |   |  |                |  



|                  |  |                |   |  |              |   |  |                |  
|----------------- |  | -------------- | - |  | ------------ | - |  | -------------- | -
|2001              |  | Openingbalance |   |  | 2001movement |   |  | Closingbalance |  
|FAS 133           |  |               |   |  | (828.3       | ) |  | (828.3         | )
|Equity Accounting |  |               |   |  | (106.5       | ) |  | (106.5         | )
|FX translation    |  | 53.1           |   |  | 26.0         |   |  | 79.1           |  
|Other             |  | (55.2          | ) |  | 19.8         |   |  | (35.4          | )
|                  |  |                |   |  |              |   |  |                |  
|                  |  | (2.1           | ) |  | (889.0       | ) |  | (891.1         | )
|                  |  |                |   |  |              |   |  |                |  



F - 68



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|35. | RECONCILIATION TO US GAAP (continued)
|--- | -------------------------------------



|                                                                                   |  |                   |  |        
|---------------------------------------------------------------------------------- |  | ----------------- |  | -------
|                                                                                   |  | As at 31 December
|                                                                                   |  | 2003              |  | 2002   
|                                                                                   |  | A$m               |  | A$m    
|SHAREHOLDERS EQUITY  US GAAP RECONCILIATION                                      |  |                   |  |        
|                                                                                   |  |                  
|Shareholders equity as reported                                                   |  | 1,323.8           |  | 1,153.5
|                                                                                   |  |                  
|C      Other reconciling items relating to the continuing Alumina Limited business |  |                   |  |        
|Adjustments required to conform with US GAAP:                                      |  |                   |  |        
|- Equity in earnings and reserves of associates (net of tax) (l)                   |  | 46.8              |  | 31.2   
|- Amortization of goodwill written back (q)                                        |  | 35.4              |  | 17.7   
|                                                                                   |  |                   |  |        
|Alumina Limited shareholders equity according to US GAAP                          |  | 1,406.0           |  | 1,202.4
|                                                                                   |  |                   |  |        



|                                                           
|-----------------------------------------------------------
|ROLL FORWARD ANALYSIS OF SHAREHOLDERS EQUITY UNDER US GAAP:



|                                                                  |  |         |   |  |          |  
|----------------------------------------------------------------- |  | ------- | - |  | -------- | -
|Opening Alumina Limited shareholders equity according to US GAAP |  | 1,202.4 |   |  | 3,778.5  |  
|Net income in accordance with US GAAP                             |  | 248.2   |   |  | 306.7    |  
|Other comprehensive income                                        |  | 50.4    |   |  | 295.1    |  
|Dividends                                                         |  | (259.6  | ) |  | (199.7   | )
|Options exercised and then converted                              |  | 56.2    |   |  | 38.5     |  
|Shares issued to acquire QBEs 0.75% share of Alcoa of Australia  |  | 108.4   |   |  |         |  
|Shares issued to acquire Corridor Sands                           |  |        |   |  | 123.8    |  
|WMC Resources demerger                                            |  |        |   |  | (3,140.5 | )
|                                                                  |  |         |   |  |          |  
|Closing Alumina Limited shareholders equity according to US GAAP |  | 1,406.0 |   |  | 1,202.4  |  
|                                                                  |  |         |   |  |          |  



F - 69



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|35. | RECONCILIATION TO US GAAP (continued)
|--- | -------------------------------------



|                                                                                                               |  |                   |   |  |                   |   |  |                   |  
|-------------------------------------------------------------------------------------------------------------- |  | ----------------- | - |  | ----------------- | - |  | ----------------- | -
|                                                                                                               |  | Year to31 Dec2003 |   |  | Year to31 Dec2002 |   |  | Year to31 Dec2001 |  
|                                                                                                               |  | A$m               |   |  | A$m               |   |  | A$m               |  
|STATEMENT OF CASH FLOWS - US GAAP RECONCILIATION (n)                                                           |  |                   |   |  |                   |   |  |                   |  
|Cash flows from operating activities as reported                                                               |  | 268.5             |   |  | 602.6             |   |  | 943.0             |  
|Payments for exploration expenditure expensed for US GAAP                                                      |  |                  |   |  |                  |   |  | (3.7              | )
|Deferred stripping expenditure reclassified from investing                                                     |  |                  |   |  | (92.7             | ) |  | (102.1            | )
|                                                                                                               |  |                   |   |  |                   |   |  |                   |  
|Net cash provided by operating activities  US GAAP                                                            |  | 268.5             |   |  | 509.9             |   |  | 837.2             |  
|                                                                                                               |  |                   |   |  |                   |   |  |                   |  
|Cash flows from investing activities as reported                                                               |  | (0.3              | ) |  | (478.0            | ) |  | 290.8             |  
|Payments for exploration expenditure expensed for US GAAP                                                      |  |                  |   |  |                  |   |  | 3.7               |  
|Reclassification of deferred stripping expenditure                                                             |  |                  |   |  | 92.7              |   |  | 102.1             |  
|                                                                                                               |  |                   |   |  |                   |   |  |                   |  
|Net cash (used in) investing activities  US GAAP                                                              |  | (0.3              | ) |  | (385.3            | ) |  | 396.6             |  
|                                                                                                               |  |                   |   |  |                   |   |  |                   |  
|Cash flows from financing activities as reported                                                               |  | (124.2            | ) |  | (310.7            | ) |  | (1,108.1          | )
|Changes in bank overdrafts (net)                                                                               |  |                  |   |  | (0.2              | ) |  | (3.7              | )
|                                                                                                               |  |                   |   |  |                   |   |  |                   |  
|Net cash (used in)/provided by financing activities  US GAAP                                                  |  | (124.2            | ) |  | (310.9            | ) |  | (1,111.8          | )
|                                                                                                               |  |                   |   |  |                   |   |  |                   |  
|Net increase/(decrease) in cash and cash equivalents                                                           |  | 144.0             |   |  | (186.3            | ) |  | 122.0             |  
|Cash and cash equivalents at the beginning of the year                                                         |  | 23.2              |   |  | 214.4             |   |  | 90.0              |  
|Effects of exchange rate changes on opening foreign currency cash balances and on cash flows during the period |  | (1.9              | ) |  | (4.9              | ) |  | 2.4               |  
|                                                                                                               |  |                   |   |  |                   |   |  |                   |  
|Cash and cash equivalents at the end of the financial year                                                     |  | 165.3             |   |  | 23.2              |   |  | 214.4             |  
|                                                                                                               |  |                   |   |  |                   |   |  |                   |  



F - 70



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|36. | RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
|--- | ----------------------------------------------



The Financial Accounting Standards Board has issued certain Statements of Financial Accounting Standards which are not effective with respect to the
fiscal years presented in the consolidated financial statements.



In December, 2003, the FASB issued FIN 46R, Consolidation of Certain Variable Interest Entities - an interpretation of ARB No.51, which further clarifies FIN46 issued on January 17, 2003. FIN46R addresses consolidation and disclosure
by business enterprises of variable interest entities. FIN46R is effective for newly created variable interest entities beginning December 31, 2003 and for existing variable interest entities as of the first annual period beginning after December
15, 2004. This standard has no impact on Alumina Limited.



In
December 2003, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 104 (SAB 104). Revenue Recognition, which supersedes SAB 101, Revenue Recognition in Financial Statements and SAB 101 FAQ. SAB 104s primary purpose is
to rescind accounting guidance contained in SAB 101 and SAB 101 FAQ related to multiple element arrangements, which was superseded as a result of the issuance of EITF 00-21, Accounting for Revenue Arrangements with Multiple deliverables.
EITF 00-21 was effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of SAB 104 and EITF 00-21 is not expected to have an impact on the Company financial statements as it receives no revenue
from multiple element arrangements.



The Australian Accounting
Standards Board (AASB) has issues certain Accounting Standards which are not effective with respect to the fiscal periods presented in the consolidated financial statements.



AASB 1046 Director and Executive Disclosures by Disclosing Entities was issued January 2004. It will be
effective for Alumina in 2005. Adoption of this standard is not expected to have a significant impact on the Companys financial position.



|37. | EVENTS SUBSEQUENT TO BALANCE DATE
|--- | ---------------------------------



In January 2003, AWAC announced that it had conducted a portfolio review of its businesses and the markets they serve and decided to divest its specialty
chemicals business. On 7 November 2003, AWAC announced that it had agreed to sell Alcoa Specialty Chemicals to Rhone Capital LLC. On 27 February 2004, AWAC completed the sale of the speciality chemicals division to two private equity firms led by
Rhone Capital LLC for approximately US$342 million, which includes the assumption of debt and other unfunded obligations. The sale resulted in an approximate A$15.0 million after tax profit to Alumina Limited after adjusting for A$22 million of
goodwill that was allocated against the specialty chemical assets. Alumina Limited had previously acquired part of its interest in the specialty chemicals division from Alcoa in 1995 as part of the formation of AWAC. This transaction has not been
brought to account as at 31 December 2003.



F - 71



---

##### Table of Contents

ALUMINA LIMITED AND CONTROLLED ENTITIES

Notes to the Consolidated Financial Statements



|38. | (Schedule II)
|--- | -------------



ALUMINA LIMITED

VALUATION AND QUALIFYING ACCOUNTS

(A$m)



|                                                |  |                              |  |                                     |      |  |                                      |   |  |            |   |  |                     
|----------------------------------------------- |  | ---------------------------- |  | ----------------------------------- | ---- |  | ------------------------------------ | - |  | ---------- | - |  | --------------------
|Description                                     |  | Balanceatbeginningof year    |  | Additionschargedto costsandexpenses |      |  | Transferredto WMCResourcesondemerger |   |  | Deductions |   |  | Balanceat endof year
|                                                |  | Year ended 31 December, 2003
|Future income tax benefit valuation allowance   |  | 340.7                        |  | 16.0                                | (a)  |  |                                     |   |  |           |   |  | 356.7               
|Provision for doubtful debts                    |  |                             |  |                                    |      |  |                                     |   |  |           |   |  |                    
|Provision for obsolescence and loss             |  |                             |  |                                    |      |  |                                     |   |  |           |   |  |                    
|Provision for diminution in value of investment |  |                             |  |                                    |      |  |                                     |   |  |           |   |  |                    
|                                                |  |                              |  |                                     |      |  |                                      |   |  |            |   |  |                     
|                                                |  | 340.7                        |  | 16.0                                |      |  |                                     |   |  |           |   |  | 356.7               
|                                                |  |                              |  |                                     |      |  |                                      |   |  |            |   |  |                     
|                                                |  | Year ended 31 December, 2002
|Future income tax benefit valuation allowance   |  | 262.2                        |  | 78.5                                | (a)  |  |                                     |   |  |           |   |  | 340.7               
|Provision for doubtful debts                    |  | 7.4                          |  |                                    |      |  | (7.4                                 | ) |  |           |   |  |                    
|Provision for obsolescence and loss             |  | 13.7                         |  |                                    |      |  | (13.7                                | ) |  |           |   |  |                    
|Provision for diminution in value of investment |  | 4.5                          |  |                                    |      |  | (4.5                                 | ) |  |           |   |  |                    
|                                                |  |                              |  |                                     |      |  |                                      |   |  |            |   |  |                     
|                                                |  | 287.8                        |  | 78.5                                |      |  | (25.6                                | ) |  |           |   |  | 340.7               
|                                                |  |                              |  |                                     |      |  |                                      |   |  |            |   |  |                     
|                                                |  | Year ended 31 December, 2001
|Future income tax benefit valuation allowance   |  | 299.4                        |  | (37.2                               | )(a) |  |                                     |   |  |           |   |  | 262.2               
|Provision for doubtful debts                    |  | 8.7                          |  |                                    |      |  |                                     |   |  | (1.3       | ) |  | 7.4                 
|Provision for obsolescence and loss             |  | 12.0                         |  | 4.0                                 |      |  |                                     |   |  | (2.3       | ) |  | 13.7                
|Provision for diminution in value of investment |  | 4.5                          |  |                                    |      |  |                                     |   |  |           |   |  | 4.5                 
|                                                |  |                              |  |                                     |      |  |                                      |   |  |            |   |  |                     
|                                                |  | 324.6                        |  | (33.2                               | )    |  |                                     |   |  | (3.6       | ) |  | 287.8               
|                                                |  |                              |  |                                     |      |  |                                      |   |  |            |   |  |                     



|(a) | Charged/(Credited) to income tax expense
|--- | ----------------------------------------



F - 72



---

##### Table of Contents

Report of Independent Auditors



To the Members of
the Strategic Council of Alcoa World Alumina and Chemicals (AWAC)



In our opinion, the accompanying combined balance sheets and the related combined statements of income, comprehensive income, members equity and cash flows present fairly, in all material respects, the financial position of Alcoa
World Alumina and Chemicals at December 31, 2003 and 2002, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial
statements are the responsibility of AWACS management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.



As discussed in Note D to
the combined financial statements, AWAC changes its method of accounting for assets retirement obligations in 2003. Also, as discussed in Notes A and R to the combined financial statements, AWAC changed its method of accounting for long-lived asset
impairments and goodwill and other intangible assets in 2002.



/s/
PricewaterhouseCoopers LLP



January 15, 2004



F - 73



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Combined Balance Sheets

December 31, 2003 and 2002



(in millions)



|                                                                                 |  |      |         |      |   |        
|-------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|                                                                                 |  | 2003 |         | 2002
|Assets                                                                           |  |      |         |      |   |        
|Current assets                                                                   |  |      |         |      |   |        
|Cash and cash equivalents (A and M)                                              |  | $    | 98.3    |      | $ | 96.4   
|Receivables from customers, less allowances of $0.1 in 2003 and $1.0 in 2002 (I) |  |      | 325.9   |      |   | 284.5  
|Inventories (A and E)                                                            |  |      | 323.1   |      |   | 283.7  
|Prepaid expenses and other current assets                                        |  |      | 111.9   |      |   | 76.0   
|                                                                                 |  |      |         |      |   |        
|Total current assets                                                             |  |      | 859.2   |      |   | 740.6  
|Investments (A)                                                                  |  |      | 138.3   |      |   | 128.8  
|Properties, plants and equipment (A and F)                                       |  |      | 2,322.5 |      |   | 1,889.7
|Other noncurrent assets and deferred charges (A and G)                           |  |      | 466.1   |      |   | 375.7  
|Assets held for sale (C)                                                         |  |      | 237.0   |      |   | 220.2  
|                                                                                 |  |      |         |      |   |        
|Total assets                                                                     |  | $    | 4,023.1 |      | $ | 3,355.0
|                                                                                 |  |      |         |      |   |        
|Liabilities                                                                      |  |      |         |      |   |        
|Current liabilities                                                              |  |      |         |      |   |        
|Short-term borrowings (I and M)                                                  |  | $    | 115.4   |      | $ | 43.6   
|Accounts payable, trade (I)                                                      |  |      | 352.2   |      |   | 282.3  
|Accrued compensation                                                             |  |      | 112.6   |      |   | 59.4   
|Taxes, including taxes on income (L)                                             |  |      | 43.7    |      |   | 69.4   
|Deferred income taxes (L)                                                        |  |      | 97.8    |      |   | 51.2   
|Other current liabilities                                                        |  |      | 45.5    |      |   | 82.8   
|                                                                                 |  |      |         |      |   |        
|Total current liabilities                                                        |  |      | 767.2   |      |   | 588.7  
|Long-term debt (H and I)                                                         |  |      | 7.2     |      |   | 4.0    
|Accrued postretirement benefits (K)                                              |  |      | 63.4    |      |   | 63.3   
|Deferred alumina sales revenue (A)                                               |  |      | 187.4   |      |   | 195.4  
|Noncurrent liabilities                                                           |  |      | 159.8   |      |   | 193.3  
|Deferred income taxes (L)                                                        |  |      | 256.1   |      |   | 200.5  
|Liabilities of operations held for sale (C)                                      |  |      | 40.7    |      |   | 18.3   
|                                                                                 |  |      |         |      |   |        
|Total liabilities                                                                |  |      | 1,481.8 |      |   | 1,263.5
|Minority interests                                                               |  |      | 7.8     |      |   | 5.7    
|Contingencies and commitments (O)                                                |  |      |         |      |   |        
|Members equity (Q)                                                              |  |      |         |      |   |        
|Enterprise Capital                                                               |  |      | 2,533.5 |      |   | 2,085.8
|                                                                                 |  |      |         |      |   |        
|Total liabilities and members equity                                            |  | $    | 4,023.1 |      | $ | 3,355.0
|                                                                                 |  |      |         |      |   |        



The accompanying notes
are an integral part of the combined financial statements.



F - 74



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Combined Statements of Income, Comprehensive Income and Members Equity

Years Ended December 31, 2003 and 2002



(in millions)



|                                                                                                |  |      |         |   |      |   |         |  
|----------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                                |  | 2003 |         |   | 2002 |  
|Revenues (A)                                                                                    |  |      |         |   |      |   |         |  
|Sales                                                                                           |  | $    | 2,424.8 |   |      | $ | 1,940.0 |  
|Sales to related parties (I)                                                                    |  |      | 895.8   |   |      |   | 936.7   |  
|                                                                                                |  |      |         |   |      |   |         |  
|                                                                                                |  |      | 3,320.6 |   |      |   | 2,876.7 |  
|                                                                                                |  |      |         |   |      |   |         |  
|Costs and expenses                                                                              |  |      |         |   |      |   |         |  
|Cost of goods sold                                                                              |  |      | 2,422.6 |   |      |   | 2,084.7 |  
|Selling, general administrative and other expenses                                              |  |      | 85.7    |   |      |   | 71.4    |  
|Provision for depreciation, depletion and amortization (A)                                      |  |      | 170.7   |   |      |   | 156.5   |  
|Special items (R)                                                                               |  |      |        |   |      |   | .4      |  
|Interest expense                                                                                |  |      | 2.1     |   |      |   | 2.9     |  
|Other expense                                                                                   |  |      | 14.8    |   |      |   | 6.4     |  
|                                                                                                |  |      |         |   |      |   |         |  
|                                                                                                |  |      | 2,695.9 |   |      |   | 2,322.3 |  
|                                                                                                |  |      |         |   |      |   |         |  
|Earnings                                                                                        |  |      |         |   |      |   |         |  
|Income before taxes on income                                                                   |  |      | 624.7   |   |      |   | 554.4   |  
|Provision for taxes on income (L)                                                               |  |      | 194.2   |   |      |   | 195.2   |  
|                                                                                                |  |      |         |   |      |   |         |  
|Income from operations                                                                          |  |      | 430.5   |   |      |   | 359.2   |  
|Less: Minority interests share                                                                 |  |      | .4      |   |      |   | .3      |  
|                                                                                                |  |      |         |   |      |   |         |  
|Income before cumulative effect of accounting change                                            |  |      | 430.1   |   |      |   | 358.9   |  
|Cumulative effect of accounting change (A and D)                                                |  |      | 15.7    |   |      |   | 4.7     |  
|                                                                                                |  |      |         |   |      |   |         |  
|Net income                                                                                      |  | $    | 445.8   |   |      | $ | 363.6   |  
|                                                                                                |  |      |         |   |      |   |         |  
|Other comprehensive income                                                                      |  |      |         |   |      |   |         |  
|Unrealized foreign currency translation adjustments                                             |  | $    | 439.1   |   |      | $ | 168.7   |  
|Change in minimum pension liability, net tax of $5.2 in 2003 and $14.3 in 2002 (K)              |  |      | 11.7    |   |      |   | (26.6   | )
|Unrecognized gains and losses on derivatives, net of tax of $14.7 in 2003 and $64.2 in 2002 (M) |  |      |         |   |      |   |         |  
|Net change from periodic revaluations                                                           |  |      | 78.4    |   |      |   | 79.0    |  
|Net amount reclassified to income                                                               |  |      | (45.8   | ) |      |   | 40.2    |  
|                                                                                                |  |      |         |   |      |   |         |  
|Other comprehensive income                                                                      |  |      | 483.4   |   |      |   | 261.3   |  
|                                                                                                |  |      |         |   |      |   |         |  
|Comprehensive income                                                                            |  | $    | 929.2   |   |      | $ | 624.9   |  
|                                                                                                |  |      |         |   |      |   |         |  
|Members equity (Q)                                                                             |  |      |         |   |      |   |         |  
|Balance at the beginning of the year                                                            |  | $    | 2,085.8 |   |      | $ | 1,749.3 |  
|Net income                                                                                      |  |      | 445.8   |   |      |   | 363.6   |  
|Capital contributions of members (I)                                                            |  |      |        |   |      |   | 103.0   |  
|Dividends paid to members                                                                       |  |      | (481.5  | ) |      |   | (391.4  | )
|Other comprehensive income                                                                      |  |      | 483.4   |   |      |   | 261.3   |  
|                                                                                                |  |      |         |   |      |   |         |  
|Balance at the end of the year                                                                  |  | $    | 2,533.5 |   |      | $ | 2,085.8 |  
|                                                                                                |  |      |         |   |      |   |         |  



The accompanying notes
are an integral part of the combined financial statements.



F - 75



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Combined Statements of Cash Flows

Years Ended December 31, 2003 and 2002



(in millions)



|                                                                                      |  |      |        |   |      |   |        |  
|------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                                                      |  | 2003 |        |   | 2002 |  
|Cash from operations                                                                  |  |      |        |   |      |   |        |  
|Net income                                                                            |  | $    | 445.8  |   |      | $ | 363.6  |  
|Adjustments to reconcile net income to cash from operations                           |  |      |        |   |      |   |        |  
|Depreciation, depletion and amortization                                              |  |      | 170.7  |   |      |   | 156.5  |  
|Equity earnings net of dividends                                                      |  |      | (2.0   | ) |      |   | (2.3   | )
|Noncash special items                                                                 |  |      |       |   |      |   | .4     |  
|Change in deferred income taxes                                                       |  |      | 4.5    |   |      |   | (2.3   | )
|Minority interests                                                                    |  |      | .4     |   |      |   | .3     |  
|(Gains) Losses from investing activities                                              |  |      | 2.4    |   |      |   |       |  
|Cumulative effect of accounting change                                                |  |      | (15.7  | ) |      |   | 4.7    |  
|Changes in assets and liabilities, excluding effects of acquisitions and divestitures |  |      |        |   |      |   |        |  
|Reduction (increase) in receivables                                                   |  |      | (3.2   | ) |      |   | 46.8   |  
|Reduction (increase) in inventories                                                   |  |      | 12.3   |   |      |   | 48.5   |  
|(Increase) reduction in prepaid expenses and other current assets                     |  |      | (48.1  | ) |      |   | .4     |  
|Increase (reduction) in accounts payable and accrued expenses                         |  |      | (.7    | ) |      |   | 8.4    |  
|(Reduction) increase in taxes, including taxes on income                              |  |      | 18.6   |   |      |   | (67.0  | )
|Net change in noncurrent assets and liabilities                                       |  |      | (2.2   | ) |      |   | (69.2  | )
|(Increase) reduction in net assets held for sale                                      |  |      | 3.2    |   |      |   | 27.6   |  
|                                                                                      |  |      |        |   |      |   |        |  
|Cash from operations                                                                  |  |      | 586.0  |   |      |   | 516.4  |  
|                                                                                      |  |      |        |   |      |   |        |  
|Cash from financing activities                                                        |  |      |        |   |      |   |        |  
|Net changes in short-term borrowing                                                   |  |      | 71.0   |   |      |   | (73.3  | )
|Additions to long-term debt                                                           |  |      | 482.3  |   |      |   | 140.1  |  
|Payments on long-term debt                                                            |  |      | (501.6 | ) |      |   | (135.9 | )
|Partners cash capital contributions (I)                                               |  |      |       |   |      |   | 41.0   |  
|Dividends paid to partners                                                            |  |      | (481.5 | ) |      |   | (391.0 | )
|Dividends paid to minority interests                                                  |  |      |       |   |      |   | (.4    | )
|                                                                                      |  |      |        |   |      |   |        |  
|Cash used for financing activities                                                    |  |      | (429.8 | ) |      |   | (419.5 | )
|                                                                                      |  |      |        |   |      |   |        |  
|Cash from investing activities                                                        |  |      |        |   |      |   |        |  
|Capital expenditures                                                                  |  |      | (170.2 | ) |      |   | (112.2 | )
|Net changes in short-term investments excluding cash equivalents                      |  |      | (2.9   | ) |      |   |       |  
|Proceeds from long-term notes receivables                                             |  |      | 5.0    |   |      |   |       |  
|Sale of subsidiaries                                                                  |  |      |       |   |      |   | 11.0   |  
|Other                                                                                 |  |      |       |   |      |   | (1.2   | )
|                                                                                      |  |      |        |   |      |   |        |  
|Cash used for investing activities                                                    |  |      | (168.1 | ) |      |   | (102.4 | )
|                                                                                      |  |      |        |   |      |   |        |  
|Effect of exchange rate changes on cash                                               |  |      | 13.8   |   |      |   | 3.7    |  
|                                                                                      |  |      |        |   |      |   |        |  
|Net change in cash and cash equivalents                                               |  |      | 1.9    |   |      |   | (1.8   | )
|Cash and cash equivalents                                                             |  |      |        |   |      |   |        |  
|Beginning of year                                                                     |  |      | 96.4   |   |      |   | 98.2   |  
|                                                                                      |  |      |        |   |      |   |        |  
|End of year                                                                           |  | $    | 98.3   |   |      | $ | 96.4   |  
|                                                                                      |  |      |        |   |      |   |        |  



The accompanying notes
are an integral part of the combined financial statements.



F - 76



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



|A. | Summary of Significant Accounting Policies
|-- | ------------------------------------------



Principles of Combination



The combined financial statements of Alcoa World Alumina and Chemicals (AWAC) have been prepared pursuant to a Formation Agreement dated
December 21, 1994 between Alcoa Inc. (Alcoa) and WMC Limited of Melbourne, Australia (WMC). Investments in other entities are accounted for principally on the equity basis.



Effective December 11, 2002, WMC shareholders voted to create two entities,
WMC Resources Ltd and Alumina Limited. Resulting in existing WMC Shareholders receiving shares in a new listed entity WMC Resources Ltd, which holds the non-AWAC businesses. Alumina Limiteds (formerly WMC) only
significant asset is the 40% interest in AWAC.



The amounts
presented within AWAC are stated at historical cost. All transactions between entities included in the combined financial statements have been eliminated.



The combined financial statements are prepared in conformity with generally accepted accounting principles and require management to make certain
estimates and assumptions. These may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. They may also affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates upon subsequent resolution of some matters.



Cash and Cash Equivalents



AWAC considers all highly liquid securities with a maturity of three months or less when purchased to be cash equivalents.



Inventory Valuation



Inventories are carried at the lower of cost or market, with cost for a
substantial portion of U.S. inventories determined under the last-in, first-out (LIFO) method. The cost of other inventories is principally determined under the average cost method. See Note E for additional detail.



Revenue Recognition



AWAC recognizes revenue when title, ownership, and risk of loss pass to the
customer, in accordance with the provision of the U.S. Securities and Exchange Commissions Staff Accounting Bulletin no. 101 and SAB 104, Revenue Recognition in Financial Statements.



Deferred Alumina Sales Revenue



AWAC periodically enters into long-term supply contracts with alumina and
aluminum customers and receives advance payments for product to be delivered in future periods. These advance payments are recorded as deferred revenue and revenue is recognized as shipments are made and title, ownership, and risk of loss pass to
the customer during the term of the contracts. A prepayment of $240 related to the agreement is being amortized over the life of the contract based on the tonnage shipped.



F - 77



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



Properties, Plants and Equipment



Properties, plants and equipment are recorded at cost. Depreciation is
recorded principally on the straight-line method at rates based on the estimated useful lives of the assets, averaging 33 years for structures, and between 5 and 25 years for machinery and equipment. Gains or losses from the sale of assets are
included in other income. Repairs and maintenance are charged to expense as incurred. Interest related to construction of qualifying assets is capitalized as part of construction costs. Depletion is taken over the periods the estimated mineral,
reserves are extracted. See Note F for additional detail.



Amortization of Intangibles



Intangible assets
with finite useful lives are amortized generally on a straight-line basis over the periods benefited, with a weighted average useful life of 10 years. Beginning January 1, 2002 goodwill and intangible assets with indefinite useful lives are no
longer amortized. Prior to 2002, goodwill and indefinite-lived intangible assets were amortized over periods not exceeding 40 years. The carrying values of goodwill and other intangible assets with indefinite useful lives are tested at least
annually for impairment. If it is determined that the carrying value exceeds the fair value, an impairment loss is recognized. See recently issued and adopted accounting standards below and Note G for additional detail.



Environmental Expenditures



Expenditures for current operations are expensed or capitalized, as
appropriate. Expenditures relating to existing conditions caused by past operations, and which do not contribute to future revenues, are expensed. Liabilities are recorded when remedial efforts are probable and the costs can be reasonably estimated.
The liability may include elements of costs such as site investigations, consultant fees, feasibility studies, outside contractor expenses and monitoring expenses. Estimates are not discounted or reduced by potential claims for recovery. Claims for
recovery are recognized when received. The estimates also include costs related to other potentially responsible parties to the extent AWAC has reason to believe such parties will not fully pay their proportional share. The liability is periodically
reviewed and adjusted to reflect current remediation progress, prospective estimates of required activity, and other factors that may be relevant, including changes in technology or regulations. See Note P for additional information.



Foreign Currency



The local currency is the functional currency for AWACs operations
outside the U.S., except in Brazil, Jamaica and Suriname, which use the U.S. dollar. The determination of the functional currency in these countries is made based on the appropriate economic and management indicators.



Derivatives and Hedging



AWAC accounts for derivatives in accordance with Statement of Financial
Accounting Standards (SFAS) No. 133 Accounting for Derivative Instruments and Hedging Activities,as amended. The fair values of all outstanding derivative instruments are recorded on the balance sheet in other current and
noncurrent assets and liabilities.



Derivatives are held as
part of a formally documented risk management (hedging) program. AWACs hedging activities are subject to the management direction and control of the Alcoa Strategic Risk Management Committee (SRMC). SRMC is composed of the Alcoa
chief executive officer, the Alcoa chief financial officer and other Alcoa officers and employees that the Alcoa chief executive officer selects. SRMC reports to the Alcoa Board of Directors on the scope of



F - 78



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



its derivative activities. All derivatives are straightforward and are held for purposes other than trading. They are used primarily to mitigate uncertainty
and volatility, and cover underlying exposures. AWAC measures hedge effectiveness by formally assessing, at least quarterly, the historical and probable future high correlation of changes in the fair value or expected future cash flows of the hedged
item. When applicable, the ineffective portions are recorded in other income or expense in the current period. If the hedging relationship ceases to be highly effective or it becomes probable that an expected transaction will no longer occur, gains
or losses on the derivative are recorded in other income or expense.



Changes in the fair value of derivatives are recorded in current earnings along with the change in the fair value of the underlying hedged item if the derivative is designated as a fair value hedge or in other comprehensive income if the
derivative is designated as a cash flow hedge. If no hedging relationship is designated, the derivative is marked to market through earnings.



Cash flows from financial instruments are recognized in the statement of cash flows in a manner consistent with the underlying transactions. See Note M
for additional information.



Exploration Costs



Exploration costs are generally deferred and amortized
over the period during which the resources are extracted on a production basis. Applicable exploration costs are charged to expense in the year any program is abandoned.



Income Taxes



AWAC consists of a variety of different tax-paying legal entities. Income taxes are accrued and recorded on the financial statements of entities within
AWAC except for entities that are limited liability companies (LLC). LLC income is taxable to the members that hold the LLC interest (for U.S. federal and most state income tax purposes). Therefore, current and deferred U.S. and most
state tax assets and liabilities of the LLCs are recorded in the financial statements of the members and, thus, are not reflected in AWACs financial statements. See Note L for additional detail.



Stock-Based Compensation



AWAC accounts for stock-based compensation in accordance with the provisions
of Accounting Principles Board Opinion No. 25 Accounting for Stock Issued to Employeesand related interpretations using the intrinsic value method which resulted in no compensation costs for options granted. If compensation cost had been
recognized for options granted in 2003 and 2002 under the provisions of SFAS No. 123 and No. 148, AWACs net income would not have been materially different. See Note I for additional detail.



Recently Issued and Adopted Accounting Standards



Effective December 31, 2003, AWAC adopted SFAS No. 132, Employers
Disclosures about Pensions and Other Postretirement Benefits - an amendment of FASB Statements No. 87, 88, and 106.This standard requires additional disclosures about an employers pension plans and postretirement benefit plans such as:
the types of plan assets, investment strategy, measurement date, plan obligations, cash flows and components of net periodic benefit cost recognized during interim periods. See Note K to the combined Financial Statements for additional details.



F - 79



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



Effective December 31, 2003, AWAC adopted Financial Accounting Standards Board (FASB)
Interpretation No. 46 R (FIN46R), Consolidation of Variable Interest Entities - an Interpretationof ARB 51.FIN46R addresses consolidation and disclosure by business enterprises of variable interest entities. This standard
has no impact on AWACS financial statements.



Effective
January 1, 2002, AWAC adopted SFAS No. 142, Goodwill and Other Intangible Assetsfor existing goodwill and other intangible assets. This standard eliminated the amortization of goodwill and intangible assets with indefinite useful lives and
required annual testing for impairment. This standard required the assignment of assets acquired and liabilities assumed including goodwill to reporting units for purposes of goodwill impairment testing. Upon adoption of SFAS No. 142 on January 1,
2002, AWAC recognized a cumulative effect gain of $4.7, net of tax, associated with the write-off of negative goodwill.



Effective January 1, 2002, AWAC adopted the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,which
established accounting and reporting standards for the impairment and disposal of long lived assets and discontinued operations. See Note R for additional information.



Effective December 31, 2002, AWAC adopted Financial Accounting Standards Board (FASB) Interpretation No.45
(FIN 45), Guarantors Accounting and Disclosure Requirements forGuarantees, Including Indirect Guarantees of Indebtedness of Others.FIN 45 is an interpretation of FASB Statements Nos. 5, 57 and 107. FIN 45 elaborated
on the disclosures to be made by a guarantor about its obligations under certain guarantees that it has issued and it required the recognition of a liability at fair value by a guarantor at the inception of a guarantee. The disclosure requirements
of FIN 45 were effective as of December 31, 2002. See Note O for additional details. The initial recognition and measurement provisions of FIN 45 were effective on a prospective basis for all guarantees issued or modified after December 31, 2002.
AWAC has not issued or modified any material guarantees since December 31, 2002.



Effective December 31, 2002, AWAC adopted the disclosure requirements of SFAS No. 148, Accounting for Stock-Based CompensationTransition and Disclosurean amendment of FASB Statement No. 123.SFAS
No. 148 provided alternative methods of transition for entities that voluntarily changed to the fair value method of accounting for stock-based employee compensation, and it also amended the disclosure provisions of SFAS No. 123 to require prominent
disclosure about the effects of an entitys accounting policy decisions with respect to stock-based employee compensation. This standard has no impact on AWACs financial statements.



Effective January 1, 2003, AWAC adopted SFAS No. 146, Accounting for
Costs Associated with Exit or Disposal Activities.SFAS No. 146 nullified Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exitan
Activity,under which a liability for an exit cost was recognized at the date of an entitys commitment to an exit plan. SFAS No. 146 required that a liability for a cost associated with an exit or disposal activity be recognized at fair
value when the liability is incurred. The provisions of this statement will be applied to any future exit or disposal activities.



F - 80



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



Reclassification



Certain amounts in previously issued financial statements were reclassified to conform to 2003 presentations. See Note C for
further details.



|B. | Nature of Operations
|-- | --------------------



In December 1994 and January 1995, Alcoa and Alumina Limited entered into a multi-step transaction to restructure and combine the ownership of their
respective worldwide bauxite, alumina and alumina-based chemicals businesses and investments into a group of companies known collectively as AWAC. AWAC is owned 60% by Alcoa and 40% by Alumina Limited



Primarily all bauxite mined by AWAC entities is refined into alumina by AWAC
through a chemical process. The alumina is then further processed into alumina-based chemicals (See Note C below) or is sold to customers to be smelted into primary aluminum. Approximately 48% and 47% of AWACs respective 2003 and 2002 alumina
production was sold to Alcoa. AWAC sells alumina-based chemicals to customers in a broad spectrum of industries for use in refractories, ceramics, abrasives, chemical processing and other specialty applications. In addition, AofA, the largest entity
within AWAC, operates integrated aluminum facilities in Australia including mining, refining and smelting operations. Approximately 76% and 77% of AofAs 2003 and 2002 revenues of $1,889 and $1,682 respectively, were derived from alumina, and
the balance was derived principally from primary aluminum.



AWAC consists of the following entities within the noted worldwide markets:



| | 1. | Two LLCs, which hold all of Alcoas and Alumina Limiteds bauxite, alumina and industrial chemicals operations in Guinea, India, Japan, China and the U.S.; all of
Alcoas bauxite and alumina operations in Jamaica; the bauxite and alumina operations in St. Croix; and the majority of Alcoas bauxite and alumina shipping operations. In June 2002, AWAC sold the St. Croix facility. See Note R for
additional detail.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | AofA, including its aluminum smelting operations.
| | -- | -------------------------------------------------



| | 3. | All of Alcoas and Alumina Limiteds interest in Alcoa Chemie GmbH, Alcoa Chemie Nederland, and Alumina Espanola S.A. which represent all of Alcoas and Alumina
Limiteds alumina-based chemicals businesses located in Germany, the Netherlands and Spain.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | Abalco, S.A. (Abalco), an entity formed in Brazil to hold 35% of Alcoa Aluminios (Aluminio) interest in the Alumar alumina refinery
(Alumar) and 35% of Aluminios interest in Mineracao Rio do Norte S.A. (MRN), a bauxite mine that supplies bauxite to the Alumar refinery. The 35% interest is the estimated capacity necessary to fulfill Aluminios
export alimina sales.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F - 81



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



The following summarizes the concentrations of sales and net assets by major geographic region.



|            |  |      |         |      |   |        
|----------- |  | ---- | ------- | ---- | - | -------
|            |  | 2003 |         | 2002
|Sales       |  |      |         |      |   |        
|Australia   |  | $    | 1,743.6 |      | $ | 1,567.0
|U.S.        |  |      | 1,159.8 |      |   | 981.0  
|Other       |  |      | 417.2   |      |   | 328.7  
|            |  |      |         |      |   |        
|Total sales |  | $    | 3,320.6 |      | $ | 2,876.7
|            |  |      |         |      |   |        
|Net assets  |  |      |         |      |   |        
|Australia   |  | $    | 1,691.3 |      | $ | 1,275.8
|U.S.        |  |      | 542.6   |      |   | 573.6  
|Other       |  |      | 307.4   |      |   | 242.1  
|            |  |      |         |      |   |        
|Total sales |  | $    | 2,541.3 |      | $ | 2,091.5
|            |  |      |         |      |   |        



|C. | Assets Held for Sale
|-- | --------------------



During 2002, AWAC management performed a portfolio review of its businesses and markets they serve. As a result of this review, AWAC committed to a plan
to divest certain businesses that were not meeting initial growth and return measures. As part of this review, Alcoa Specialty Chemicals (ASC) was identified for sale.



ASC has annual revenues of approximately $360 million, and employs approximately 800 people. ASCs global platform
consists of eleven operating facilities in six countries around the world. In addition to facilities in North America, Europe, Japan, and an equity stake in Australia, ASC operates production and processing centers in the growth markets of China and
India. ASCs products are sold into a wide range of well established end markets including the steel production, cement production, petrochemical, plastics, automotive, non-ferrous metal production, ceramics, carpet manufacturing and
electronics industries.



ASC, which was previously classified
as held and used, has been reclassified to held for sale on the Combined Balance Sheet rather than discontinued operations, due to the expectation that Alcoa will enter into a supply agreement in connection with the sale of these businesses. All
prior financial information has also been reclassified to reflect this treatment.



F - 82



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



The major classes of assets and liabilities of operations held for sale in the Combined Balance Sheet
are as follows:



|                                              |  |      |       |      |   |      
|--------------------------------------------- |  | ---- | ----- | ---- | - | -----
|                                              |  | 2003 |       | 2002
|Assets                                        |  |      |       |      |   |      
|Receivables                                   |  | $    | 45.8  |      | $ | 31.6 
|Inventories                                   |  |      | 37.0  |      |   | 32.9 
|Properties, plants and equipment, net         |  |      | 127.2 |      |   | 130.8
|Other assets                                  |  |      | 27.0  |      |   | 24.9 
|                                              |  |      |       |      |   |      
|Total assets held for sale                    |  | $    | 237.0 |      | $ | 220.2
|                                              |  |      |       |      |   |      
|Liabilities                                   |  |      |       |      |   |      
|Accounts payable and accrued expenses         |  | $    | 17.6  |      | $ | 12.4 
|Other liabilities                             |  |      | 23.1  |      |   | 5.9  
|                                              |  |      |       |      |   |      
|Total liabilities of operations held for sale |  | $    | 40.7  |      | $ | 18.3 
|                                              |  |      |       |      |   |      



|D. | Asset Retirement Obligations
|-- | ----------------------------



Effective January 1, 2003, AWAC adopted Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations.Under this new standard, AWAC recognized a reduction in liabilities, at fair value, of approximately $12.5 at January 1, 2003, for asset retirement obligations (AROs), consisting primarily of costs associated with
spent pot lining disposal, bauxite residue disposal, mine reclamation and landfills based on a discounted cash flow model. These costs reflect the legal obligations associated with the normal operation of AWACs bauxite mining, alumina
refining, and aluminum smelting facilities. AWAC had previously recorded liabilities for these costs on an undiscounted basis. Additionally, AWAC capitalized certain asset retirement costs by increasing the carrying amount of related long-lived
assets, primarily machinery and equipment, and recorded associated accumulated depreciation from the time the original assets were placed into service. At January 1, 2003, AWAC increased the net properties, plants and equipment by $10.4, reduced
liabilities by $12.5 as noted above and, recognized net deferred tax liabilities of $7.2.



The cumulative effect adjustment recognized upon adoption of this standard was a gain of $15.7. Net income for the year of 2002 would not have been materially different if this standard had been adopted effective
January 1, 2002.



F - 83



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes toCombined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



The changes in the carrying amount of AROs for the year ended December 31, 2002, as if this
standard had been adopted effective January 1, 2002, follow:



|                                       |  |      |      |   |                 |   |      |  
|-------------------------------------- |  | ---- | ---- | - | --------------- | - | ---- | -
|                                       |  | 2003 |      |   | (Pro forma)2002 |  
|Balance at beginning of year           |  | $    | 56.6 |   |                 | $ | 49.9 |  
|Accretion expense                      |  |      | 4.9  |   |                 |   | 2.9  |  
|Payments and liabilities incurred, net |  |      | (5.2 | ) |                 |   | (1.2 | )
|Translation and other                  |  |      | (4.6 | ) |                 |   | 5.0  |  
|                                       |  |      |      |   |                 |   |      |  
|Balance at end of year                 |  | $    | 51.7 |   |                 | $ | 56.6 |  
|                                       |  |      |      |   |                 |   |      |  



In addition to the
AROs discussed above, AWAC may have other obligations in the event of a permanent plant shutdown. However, these plant assets have indeterminate lives and, therefore, the associated AROs are not reasonably estimable and liabilities
cannot be established



|E. | Inventories
|-- | -----------



|                        |  |      |       |      |   |      
|----------------------- |  | ---- | ----- | ---- | - | -----
|                        |  | 2003 |       | 2002
|Finished goods          |  | $    | 4.1   |      | $ | 6.2  
|Work-in-process         |  |      | 20.0  |      |   | 17.4 
|Bauxite and alumina*    |  |      | 118.8 |      |   | 116.3
|Purchased raw materials |  |      | 86.8  |      |   | 70.3 
|Operating supplies      |  |      | 93.4  |      |   | 73.5 
|                        |  |      |       |      |   |      
|                        |  | $    | 323.1 |      | $ | 283.7
|                        |  |      |       |      |   |      



|* | Consists of 45% and 25% in the raw material state, 32% and 31% in work-in-process and 24% and 43% in finished goods at December 31, 2003 and 2002, respectively.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



Approximately 13% of total inventories at
December 31, 2003 and 2002, were valued on a LIFO basis. If valued on an average cost basis, total inventories would have been $35.2 and $31.2 higher at the end of 2003 and 2002, respectively. During 2002, LIFO inventory quantities were reduced,
which resulted in a partial liquidation of the LIFO basis. The impact of this liquidation increased the 2002 net income by $4.3 net of tax. No such LIFO liquidation occurred in 2003.



|F. | Properties, Plants and Equipment
|-- | --------------------------------



|                                             |  |      |         |      |   |        
|-------------------------------------------- |  | ---- | ------- | ---- | - | -------
|                                             |  | 2003 |         | 2002
|Land and land rights, including mines        |  | $    | 111.2   |      | $ | 89.1   
|Structures                                   |  |      | 1,519.5 |      |   | 1,260.9
|Machinery and equipment                      |  |      | 3,537.5 |      |   | 2,847.7
|                                             |  |      |         |      |   |        
|                                             |  |      | 5,168.2 |      |   | 4,197.7
|Less: Accumulated depreciation and depletion |  |      | 3,048.4 |      |   | 2,464.1
|                                             |  |      |         |      |   |        
|                                             |  |      | 2,119.8 |      |   | 1,733.6
|Construction work in progress                |  |      | 202.7   |      |   | 156.1  
|                                             |  |      |         |      |   |        
|                                             |  | $    | 2,322.5 |      | $ | 1,889.7
|                                             |  |      |         |      |   |        



F - 84



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



|G. | Other Noncurrent Assets and Deferred Charges
|-- | --------------------------------------------



|                                       |  |      |       |      |   |      
|-------------------------------------- |  | ---- | ----- | ---- | - | -----
|                                       |  | 2003 |       | 2002
|Deferred exploring and mining expenses |  | $    | 88.3  |      | $ | 60.1 
|Deferred tax asset                     |  |      | 101.7 |      |   | 97.5 
|Other noncurrent assets                |  |      | 246.9 |      |   | 186.2
|Goodwill                               |  |      | 28.6  |      |   | 27.8 
|Intangibles                            |  |      | .6    |      |   | 4.1  
|                                       |  |      |       |      |   |      
|                                       |  | $    | 466.1 |      | $ | 375.7
|                                       |  |      |       |      |   |      



|H. | Long-Term Debt
|-- | --------------



Amounts are principally related to mortgages, that mature in 2005.



In April of 2002, Alcoa refinanced its $2,000 revolving-credit agreement that was to expire in April 2002, into a
revolving-credit agreement that expired in April 2003 and wasnt renewed. Under this agreement, certain levels of net worth must be maintained. No amounts were outstanding under this agreement at December 31, 2003. At December 31, 2002
AofAs portion of these agreements totaled $250.



|I. | Related Party Transactions
|-- | --------------------------



AWAC is controlled by its majority owner, Alcoa. AWAC receives related party sales revenues for alumina and chemical products sold to:



|      |  |      |       |      |   |      
|----- |  | ---- | ----- | ---- | - | -----
|      |  | 2003 |       | 2002
|Alcoa |  | $    | 804.5 |      | $ | 854.7
|Other |  |      | 91.3  |      |   | 82.0 
|      |  |      |       |      |   |      
|      |  | $    | 895.8 |      | $ | 936.7
|      |  |      |       |      |   |      



The terms for all
transactions and agreements between related parties and AWAC are established by negotiation between the parties.



Certain entities within AWAC have entered into contractual agreements with Alcoa for employee services (principally related to employees of the U.S.
operations), an administrative services agreement, a commodity and foreign exchange hedging agreement and an alumina sales agreement. Total costs incurred by AWAC for these agreements were approximately $98.3 in 2003 and $95.3 in 2002. AWAC also has
a long-term bauxite purchase agreement with a partially-owned entity. Total purchases under this agreement were approximately $92.5 and $85.8 during 2003 and 2002 respectively.



AWAC entered into a similar arrangement with Inespal, a wholly-owned subsidiary of Alcoa, in 1999. Loans made by AWAC under
this agreement may be repaid at any time but have a maturity of one year. Because this agreement is less liquid then the agreement between AWAC and Alcoa,



F - 85



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes toCombined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



the net amount of loans receivable of $8.7 at December 31,2002, is included in other current assets. This agreement expired in January 2003.



Receivables from Alcoa, included in receivables from customers, totaled
$105.1 and $87.4 as of December 31, 2003 and 2002, respectively, while trade accounts payable to Alcoa totaled $42.9 and $42.4 at December 31, 2003 and 2002, respectively. Short-term borrowings include $105.7 and $18.5 as of December 31, 2003 and
2002, respectively, that were due to Alcoa.



In May 2001,
Alcoa entered into a loan agreement with AWAC whereby AW AC may borrow funds from Alcoa in various installments or draw downs. Each individual draw down has its own maturity not to exceed 60 days, and bears interest at the
rate for deposits in US dollars as determined by the British Bankers Association on the day of the borrowing. Outstanding amounts for this agreement was $103 and $9 at December 31, 2003 and 2002 respectively, which are also included in the
short-term borrowings listed above.



In 2003 and 2002, AW AC
paid $5.2 and $4.3, respectively for stock option exercises under Alcoas Long Term Stock Incentive Plan. These amounts were reflected as a dividend paid to partners, net of a tax benefit of $1.8 in 2003 and $1.5 in 2002.



In 2002, Alcoa made a non-cash capital contribution to AWAC consisting of a
$41.0 interest in Mineracao Rio do Norte (MRN) and a $21.0 interest in Halco Mining. In order to maintain its 40% interest in AWAC, Alumina Limited made total cash contributions in the amount of $41.0.



|J. | Lease Expense
|-- | -------------



Certain equipment, including process control hardware and software, as well as warehousing, office space and non-cancelable lease obligations are under
operating lease agreements. Total expense for all leases was $29.0 in 2003 and $33.9 in 2002. Under long-term leases, minimum annual rentals are $29.7 in 2004, $26.1 in 2005, $21.7 in 2006, $19.2 in 2007, $18.4 in 2008 and a total of $50.8 for 2009
and thereafter.



|K. | Pension Plans and Other Postretirement Benefits
|-- | -----------------------------------------------



Entities within AWAC maintain pension plans covering certain non-U.S. employees. Pension benefits generally depend upon length of service, job grade or
remuneration and certain other benefits. Substantially all benefits are paid through pension trusts that are sufficiently funded to ensure that all plans have adequate funds to pay benefits to retirees as they become due.



Entities within AWAC maintain health care and life insurance benefit plans
covering certain non-U.S. retired employees. Generally, the medical plans are unfunded and pay a percentage of medical expenses reduced by other coverages. Life benefits are generally provided by insurance contracts. The entities retain the right,
subject to existing agreements, to change or eliminate these benefits.



F - 86



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



The table below reflects the status of AWACs pension and postretirement benefit plans.



|                                                   |  |                  |       |   |                         |   |       |      |  |   |       |   |  |   |       |  
|-------------------------------------------------- |  | ---------------- | ----- | - | ----------------------- | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                   |  | Pension Benefits |       |   | Postretirement Benefits |  
|                                                   |  | 2003             |       |   | 2002                    |   |       | 2003 |  |   | 2002  |  
|Change in benefit obligation                       |  |                  |       |   |                         |   |       |      |  |   |       |   |  |   |       |  
|Benefit obligation at beginning of year            |  | $                | 497.1 |   |                         | $ | 445.8 |      |  | $ | 34.5  |   |  | $ | 33.7  |  
|Service cost                                       |  |                  | 26.3  |   |                         |   | 22.1  |      |  |   | .2    |   |  |   | .2    |  
|Interest cost                                      |  |                  | 29.6  |   |                         |   | 26.1  |      |  |   | 1.7   |   |  |   | 1.7   |  
|Amendments                                         |  |                  |      |   |                         |   | 4.5   |      |  |   |      |   |  |   |      |  
|Actuarial (gains) losses                           |  |                  | (4.8  | ) |                         |   | 10.8  |      |  |   | (.8   | ) |  |   | (.1   | )
|Participants contributions                        |  |                  | 15.0  |   |                         |   | 12.2  |      |  |   |      |   |  |   |      |  
|Benefits paid                                      |  |                  | (49.7 | ) |                         |   | (47.4 | )    |  |   | (1.0  | ) |  |   | (1.0  | )
|Exchange rate                                      |  |                  | 115.1 |   |                         |   | 23.0  |      |  |   |      |   |  |   |      |  
|                                                   |  |                  |       |   |                         |   |       |      |  |   |       |   |  |   |       |  
|Benefit obligation at end of year                  |  | $                | 628.6 |   |                         | $ | 497.1 |      |  | $ | 34.6  |   |  | $ | 34.5  |  
|                                                   |  |                  |       |   |                         |   |       |      |  |   |       |   |  |   |       |  
|Change in plan assets                              |  |                  |       |   |                         |   |       |      |  |   |       |   |  |   |       |  
|Fair value of plan assets at beginning of year     |  | $                | 491.3 |   |                         | $ | 504.2 |      |  | $ |      |   |  | $ |      |  
|Actual (loss) return on plan assets                |  |                  | 45.4  |   |                         |   | (19.8 | )    |  |   |      |   |  |   |      |  
|Employer contributions                             |  |                  | 35.7  |   |                         |   | 22.0  |      |  |   |      |   |  |   |      |  
|Plan participants contributions                   |  |                  | 15.0  |   |                         |   | 12.2  |      |  |   |      |   |  |   |      |  
|Benefits paid                                      |  |                  | (48 7 | ) |                         |   | (46.7 | )    |  |   |      |   |  |   |      |  
|Administrative expenses                            |  |                  | (.7   | ) |                         |   | (1.0  | )    |  |   |      |   |  |   |      |  
|Exchange rate                                      |  |                  | 99.3  |   |                         |   | 20.4  |      |  |   |      |   |  |   |      |  
|                                                   |  |                  |       |   |                         |   |       |      |  |   |       |   |  |   |       |  
|                                                   |  | $                | 637.3 |   |                         | $ | 491.3 |      |  | $ |      |   |  | $ |      |  
|                                                   |  |                  |       |   |                         |   |       |      |  |   |       |   |  |   |       |  
|Funded status                                      |  | $                | 8.7   |   |                         | $ | (5.8  | )    |  | $ | (34.6 | ) |  | $ | (34.5 | )
|Unrecognized net actuarial (gain) loss             |  |                  | 17.8  |   |                         |   | 36.2  |      |  |   | (32.4 | ) |  |   | (32.3 | )
|Unrecognized net prior service cost                |  |                  | 12.9  |   |                         |   | 16.8  |      |  |   |      |   |  |   |      |  
|                                                   |  |                  |       |   |                         |   |       |      |  |   |       |   |  |   |       |  
|Net amount recognized                              |  | $                | 39.4  |   |                         | $ | 47.2  |      |  | $ | (67.0 | ) |  | $ | (66.8 | )
|                                                   |  |                  |       |   |                         |   |       |      |  |   |       |   |  |   |       |  
|Amount recognized in the balance sheet consists of |  |                  |       |   |                         |   |       |      |  |   |       |   |  |   |       |  
|Prepaid benefit                                    |  | $                | 62.0  |   |                         | $ | 62.3  |      |  | $ |      |   |  | $ |      |  
|Accrued benefit liability                          |  |                  | (64.8 | ) |                         |   | (65.1 | )    |  |   | (67.0 | ) |  |   | (66.8 | )
|Accumulated other comprehensive loss               |  |                  | 32.7  |   |                         |   | 49.5  |      |  |   |      |   |  |   |      |  
|Intangible asset                                   |  |                  | 9.5   |   |                         |   | .5    |      |  |   |      |   |  |   |      |  
|                                                   |  |                  |       |   |                         |   |       |      |  |   |       |   |  |   |       |  
|Net amount recognized                              |  | $                | 39.4  |   |                         | $ | 47.2  |      |  | $ | (67.0 | ) |  | $ | (66.8 | )
|                                                   |  |                  |       |   |                         |   |       |      |  |   |       |   |  |   |       |  



The accumulated
benefit obligations for all defined benefit pension plans were $597.2 and $482.0 at December 31, 2003 and 2002, respectively.



The aggregate benefit obligation and fair value of plan assets for the pension plan with benefit obligations in excess of plan assets were $442.4 and
$390.0, respectively, as of December 31, 2003 and $315.0 and $261.9, respectively, as of December 31, 2002. The aggregate pension accumulated benefit obligation and fair value of plan assets with accumulated benefit obligations in excess of plan
assets were $416.9 and $390.0, respectively, as of December 31, 2003 and $306.0 and $261.9, respectively, at December 31, 2002.



F - 87



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



|                                         |  |                 |       |   |                        |   |       |      |  |   |      |   |  |   |      |  
|---------------------------------------- |  | --------------- | ----- | - | ---------------------- | - | ----- | ---- |  | - | ---- | - |  | - | ---- | -
|                                         |  | PensionBenefits |       |   | PostretirementBenefits |  
|                                         |  | 2003            |       |   | 2002                   |   |       | 2003 |  |   | 2002 |  
|Components of net periodic benefit costs |  |                 |       |   |                        |   |       |      |  |   |      |   |  |   |      |  
|Service cost                             |  | $               | 26.3  |   |                        | $ | 22.1  |      |  | $ | .2   |   |  | $ | .2   |  
|Interest cost                            |  |                 | 29.6  |   |                        |   | 26.1  |      |  |   | 1.7  |   |  |   | 1.7  |  
|Expected return on plan assets           |  |                 | (45.7 | ) |                        |   | (43.5 | )    |  |   |     |   |  |   |     |  
|Amortization of prior service cost       |  |                 | 1.7   |   |                        |   | 2.2   |      |  |   |     |   |  |   |     |  
|Recognized actuarial gains               |  |                 | 1.2   |   |                        |   | (2.1  | )    |  |   | (2.5 | ) |  |   | (2.8 | )
|                                         |  |                 |       |   |                        |   |       |      |  |   |      |   |  |   |      |  
|Net periodic benefit costs (income)      |  | $               | 13.1  |   |                        | $ | 4.8   |      |  | $ | (.6  | ) |  | $ | (.9  | )
|                                         |  |                 |       |   |                        |   |       |      |  |   |      |   |  |   |      |  



Assumptions



Weighted average assumptions used to determine benefit
obligations at December 31:



|                              |  |                  |   |  |                        |   |  |      |   |  |      |  
|----------------------------- |  | ---------------- | - |  | ---------------------- | - |  | ---- | - |  | ---- | -
|                              |  | Pension Benefits |   |  | PostretirementBenefits |  
|                              |  | 2003             |   |  | 2002                   |   |  | 2003 |   |  | 2002 |  
|Weighted average assumptions  |  |                  |   |  |                        |   |  |      |   |  |      |  
|Discount rate, at year end    |  | 5.33             | % |  | 5.59                   | % |  | 6.25 | % |  | 6.75 | %
|Rate of compensation increase |  | 3.95             | % |  | 4.69                   | % |  | 5.00 | % |  | 5.00 | %



Weighted average
assumptions used to determine the net cost for years ended December 31:



|                                         |  |                  |   |  |                        |   |  |      |   |  |      |  
|---------------------------------------- |  | ---------------- | - |  | ---------------------- | - |  | ---- | - |  | ---- | -
|                                         |  | Pension Benefits |   |  | PostretirementBenefits |  
|                                         |  | 2003             |   |  | 2002                   |   |  | 2003 |   |  | 2002 |  
|Weighted average assumptions             |  |                  |   |  |                        |   |  |      |   |  |      |  
|Discount rate, at year end               |  | 5.59             | % |  | 5.75                   | % |  | 6.75 | % |  | 7.25 | %
|Expected long-term return on plan assets |  | 8.43             | % |  | 8.50                   | % |  |     |   |  |     |  
|Rate of compensation increase            |  | 4.69             | % |  | 4.67                   | % |  | 5.00 | % |  | 5.00 | %



The expected return
on plan assets is based on historical performance as well as expected future rate of return on plan assets considering the current investment portfolio mix and the long-term investment strategy.



Assumed health care cost trend rates at December 31:



|                                                               |  |      |   |  |      |  
|-------------------------------------------------------------- |  | ---- | - |  | ---- | -
|                                                               |  | 2003 |   |  | 2002 |  
|Health care cost trend rate assumed for next year              |  | 9.0  | % |  | 11.0 | %
|Rate that the cost trend rate gradually declines to            |  | 5.0  | % |  | 5.0  | %
|Year that the rate reaches the rate it is assumed to remain at |  | 2009 |   |  | 2008 |  



F - 88



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



Assumed health care cost trend rates have a significant effect on the amounts reported for the health
care plan. A one-percentage point change in assumed health care cost trend rates would have the following effects:



|                                                        |  |                  |     |                  |   |      |  
|------------------------------------------------------- |  | ---------------- | --- | ---------------- | - | ---- | -
|                                                        |  | 1% PointIncrease |     | 1% PointDecrease |  
|Effect on total of service and interest cost components |  | $                | .3  |                  | $ | (.3  | )
|Effect on postretirement benefit obligations            |  |                  | 4.7 |                  |   | (3.8 | )



Plan assets



AWAC pension plans investment policy, weighted-average
asset allocations at December 31, 2003 and 2002, and target allocations for 2004, by asset category are as follows:



|                  |  |              |      |  |                             |      |  |             |   |  |     |  
|----------------- |  | ------------ | ---- |  | --------------------------- | ---- |  | ----------- | - |  | --- | -
|                  |  | Policy Range |      |  | Plan Assets at December 31, |      |  | Target 2004 |  
|                  |  |              | 2003 |  |                             | 2002 |  |            
|Asset Category    |  |              |      |  |                             |      |  |             |   |  |     |  
|Equity securities |  | 35-60        | %    |  | 59                          | %    |  | 49          | % |  | 50  | %
|Debt securities   |  | 30-55        | %    |  | 27                          | %    |  | 33          | % |  | 38  | %
|Real estate       |  | 5-15         | %    |  | 7                           | %    |  | 8           | % |  | 6   | %
|Other             |  | 0-15         | %    |  | 7                           | %    |  | 10          | % |  | 6   | %
|                  |  |              |      |  |                             |      |  |             |   |  |     |  
|                  |  |              |      |  | 100                         | %    |  | 100         | % |  | 100 | %
|                  |  |              |      |  |                             |      |  |             |   |  |     |  



The basic goal
underlying pension plan investment policy is to ensure that the assets of the plan, along with expected plan sponsor contributions, will be invested in a prudent manner to meet the obligations of the plan as those obligations come due. Investment
practices must comply with applicable laws and regulations.



Numerous asset classes with differing expected rates of return, return volatility and correlations are utilized to reduce risk by providing diversification. Debt securities comprise a significant portion of the portfolio due to their
plan-liability-matching characteristics and to address the plans cash flow requirements. Additionally, diversification of investments within each asset class is utilized to further reduce the impact of losses in simple investments. The use of
derivative instruments is permitted where appropriate and necessary for achieving overall investment policy objectives.



Cash Flows



AWAC expects to contribute $35.0 to its pension plans in 2004.



AWAC sponsors a number of defined contribution pension plans. Expenses were $10.3 in 2003, $6.3 and in 2002.



F - 89



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



|L. | Income Taxes
|-- | ------------



The combined financial statements of AWAC contain taxes for a variety of different tax-paying legal entities. Income taxes are accrued and recorded on the
financial statements for all entities in AWAC except where the organizational structure involves an LLC. LLC income is taxable to the corporate members who hold the LLC interests (for U.S. federal and most state income tax purposes).



The components of income before taxes on income were:



|        |  |      |       |   |      |   |       |  
|------- |  | ---- | ----- | - | ---- | - | ----- | -
|        |  | 2003 |       |   | 2002 |  
|U.S.    |  | $    | (81.3 | ) |      | $ | (66.0 | )
|Foreign |  |      | 706.0 |   |      |   | 620.4 |  
|        |  |      |       |   |      |   |       |  
|        |  | $    | 624.7 |   |      | $ | 554.4 |  
|        |  |      |       |   |      |   |       |  



The provision for
taxes on income consisted of:



|             |  |      |       |      |   |       |  
|------------ |  | ---- | ----- | ---- | - | ----- | -
|             |  | 2003 |       | 2002 |  
|Current      |  |      |       |      |   |       |  
|U.S. federal |  | $    | 2.7   |      | $ | 1.7   |  
|Foreign      |  |      | 187.0 |      |   | 195.8 |  
|             |  |      |       |      |   |       |  
|             |  |      | 189.7 |      |   | 197.5 |  
|Deferred     |  |      |       |      |   |       |  
|U.S. federal |  |      | 1.1   |      |   | .7    |  
|Foreign      |  |      | 3.4   |      |   | (3.0  | )
|             |  |      |       |      |   |       |  
|             |  |      | 4.5   |      |   | (2.3  | )
|             |  |      |       |      |   |       |  
|             |  | $    | 194.2 |      | $ | 195.2 |  
|             |  |      |       |      |   |       |  



Reconciliation of the
U.S. federal statutory rate to the effective rate follows.



|                            |  |      |   |  |      |  
|--------------------------- |  | ---- | - |  | ---- | -
|                            |  | 2003 |   |  | 2002 |  
|U.S. federal statutory rate |  | 35.0 | % |  | 35.0 | %
|Loss not taxed to AWAC      |  | 4.5  |   |  | 4.0  |  
|Taxes on foreign income     |  | (8.4 | ) |  | (3.8 | )
|                            |  |      |   |  |      |  
|Effective tax rate          |  | 31.1 | % |  | 35.2 | %
|                            |  |      |   |  |      |  



F - 90



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



The components of net deferred tax assets and liabilities at December 31 follow.



|                        |  |                    |      |      |                        |   |                   |  |   |                        |   |  |   |      
|----------------------- |  | ------------------ | ---- | ---- | ---------------------- | - | ----------------- |  | - | ---------------------- | - |  | - | -----
|                        |  | 2003               |      | 2002
|                        |  | DeferredTax Assets |      |      | DeferredTaxLiabilities |   | DeferredTaxAssets |  |   | DeferredTaxLiabilities
|Depreciation            |  | $                  |     |      |                        | $ | 237.2             |  | $ |                       |   |  | $ | 174.6
|Employee benefits       |  |                    | 31.4 |      |                        |   |                  |  |   | 48.8                   |   |  |   |     
|Loss provisions         |  |                    | 18.3 |      |                        |   |                  |  |   | 15.3                   |   |  |   |     
|Deferred income/expense |  |                    | 17.7 |      |                        |   | 74.9              |  |   | 12.2                   |   |  |   | 48.7 
|Tax loss carryforward   |  |                    | 20.2 |      |                        |   |                  |  |   | 12.1                   |   |  |   |     
|Derivatives and hedging |  |                    |     |      |                        |   | 19.4              |  |   |                       |   |  |   | 3.3  
|Other                   |  |                    | 2.2  |      |                        |   | 9.2               |  |   | 17.2                   |   |  |   | 29.5 
|                        |  |                    |      |      |                        |   |                   |  |   |                        |   |  |   |      
|                        |  |                    | 89.8 |      |                        |   | 340.7             |  |   | 105.6                  |   |  |   | 256.1
|Valuation allowance     |  |                    | (.2  | )    |                        |   |                  |  |   | (.2                    | ) |  |   |     
|                        |  |                    |      |      |                        |   |                   |  |   |                        |   |  |   |      
|                        |  | $                  | 89.6 |      |                        | $ | 340.7             |  | $ | 105.4                  |   |  | $ | 256.1
|                        |  |                    |      |      |                        |   |                   |  |   |                        |   |  |   |      



Of the total loss
carry forward benefits, $7.3 expires over the next 10 years, $12.9 over the next 20 years.



|M. | Derivatives and Other Financial Instruments
|-- | -------------------------------------------



The carrying values and fair values of AWACs financial instruments at December 31 follow.



|                          |  |               |       |           |   |               |  |           |      |  |   |     
|------------------------- |  | ------------- | ----- | --------- | - | ------------- |  | --------- | ---- |  | - | ----
|                          |  | 2003          |       | 2002     
|                          |  | CarryingValue |       | FairValue |   | CarryingValue |  | FairValue
|Cash and cash equivalents |  | $             | 98.3  |           | $ | 98.3          |  | $         | 96.4 |  | $ | 96.4
|Notes receivable          |  |               | 8.6   |           |   | 8.6           |  |           | 8.7  |  |   | 8.7 
|Short-term debt           |  |               | 115.4 |           |   | 115.4         |  |           | 43.6 |  |   | 43.6
|Long-term debt            |  |               | 7.2   |           |   | 7.2           |  |           | 4.0  |  |   | 4.0 



The methods used to
estimate the fair value of certain financial instruments follow.



Cash and Cash Equivalents, Notes Receivable, and Short-Term Debt



The carrying amount approximates fair value because of the short maturity of the instruments. The short-term debt weighted average interest rate is 1.23% in 2003 and 1.85% in 2002.



Noncurrent Receivables



The fair value of noncurrent receivables is based on anticipated cash flows
and approximates carrying value.



F - 91



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



Long-Term Debt



The fair value is based on interest rates that are currently available to Alcoa for issuance of debt with similar terms and
remaining maturities.



AWAC holds or purchases derivative
financial instruments, principally foreign exchange and commodity contracts, for purposes other than trading. Details of the fair values of the significant instruments follow.



|                                  |  |      |      |      |   |       |  
|--------------------------------- |  | ---- | ---- | ---- | - | ----- | -
|                                  |  | 2003 |      | 2002 |  
|Foreign currency                  |  | $    |     |      | $ | (10.1 | )
|Natural gas and other commodities |  |      | 32.7 |      |   | 18.2  |  



Cash Flow Hedges



Currencies



AWAC is subject to exposure from fluctuations in foreign currencies. Foreign
currency exchange contracts are used to hedge the variability in cash flows from the forecasted payment or receipt of currencies other than the functional currency. AWACs foreign currency contracts were principally used to purchase Australian
dollars. The U.S. dollar notional amount of all foreign currency contracts was $469.7 as of December 31, 2002. There were no outstanding contracts at the end of 2003.



Commodities



AWAC may elect to sell forward a portion of its anticipated alumina production. In addition, AWAC anticipates the continued requirement to purchase other
commodities such as natural gas, fuel oil and electricity for its operations. AWAC enters into futures and options contracts to reduce volatility in the price of these commodities.



For these cash flow hedge transactions, the fair values of the derivatives are recorded on the balance sheet. The effective
portion of the changes in the fair values of these derivatives are recorded in other comprehensive income and are reclassified to sales or cost of goods sold in the period in which earnings are impacted by the hedged items or in the period that the
transaction no longer qualifies as a cash flow hedge. There were no material transactions that ceased to qualify as a cash flow hedge in 2003 or 2002. These contracts cover periods commensurate with known or expected exposures, generally within
three years. Assuming market rates remain constant with the rates at December 31, 2003, $17.7 of the $21.3 loss included in other comprehensive income is expected to be recognized in earnings over the next twelve months. See Note Q for additional
details regarding accumulated other comprehensive income.



AWAC is exposed to credit loss in the event of nonperformance by counterparties on the above instruments, but does not anticipate nonperformance by any of the parties. Futures and options contracts are with creditworthy counterparties and
are further supported by cash, treasury bills or irrevocable letters of credit issued by carefully chosen banks. In addition, various master netting arrangements are in place with counterparties to facilitate settlement of gains and losses on these
contracts.



For further information on AWACs hedging and
derivative activities, see Note A.



F - 92



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



|N. | Cash Flow Information
|-- | ---------------------



Cash payments for interest and taxes follow.



|             |  |      |      |      |   |      
|------------ |  | ---- | ---- | ---- | - | -----
|             |  | 2003 |      | 2002
|Interest     |  | $    | 1.4  |      | $ | 1.0  
|Income taxes |  |      | 86.2 |      |   | 235.4
|             |  |      |      |      |   |      
|             |  | $    | 87.6 |      | $ | 236.4
|             |  |      |      |      |   |      



In 2002, Alcoa made a
non-cash capital contribution to AWAC consisting of a $41.0 interest in Mineracao Rio do Norte (MRN) and a $21.0 interest in Halco Mining.



|O. | Contingencies and Commitments
|-- | -----------------------------



AofA is party to a number of natural gas and electricity contracts that expire between 2003 and 2022. Under these take-or-pay contracts, AofA is obligated
to pay for a minimum amount of natural gas or electricity even if these commodities are not delivered. Commitments related to these contracts total $225.7 in 2004, $212.2 in 2005, $177.2 in 2006, $191.2 in 2007, $195.0 in 2008 and $2,358.8
thereafter. Amounts paid under these agreements were $266.5 and $178.3 for the years ended December 31, 2003 and 2002, respectively.



Various lawsuits and claims and proceedings have been or may be instituted or asserted against entities within AWAC, including those pertaining to
environmental, product liability, and safety and health matters. While the amounts claimed may be substantial, the ultimate liability cannot be determined now because of the considerable uncertainties that exist. Therefore, it is possible that
results of operations or liquidity in a particular period could be materially affected by certain contingencies. However, based on currently available facts, management believes that the disposition of matters that are pending or asserted will not
have a materially adverse effect on AWACs financial position.



Pursuant to the terms of the Formation Agreement, Alcoa and Alumina Limited have agreed to remain liable for Extraordinary Liabilities (as defined in the agreement) as well as for certain other pre-formation liabilities, such as existing
environmental conditions, to the extent of their pre-formation ownership of the company or asset with which the liability is associated.



During 2001, AWAC entered into a ten-year agreement with a vendor to provide process control hardware and software at a ten-year cost of approximately
$146.0.



F - 93



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



(dollars in millions)



|P. | Environmental
|-- | -------------



AWAC continues to participate in environmental assessments and cleanups at a number of locations, including operating facilities. A liability is recorded
for environmental remediation costs or damages when a cleanup program becomes probable and the costs or damages can be reasonably estimated. As assessments and cleanups proceed, the liability is adjusted based on progress in determining the extent
of remedial actions and related costs and damages. The liability can change substantially due to factors such as the nature and extent of contamination, changes in remedial requirements and technological changes. AWACs remediation reserve
balance at the end of 2003 and 2002 was $2.7 and $3.6 respectively, and reflects the most probable costs to remediate identified environmental conditions for which costs can be reasonably estimated.



|Q. | Members Equity
|-- | ---------------



AWACs capital represents the excess of AWACs assets over liabilities and minority interest. The components of capital consist of common stock,
participants equity, additional capital, accumulated other comprehensive loss and retained earnings. For detail by entity, see Appendix I.



The components of accumulated other comprehensive loss included in members equity were as follows:



|                                                   |  |      |       |   |      |   |        |  
|-------------------------------------------------- |  | ---- | ----- | - | ---- | - | ------ | -
|                                                   |  | 2003 |       |   | 2002 |  
|Cumulative foreign currency translation adjustment |  | $    | (96.6 | ) |      | $ | (535.8 | )
|Additional minimum pension liability, net of tax   |  |      | (23.0 | ) |      |   | (34.6  | )
|Unrealized losses on derivatives, net of tax       |  |      | 21.3  |   |      |   | (11.3  | )
|                                                   |  |      |       |   |      |   |        |  
|                                                   |  | $    | (98.3 | ) |      | $ | (581.7 | )
|                                                   |  |      |       |   |      |   |        |  



|R. | Special Items
|-- | -------------



During 2002 AWAC recorded net charges of $.4 in Special Items. The net charge related to asset impairments of $4.4 and employee termination and severance
costs of $6.9, off-set by reversals of prior restructuring charges of $10.9. AWAC substantially completed all of these actions during 2003.



A charge of $4.4 was recorded at Arkansas related to the impairment of various assets that have been permanently idle and are held for disposal. The
assets are no longer utilized in production and a reserve was established for the difference between the estimated proceeds from disposal and the book value of the assets.



In addition, employee termination and severance costs in the amount of $6.9, were recorded by AofA, related to approximately
110 employees who accepted severance packages as part of a voluntary workforce reduction.



F - 94



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Notes to Combined Financial Statements

December 31, 2003 and 2002



( dollars in millions)



As part of the sale of the St. Croix refinery in June 2002, AWAC was not required to assume any
environmental or shutdown costs that were originally estimated in the 2001 restructuring charge. Therefore, the remaining balance of the reserves established in 2001 in conjunction with the shutdown were reversed, since AWAC was relieved of all
future obligations associate with this location. Additionally, initial environmental reserve estimates with regards to the shutdown of the Suriname smelter and demolition of the Pt. Comfort Carbon plant were revised based on information currently
available. The total reversal associated with these actions was a benefit of $(9.8).



In 2001, Alumina Espanola made estimates of termination costs for 40 of its employees totaling approximately $2.9. During the third quarter of 2002, management reassessed the number of employees for which termination
costs will still be incurred. Based on that assessment, management determined that only 15 employees would generate termination costs for the Company. The difference between the original accrual and the 15 employees making up the current accrual is
attributable to changes in facts and circumstances in 2002 as a result of finding various alternatives which yielded less cost to the company. As a result, the reserve was reduced by $(1.1), to reflect an assessment based on information currently
available.



Of the remaining restructuring reserve balances at
December 31, 2002, $1.2 relates to the 2001 restructuring program, consisting of asset write-down costs for remediation and demolition.



During 2003, 15 employees were terminated in Alumina Espanola with payments totaling $1.6, remaining no additional employees of the initial 15 accrued for
at December 31, 2002.



Pretax restructuring charges consisted
of:



|                                        |  |                  |      |   |                                      |   |      |       |  |   |       |  
|--------------------------------------- |  | ---------------- | ---- | - | ------------------------------------ | - | ---- | ----- |  | - | ----- | -
|                                        |  | AssetWrite-Downs |      |   | EmployeeTerminationandSeveranceCosts |   |      | Total | 
|2002                                    |  |                  |      |   |                                      |   |      |       |  |   |       |  
|Reserve balance at January 1, 2002      |  | $                | 13.9 |   |                                      | $ | 4.8  |       |  | $ | 18.7  |  
|Total restructuring charges             |  |                  | 4.4  |   |                                      |   | 6.9  |       |  |   | 11.3  |  
|Reversals of 2001 restructuring charges |  |                  | (9.8 | ) |                                      |   | (1.1 | )     |  |   | (10.9 | )
|Cash payments                           |  |                  | (2.5 | ) |                                      |   | (3.2 | )     |  |   | (5.7  | )
|Noncash charges                         |  |                  | (4.8 | ) |                                      |   |     |       |  |   | (4.8  | )
|                                        |  |                  |      |   |                                      |   |      |       |  |   |       |  
|Reserve balance at December 31, 2002    |  | $                | 1.2  |   |                                      | $ | 7.4  |       |  | $ | 8.6   |  
|                                        |  |                  |      |   |                                      |   |      |       |  |   |       |  
|2003                                    |  |                  |      |   |                                      |   |      |       |  |   |       |  
|Cash payments                           |  | $                | (1.2 | ) |                                      | $ | (1.6 | )     |  | $ | (2.8  | )
|Noncash charges                         |  |                  |     |   |                                      |   | (.2  | )     |  |   | (.2   | )
|                                        |  |                  |      |   |                                      |   |      |       |  |   |       |  
|Reserve balance at December 31, 2003    |  | $                |     |   |                                      | $ | 5.6  |       |  | $ | 5.6   |  
|                                        |  |                  |      |   |                                      |   |      |       |  |   |       |  



F - 95



---

##### Table of Contents

Report of Independent Auditors

on Accompanying Combining Information



To the Members of the Strategic Council of

Alcoa World Alumina and Chemicals (AWAC)



The report on our audits of the combined financial statements of Alcoa World Alumina and
Chemicals at December 31, 2003 and 2002 and for the years then ended appears on page one of this document. These audits were conducted for the purpose of forming an opinion on the combined financial statements taken as a whole. The supplementary
combining information (Appendix 1) is presented for purposes of additional analysis of the combined financial statements rather than to present the financial position, results of operations and cash flows of the individual companies. Accordingly, we
do not express an opinion on the financial position, result of operations and cash flows of the individual companies. However, the combining information has been subjected to the auditing procedures applied in the audit of the combined financial
statements and, in our opinion, is fairly stated in all material respects in relation to the combined financial statements taken as a whole.



PricewaterhouseCoopers LLP



January 15, 2004



F - 96



---

##### Table of Contents

|                                                                            |  |           
|--------------------------------------------------------------------------- |  | ----------
|Alcoa World Alumina and Chemicals Combining
Balance Sheet December 31, 2003 |  | Appendix I



|                                                                             |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|---------------------------------------------------------------------------- |  | ------------- | ------- | ----------------- | - | --------------- |  | -------------------- | ---- | ------ | - | --------------- |  | --------- | ----- | ------------------------- | - | ----- | ----------- | - | ------- | -------------- | - | ----- | - |  | - | ------ | - |  | - | -------
|(in millions)                                                                |  | CombinedLLCs |         | Alcoa ofAustralia |   | AlcoaChemieGmbH |  | AlcoaChemieNederland |      | Abalco |   | AluminaEspanola |  | Sub Total |       | Intercompany Eliminations |   |       | Adjustments |   |         | Combined Total
|Assets                                                                       |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Current assets                                                               |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Cash and cash equivalents                                                    |  | $             | 7.1     |                   | $ | 42.8            |  | $                    | 17.7 |        | $ | 18.4            |  | $         | 7.8   |                           | $ | 5.0   |             | $ | 98.8    |                | $ |      |   |  | $ | (0.5   | ) |  | $ | 98.3   
|Receivables from customers, less allowances of $0.1 in 2003 and $1.0 in 2002 |  |               | 146.1   |                   |   | 196.1           |  |                      | 10.8 |        |   | 10.4            |  |           | 8.4   |                           |   | 34.6  |             |   | 406.4   |                |   | (35.2 | ) |  |   | (45.3  | ) |  |   | 325.9  
|Inventories                                                                  |  |               | 76.1    |                   |   | 215.4           |  |                      | 13.0 |        |   | 3.0             |  |           | 8.1   |                           |   | 44.7  |             |   | 360.3   |                |   | (0.2  | ) |  |   | (37.0  | ) |  |   | 323.1  
|Prepaid expenses and other current assets                                    |  |               | 70.5    |                   |   | 38.0            |  |                      | 2.3  |        |   | 0.3             |  |           | 5.0   |                           |   | 1.1   |             |   | 117.2   |                |   |      |   |  |   | (5.3   | ) |  |   | 111.9  
|                                                                             |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Total current assets                                                         |  |               | 299.8   |                   |   | 492.3           |  |                      | 43.8 |        |   | 32.1            |  |           | 29.3  |                           |   | 85.4  |             |   | 982.7   |                |   | (35.4 | ) |  |   | (88.1  | ) |  |   | 859.2  
|Investments                                                                  |  |               | 139.6   |                   |   | 8.4             |  |                      |     |        |   |                |  |           | 18.8  |                           |   |      |             |   | 166.8   |                |   |      |   |  |   | (28.5  | ) |  |   | 138.3  
|Properties, plants and equipment                                             |  |               | 536.7   |                   |   | 1,735.1         |  |                      | 22.4 |        |   | 15.0            |  |           | 61.1  |                           |   | 79.4  |             |   | 2,449.7 |                |   |      |   |  |   | (127.2 | ) |  |   | 2,322.5
|Other assets and deferred charges                                            |  |               | 129.7   |                   |   | 268.1           |  |                      | 1.1  |        |   | 0.1             |  |           | 14.8  |                           |   | 66.3  |             |   | 480.1   |                |   | 0.7   |   |  |   | (13.3  | ) |  |   | 466.1  
|Assets held for sale                                                         |  |               |        |                   |   |                |  |                      |     |        |   |                |  |           |      |                           |   |      |             |   |        |                |   |      |   |  |   | 237.0  |   |  |   | 237.0  
|                                                                             |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Total assets                                                                 |  | $             | 1,105.8 |                   | $ | 2,503.9         |  | $                    | 67.3 |        | $ | 47.2            |  | $         | 124.0 |                           | $ | 231.1 |             |   | 4,079.3 |                | $ | (36.1 | ) |  | $ | (20.1  | ) |  | $ | 4,023.1
|                                                                             |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Liabilities                                                                  |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Current liabilities                                                          |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Short-term borrowings                                                        |  | $             | 103.3   |                   | $ | 11.3            |  | $                    |     |        | $ |                |  | $         |      |                           | $ | 0.8   |             | $ | 115.4   |                | $ |      |   |  | $ |       |   |  | $ | 115.4  
|Accounts payable, trade                                                      |  |               | 174.5   |                   |   | 159.0           |  |                      | 7.2  |        |   | 3.0             |  |           | 2.8   |                           |   | 55.8  |             |   | 402.3   |                |   | (35.2 | ) |  |   | (14.9  | ) |  |   | 352.2  
|Accrued compensation                                                         |  |               | 5.1     |                   |   | 71.9            |  |                      | 1.4  |        |   | 0.7             |  |           | 0.3   |                           |   | 0.9   |             |   | 80.3    |                |   |      |   |  |   | 32.3   |   |  |   | 112.6  
|Taxes, including taxes on income                                             |  |               | 15.8    |                   |   | 30.3            |  |                      | 3.8  |        |   |                |  |           |      |                           |   |      |             |   | 49.9    |                |   |      |   |  |   | (6.2   | ) |  |   | 43.7   
|Deferred income taxes                                                        |  |               | 11.6    |                   |   | 86.3            |  |                      |     |        |   |                |  |           |      |                           |   |      |             |   | 97.9    |                |   | (0.1  | ) |  |   |       |   |  |   | 97.8   
|Other current liabilities                                                    |  |               | 22.0    |                   |   | 23.0            |  |                      | 1.9  |        |   | 2.5             |  |           | 0.4   |                           |   | 5.3   |             |   | 55.1    |                |   |      |   |  |   | 9.6    |   |  |   | 45.5   
|                                                                             |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Total current liabilities                                                    |  |               | 332.3   |                   |   | 381.8           |  |                      | 14.3 |        |   | 6.2             |  |           | 3.5   |                           |   | 62.8  |             |   | 800.9   |                |   | (35.3 | ) |  |   | 1.6    |   |  |   | 767.2  
|Long-term debt, less amount due within one year                              |  |               | 2.9     |                   |   |                |  |                      |     |        |   |                |  |           |      |                           |   | 4.5   |             |   | 7.4     |                |   |      |   |  |   | (0.2   | ) |  |   | 7.2    
|Accrued postretirement benefits                                              |  |               | 56.8    |                   |   | 6.6             |  |                      |     |        |   |                |  |           |      |                           |   |      |             |   | 63.4    |                |   |      |   |  |   |       |   |  |   | 63.4   
|Deferred alumina sales revenue                                               |  |               | 187.4   |                   |   |                |  |                      |     |        |   |                |  |           |      |                           |   |      |             |   | 187.4   |                |   |      |   |  |   |       |   |  |   | 187.4  
|Noncurrent liabilities                                                       |  |               | 17.5    |                   |   | 171.1           |  |                      | 8.2  |        |   | 0.3             |  |           | 1.0   |                           |   | 3.8   |             |   | 201.9   |                |   |      |   |  |   | (42.1  | ) |  |   | 159.8  
|Deferred income taxes                                                        |  |               | 0.3     |                   |   | 254.2           |  |                      |     |        |   | 1.7             |  |           | 0.6   |                           |   |      |             |   | 256.8   |                |   | (0.7  | ) |  |   |       |   |  |   | 256.1  
|Liabilities of operations held for sale                                      |  |               |        |                   |   |                |  |                      |     |        |   |                |  |           |      |                           |   |      |             |   |        |                |   |      |   |  |   | 40.7   |   |  |   | 40.7   
|                                                                             |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Total liabilities                                                            |  |               | 597.2   |                   |   | 813.7           |  |                      | 22.5 |        |   | 8.2             |  |           | 5.1   |                           |   | 71.1  |             |   | 1,517.8 |                |   | (36.0 | ) |  |   |       |   |  |   | 1,481.8
|Minority Interests                                                           |  |               | 7.9     |                   |   |                |  |                      |     |        |   |                |  |           |      |                           |   |      |             |   | 7.9     |                |   | (0.1  | ) |  |   |       |   |  |   | 7.8    
|                                                                             |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Members equity                                                              |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Total members equity                                                        |  |               | 500.7   |                   |   | 1,690.2         |  |                      | 44.8 |        |   | 39.0            |  |           | 118.9 |                           |   | 160.0 |             |   | 2,553.6 |                |   |      |   |  |   | (20.1  | ) |  |   | 2,533.5
|                                                                             |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Total liabilities and Members equity                                        |  | $             | 1,105.8 |                   | $ | 2,503.9         |  | $                    | 67.3 |        | $ | 47.2            |  | $         | 124.0 |                           | $ | 231.1 |             | $ | 4,079.3 |                | $ | (36.1 | ) |  | $ | (20.1  | ) |  | $ | 4,023.1
|                                                                             |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        



F - 97



---

##### Table of Contents

|                                                                            |  |           
|--------------------------------------------------------------------------- |  | ----------
|Alcoa World Alumina and Chemicals Combining
Balance Sheet December 31, 2002 |  | Appendix I



|                                                |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|----------------------------------------------- |  | ------------- | ------- | ----------------- | - | --------------- |  | -------------------- | ---- | ------ | - | --------------- |  | --------- | ----- | ------------------------- | - | ----- | ----------- | - | ------- | -------------- | - | ----- | - |  | - | ------ | - |  | - | -------
|(in millions)                                   |  | CombinedLLCs |         | Alcoa ofAustralia |   | AlcoaChemieGmbH |  | AlcoaChemieNederland |      | Abalco |   | AluminaEspanola |  | Sub Total |       | Intercompany Eliminations |   |       | Adjustments |   |         | Combined Total
|Assets                                          |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Current assets                                  |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Cash and cash equivalents                       |  | $             | 15.1    |                   | $ | 39.4            |  | $                    | 12.1 |        | $ | 16.5            |  | $         | 4.4   |                           | $ | 8.9   |             | $ | 96.4    |                | $ |      |   |  | $ |       |   |  | $ | 96.4   
|Receivables from customers, less allowances     |  |               | 118.6   |                   |   | 173.7           |  |                      | 10.4 |        |   | 8.3             |  |           | 7.3   |                           |   | 29.8  |             |   | 348.1   |                |   | (32.0 | ) |  |   | (31.6  | ) |  |   | 284.5  
|Inventories                                     |  |               | 64.1    |                   |   | 186.8           |  |                      | 10.9 |        |   | 4.1             |  |           | 5.8   |                           |   | 45.6  |             |   | 317.3   |                |   | (0.7  | ) |  |   | (32.9  | ) |  |   | 283.7  
|Prepaid expenses and other current assets       |  |               | 37.3    |                   |   | 28.5            |  |                      | 2.2  |        |   | 0.6             |  |           | 2.7   |                           |   | 10.3  |             |   | 81.6    |                |   |      |   |  |   | (5.6   | ) |  |   | 76.0   
|                                                |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Total current assets                            |  |               | 235.1   |                   |   | 428.4           |  |                      | 35.6 |        |   | 29.5            |  |           | 20.2  |                           |   | 94.6  |             |   | 843.4   |                |   | (32.7 | ) |  |   | (70.1  | ) |  |   | 740.6  
|Investments                                     |  |               | 140.2   |                   |   | 7.3             |  |                      |     |        |   |                |  |           | 18.3  |                           |   |      |             |   | 165.8   |                |   | (1.6  | ) |  |   | (35.4  | ) |  |   | 128.8  
|Properties, plants and equipment                |  |               | 512.6   |                   |   | 1,355.5         |  |                      | 21.3 |        |   | 13.2            |  |           | 65.6  |                           |   | 52.3  |             |   | 2,020.5 |                |   |      |   |  |   | (130.8 | ) |  |   | 1,889.7
|Other assets and deferred charges               |  |               | 133.3   |                   |   | 174.5           |  |                      | 0.6  |        |   |                |  |           | 15.0  |                           |   | 63.2  |             |   | 386.6   |                |   | 1.1   |   |  |   | (12.0  | ) |  |   | 375.7  
|Assets held for sale                            |  |               |        |                   |   |                |  |                      |     |        |   |                |  |           |      |                           |   |      |             |   |        |                |   |      |   |  |   | 220.2  |   |  |   | 220.2  
|                                                |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Total assets                                    |  | $             | 1,021.2 |                   | $ | 1,965.7         |  | $                    | 57.5 |        | $ | 42.7            |  | $         | 119.1 |                           | $ | 210.1 |             | $ | 3,416.3 |                | $ | (33.2 | ) |  | $ | (28.1  | ) |  | $ | 3,355.0
|                                                |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Liabilities                                     |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Current liabilities:                            |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Short-term borrowings                           |  | $             | 30.1    |                   | $ | 4.3             |  | $                    | 0.5  |        | $ | 0.1             |  | $         |      |                           | $ | 8.6   |             | $ | 43.6    |                | $ |      |   |  | $ |       |   |  | $ | 43.6   
|Accounts payable, trade                         |  |               | 150.3   |                   |   | 117.1           |  |                      | 4.3  |        |   | 3.0             |  |           | 2.1   |                           |   | 47.5  |             |   | 324.3   |                |   | (32.0 | ) |  |   | (10.0  | ) |  |   | 282.3  
|Accrued compensation                            |  |               | 6.5     |                   |   | 52.1            |  |                      | 1.0  |        |   | 0.6             |  |           | 0.2   |                           |   | 1.4   |             |   | 61.8    |                |   |      |   |  |   | (2.4   | ) |  |   | 59.4   
|Taxes, including taxes on income                |  |               | 19.8    |                   |   | 43.7            |  |                      | 6.3  |        |   | 0.7             |  |           | 1.6   |                           |   | 4.4   |             |   | 76.5    |                |   |      |   |  |   | (7.1   | ) |  |   | 69.4   
|Deferred income taxes                           |  |               | 5.7     |                   |   | 45.7            |  |                      |     |        |   |                |  |           |      |                           |   |      |             |   | 51.4    |                |   | (0.2  | ) |  |   |       |   |  |   | 51.2   
|Other current liabilities                       |  |               | 20.7    |                   |   | 60.6            |  |                      | 2.3  |        |   | 1.2             |  |           | 1.1   |                           |   | 1.6   |             |   | 87.5    |                |   |      |   |  |   | (4.7   | ) |  |   | 82.8   
|Long-term debt due within one year              |  |               |        |                   |   |                |  |                      | 2.0  |        |   |                |  |           |      |                           |   |      |             |   | 2.0     |                |   |      |   |  |   | (2.0   | ) |  |   |       
|                                                |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Total current liabilities                       |  |               | 233.1   |                   |   | 323.5           |  |                      | 16.4 |        |   | 5.6             |  |           | 5.0   |                           |   | 63.5  |             |   | 647.1   |                |   | (32.2 | ) |  |   | (26.2  | ) |  |   | 588.7  
|Long-term debt, less amount due within one year |  |               | 0.2     |                   |   |                |  |                      |     |        |   |                |  |           |      |                           |   | 4.0   |             |   | 4.2     |                |   |      |   |  |   | (0.2   | ) |  |   | 4.0    
|Accrued postretirement benefits                 |  |               | 58.2    |                   |   | 5.1             |  |                      |     |        |   |                |  |           |      |                           |   |      |             |   | 63.3    |                |   |      |   |  |   |       |   |  |   | 63.3   
|Deferred alumina sales revenue                  |  |               | 195.4   |                   |   |                |  |                      |     |        |   |                |  |           |      |                           |   |      |             |   | 195.4   |                |   |      |   |  |   |       |   |  |   | 195.4  
|Noncurrent liabilities                          |  |               | 11.3    |                   |   | 163.5           |  |                      | 6.4  |        |   | 0.3             |  |           | 0.8   |                           |   | 2.9   |             |   | 185.2   |                |   |      |   |  |   | 8.1    |   |  |   | 193.3  
|Deferred income taxes                           |  |               | 1.3     |                   |   | 197.8           |  |                      | 0.4  |        |   | 1.4             |  |           | 0.4   |                           |   |      |             |   | 201.3   |                |   | (0.8  | ) |  |   |       |   |  |   | 200.5  
|Liabilities of operations held for sale         |  |               |        |                   |   |                |  |                      |     |        |   |                |  |           |      |                           |   |      |             |   |        |                |   |      |   |  |   | 18.3   |   |  |   | 18.3   
|                                                |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Total liabilities                               |  |               | 499.5   |                   |   | 689.9           |  |                      | 23.2 |        |   | 7.3             |  |           | 6.2   |                           |   | 70.4  |             |   | 1,296.5 |                |   | (33.0 | ) |  |   |       |   |  |   | 1,263.5
|Minority Interests                              |  |               | 5.9     |                   |   |                |  |                      |     |        |   |                |  |           |      |                           |   |      |             |   | 5.9     |                |   | (0.2  | ) |  |   |       |   |  |   | 5.7    
|                                                |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Members equity                                 |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Total members equity                           |  |               | 515.8   |                   |   | 1,275.8         |  |                      | 34.3 |        |   | 35.4            |  |           | 112.9 |                           |   | 139.7 |             |   | 2,113.9 |                |   |      |   |  |   | (28.1  | ) |  |   | 2,085.8
|                                                |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        
|Total liabilities and Members equity           |  | $             | 1,021.2 |                   | $ | 1,965.7         |  | $                    | 57.5 |        | $ | 42.7            |  | $         | 119.1 |                           | $ | 210.1 |             | $ | 3,416.3 |                | $ | (33.2 | ) |  | $ | (28.1  | ) |  | $ | 3,355.0
|                                                |  |               |         |                   |   |                 |  |                      |      |        |   |                 |  |           |       |                           |   |       |             |   |         |                |   |       |   |  |   |        |   |  |   |        



F - 98



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Combining Statement of Income

|                             |  |           
|---------------------------- |  | ----------
|Year Ended December 31, 2003 |  | Appendix I



(in millions)



|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                 |   |      |           |  |                          |       |   |               |   |         |  |   |        |   |  |   |        
|------------------------------------------------------ |  | ------------- | ------- | - | ----------------- | - | --------------- |  | - | -------------------- | - |  | ------ | ---- | - | --------------- | - | ---- | --------- |  | ------------------------ | ----- | - | ------------- | - | ------- |  | - | ------ | - |  | - | -------
|                                                       |  | CombinedLLCs |         |   | Alcoa ofAustralia |   | AlcoaChemicGmbH |  |   | AlcoaChemieNederland |   |  | Abalco |      |   | AluminaEspanola |   |      | Sub Total |  | IntercompanyEliminations |       |   | CombinedTotal
|Revenues                                               |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                 |   |      |           |  |                          |       |   |               |   |         |  |   |        |   |  |   |        
|Sales                                                  |  | $             | 747.9   |   |                   | $ | 1,455.5         |  | $ | 99.0                 |   |  | $      | 56.9 |   |                 | $ |     |           |  | $                        | 65.5  |   |               | $ | 2,424.8 |  | $ |       |   |  | $ | 2,424.8
|Sales lo related parties                               |  |               | 555.2   |   |                   |   | 418.1           |  |   | 13.9                 |   |  |        | 20.5 |   |                 |   | 61.3 |           |  |                          | 187.4 |   |               |   | 1,256.4 |  |   | (360.6 | ) |  |   | 895.8  
|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                 |   |      |           |  |                          |       |   |               |   |         |  |   |        |   |  |   |        
|                                                       |  |               | 1,303.1 |   |                   |   | 1,873.6         |  |   | 112.9                |   |  |        | 77.4 |   |                 |   | 61.3 |           |  |                          | 252.9 |   |               |   | 3,681.2 |  |   | (360.6 | ) |  |   | 3.320.6
|Costs and expenses                                     |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                 |   |      |           |  |                          |       |   |               |   |         |  |   |        |   |  |   |        
|Cost of goods sold                                     |  |               | 1,208.4 |   |                   |   | 1,138.2         |  |   | 89.4                 |   |  |        | 47.8 |   |                 |   | 48.4 |           |  |                          | 251.0 |   |               |   | 2,783.2 |  |   | (360.6 | ) |  |   | 2.422.6
|Selling, general administrative and other expenses     |  |               | 34.3    |   |                   |   | 38.0            |  |   | 4.8                  |   |  |        | 4.3  |   |                 |   | 0.6  |           |  |                          | 3.7   |   |               |   | 85.7    |  |   |       |   |  |   | 85.7   
|Provision for depreciation, depletion and amortization |  |               | 46.5    |   |                   |   | 111.2           |  |   | 2.8                  |   |  |        | 1.2  |   |                 |   | 6.1  |           |  |                          | 2.9   |   |               |   | 170.7   |  |   |       |   |  |   | 170.7  
|Special items                                          |  |               |        |   |                   |   |                |  |   |                     |   |  |        |     |   |                 |   |     |           |  |                          |      |   |               |   |        |  |   |       |   |  |   |       
|Interest expense                                       |  |               | 0.8     |   |                   |   | 0.7             |  |   |                     |   |  |        |     |   |                 |   |     |           |  |                          | 0.6   |   |               |   | 2.1     |  |   |       |   |  |   | 2.1    
|Other Expense                                          |  |               | 2.4     |   |                   |   | 15.2            |  |   | (0.4                 | ) |  |        | (0.4 | ) |                 |   | (2.2 | )         |  |                          | 0.2   |   |               |   | 14.8    |  |   |       |   |  |   | 14.8   
|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                 |   |      |           |  |                          |       |   |               |   |         |  |   |        |   |  |   |        
|                                                       |  |               | 1,292.4 |   |                   |   | 1,303.3         |  |   | 96.6                 |   |  |        | 52.9 |   |                 |   | 52.9 |           |  |                          | 258.4 |   |               |   | 3,056.5 |  |   | (360.6 | ) |  |   | 2,695.9
|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                 |   |      |           |  |                          |       |   |               |   |         |  |   |        |   |  |   |        
|Earnings                                               |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                 |   |      |           |  |                          |       |   |               |   |         |  |   |        |   |  |   |        
|Income before taxes on income                          |  |               | 10.7    |   |                   |   | 570.3           |  |   | 16.3                 |   |  |        | 24.5 |   |                 |   | 8.4  |           |  |                          | (3.5  | ) |               |   | 624.7   |  |   |       |   |  |   | 624.7  
|Provision for taxes on income                          |  |               | 32.6    |   |                   |   | 149.9           |  |   | 5.3                  |   |  |        | 8.6  |   |                 |   | (0.2 | )         |  |                          | (2.0  | ) |               |   | 194.2   |  |   |       |   |  |   | 194.2  
|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                 |   |      |           |  |                          |       |   |               |   |         |  |   |        |   |  |   |        
|Income from operations                                 |  |               | (21.9   | ) |                   |   | 420.4           |  |   | 11.0                 |   |  |        | 15.9 |   |                 |   | 8.6  |           |  |                          | (3.5  | ) |               |   | 430.5   |  |   |       |   |  |   | 430.5  
|Less: minority interests share                        |  |               | 0.4     |   |                   |   |                |  |   |                     |   |  |        |     |   |                 |   |     |           |  |                          |      |   |               |   | 0.4     |  |   |       |   |  |   | 0.4    
|Income before cumulative effect of accounting change   |  |               | (22.3   | ) |                   |   | 420.4           |  |   | 11.0                 |   |  |        | 15.9 |   |                 |   | 8.6  |           |  |                          | (3.5  | ) |               |   | 430.1   |  |   |       |   |  |   | 430.1  
|Accumulative effect of accounting change               |  |               | (5.2    | ) |                   |   | 20.9            |  |   |                     |   |  |        |     |   |                 |   | 0.3  |           |  |                          | (0.3  | ) |               |   | 15.7    |  |   |       |   |  |   | 15.7   
|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                 |   |      |           |  |                          |       |   |               |   |         |  |   |        |   |  |   |        
|Net Income                                             |  | $             | (27.5   | ) |                   | $ | 441.3           |  | $ | 11.0                 |   |  | $      | 15.9 |   |                 | $ | 8.9  |           |  | $                        | (3.8  | ) |               | $ | 445.8   |  | $ |       |   |  | $ | 445.8  
|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                 |   |      |           |  |                          |       |   |               |   |         |  |   |        |   |  |   |        



F - 99



---

##### Table of Contents

Alcoa World Alumina and Chemicals

Combining Statement of Income

|                             |  |           
|---------------------------- |  | ----------
|Year Ended December 31, 2002 |  | Appendix I



(in millions)



|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                  |   |      |           |  |                           |       |   |                |   |         |  |   |        |   |  |   |        
|------------------------------------------------------ |  | ------------- | ------- | - | ----------------- | - | --------------- |  | - | -------------------- | - |  | ------ | ---- | - | ---------------- | - | ---- | --------- |  | ------------------------- | ----- | - | -------------- | - | ------- |  | - | ------ | - |  | - | -------
|                                                       |  | CombinedLLCs |         |   | Alcoa ofAustralia |   | AlcoaChemieGmbH |  |   | AlcoaChemieNederland |   |  | Abalco |      |   | Alumina Espanola |   |      | Sub Total |  | Intercompany Ellminations |       |   | Combined Total
|Revenues                                               |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                  |   |      |           |  |                           |       |   |                |   |         |  |   |        |   |  |   |        
|Sales                                                  |  | $             | 651.7   |   |                   | $ | 1,106.1         |  | $ | 78.0                 |   |  | $      | 50.3 |   |                  | $ | 0.1  |           |  | $                         | 53.8  |   |                | $ | 1,940.0 |  | $ |       |   |  | $ | 1,940.0
|Sales to related parties                               |  |               | 458.2   |   |                   |   | 575.8           |  |   | 11.0                 |   |  |        | 14.5 |   |                  |   | 52.2 |           |  |                           | 170.8 |   |                |   | 1,282.5 |  |   | (345.8 | ) |  |   | 936.7  
|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                  |   |      |           |  |                           |       |   |                |   |         |  |   |        |   |  |   |        
|                                                       |  |               | 1.109.9 |   |                   |   | 1,681.9         |  |   | 89.0                 |   |  |        | 64.8 |   |                  |   | 52.3 |           |  |                           | 224.6 |   |                |   | 3,222.5 |  |   | (345.8 | ) |  |   | 2,876.7
|Costs and expenses                                     |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                  |   |      |           |  |                           |       |   |                |   |         |  |   |        |   |  |   |        
|Cost of goods sold                                     |  |               | 1.026.0 |   |                   |   | 1,034.9         |  |   | 71.4                 |   |  |        | 41.0 |   |                  |   | 44.1 |           |  |                           | 213.1 |   |                |   | 2,430.5 |  |   | (345.8 | ) |  |   | 2,084.7
|Selling, general administrative and other expenses     |  |               | 29.8    |   |                   |   | 29.7            |  |   | 3.9                  |   |  |        | 4.6  |   |                  |   | 0.5  |           |  |                           | 2.9   |   |                |   | 71.4    |  |   |       |   |  |   | 71.4   
|Provision for depreciation, depletion and amortization |  |               | 54.1    |   |                   |   | 91.0            |  |   | 2.6                  |   |  |        | 1.1  |   |                  |   | 6.3  |           |  |                           | 1.4   |   |                |   | 156.5   |  |   |       |   |  |   | 156.5  
|Special items                                          |  |               | (5.3    | ) |                   |   | 6.9             |  |   |                     |   |  |        |     |   |                  |   |      |           |  |                           | (1.2  | ) |                |   | 0.4     |  |   |       |   |  |   | 0.4    
|Interest expense                                       |  |               | 1.5     |   |                   |   | 0.9             |  |   |                     |   |  |        |     |   |                  |   | 0.1  |           |  |                           | 0.4   |   |                |   | 2.9     |  |   |       |   |  |   | 2.9    
|Other Expense                                          |  |               | (0.7    | ) |                   |   | 6.4             |  |   | (0.2                 | ) |  |        | (0.5 | ) |                  |   | 0.9  |           |  |                           | 0.4   |   |                |   | 6.3     |  |   | 0.1    |   |  |   | 6.4    
|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                  |   |      |           |  |                           |       |   |                |   |         |  |   |        |   |  |   |        
|                                                       |  |               | 1.105.4 |   |                   |   | 1,169.8         |  |   | 77.7                 |   |  |        | 46.2 |   |                  |   | 51.9 |           |  |                           | 217.0 |   |                |   | 2,668.0 |  |   | (345.7 | ) |  |   | 2,322.3
|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                  |   |      |           |  |                           |       |   |                |   |         |  |   |        |   |  |   |        
|Earnings                                               |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                  |   |      |           |  |                           |       |   |                |   |         |  |   |        |   |  |   |        
|income before taxes on income                          |  |               | 4.5     |   |                   |   | 512.1           |  |   | 11.3                 |   |  |        | 18.6 |   |                  |   | 0.4  |           |  |                           | 7.6   |   |                |   | 554.5   |  |   | (0.1   | ) |  |   | 554.4  
|Provision for taxes on income                          |  |               | 24.5    |   |                   |   | 152.7           |  |   | 5.3                  |   |  |        | 6.3  |   |                  |   | 3.8  |           |  |                           | 2.6   |   |                |   | 195.2   |  |   |       |   |  |   | 195.2  
|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                  |   |      |           |  |                           |       |   |                |   |         |  |   |        |   |  |   |        
|Income from operations                                 |  |               | (20.0   | ) |                   |   | 359.4           |  |   | 6.0                  |   |  |        | 12.3 |   |                  |   | (3.4 | )         |  |                           | 5.0   |   |                |   | 359.3   |  |   | (0.1   | ) |  |   | 359.2  
|Less: minority interests share                        |  |               | 0.3     |   |                   |   |                |  |   |                     |   |  |        |     |   |                  |   |     |           |  |                           |      |   |                |   | 0.3     |  |   |       |   |  |   | 0.3    
|Income before cumulative effect of accounting change   |  |               | (20.3   | ) |                   |   | 359.4           |  |   | 6.0                  |   |  |        | 12.3 |   |                  |   | (3.4 | )         |  |                           | 5.0   |   |                |   | 359.0   |  |   | (0.1   | ) |  |   | 358.9  
|Accumulative effect of accounting change               |  |               |        |   |                   |   |                |  |   |                     |   |  |        |     |   |                  |   |     |           |  |                           | 4.7   |   |                |   | 4.7     |  |   |       |   |  |   | 4.7    
|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                  |   |      |           |  |                           |       |   |                |   |         |  |   |        |   |  |   |        
|Net Income                                             |  | $             | (20.3   | ) |                   | $ | 359.4           |  | $ | 6.0                  |   |  | $      | 12.3 |   |                  | $ | (3.4 | )         |  | $                         | 9.7   |   |                | $ | 363.7   |  | $ | (0.1   | ) |  | $ | 363.6  
|                                                       |  |               |         |   |                   |   |                 |  |   |                      |   |  |        |      |   |                  |   |      |           |  |                           |       |   |                |   |         |  |   |        |   |  |   |        



F - 100