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Since the formation of the Alcoa World Alumina and Chemicals (AWAC) partnership in 1995, AWAC has delivered more than A$3.5 billion in dividends and capital returns to Alumina Limited. In 2004 and 2005 cash dividends paid to Alumina Limited were lower due to AWAC's cashflow being partially utilised to fund capital expenditure.
AWAC's dividend policy is governed by the terms of the AWAC Agreements. Under the agreements, 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. The practice of AWAC, confirmed by the Strategic Council in September 2002, has been to distribute 100 per cent of cash flow from the AWAC entities. Alumina Limited expects AWAC to continue this practice while it is consistent with the prudent financial management of AWAC.