GENERAL39208

• Permit No: M1982090
• IBM Index Class Name: General Documents
• Doc Name: ROYAL RESOURCES CORP ANNUAL REPORT 1986
• Annual Report Year: 1986
• Media Type: D
• Archive: No

ALUMINIUM
Alcoa of Australia Limited
(42.5% owned since June 20,1986)
After the close of the Company's financial
year (tune 17) WMCH acquired North
Broken Hill Holdings Llmiied's 12%
shareholding In Alcoa o(Australla Ltd.
Alcoa reported that the world aluminium
industry remained in a depressed state
throughout 1985 and that the growth in
demand is expected to continue to be slow
Alcoas net profit for 1985 was $46.6 million
compared with $43.7 million in 1964. The
higher profit primarily reFlected the effect of
a weaker Australian dollar on the Company's
sales in US$ which assisted revenue by
offsetting the low alumina and aluminium
prices in USS.
Sales revenue for 1985 was $1,156 million
compared with $1,151 million In 1984. Total
assets increased Irom $2,364 million to
$2,591 million. The return on total assets of
1.8% (LB% m 1984) and the return on
shareholders funds of 4.0% (3.8°(o in 1989)
continued to be totally inadequate.
Long term debt at year end was $882.7
million, an increase of $168.7 million over
1984. The Company restructured its
overseas debt during the year into a global
note facility which consolidated the OoaUng
rate long term debt, extended the term of
borrowings and resulted In significant
reductions in interest charges.
In Western Australia, Alcoas bauxite mines
and alumina refineries operated efficiently.
Production from [he older Kwinana refinery
was reduced whilst the refineries at Pinjarra
and Wagerup operated at near record levels.
At the Point Henry aluminium smelter
in Victoria significant changes were made in
smelting practices which, backed by technical
modifications under a tour year
modernisation programme, will result in
significant cost savings. About 70% o(the
aluminium produced at Point Henry smelter
was exported, the motor emphasis being on
the Asian market, including the People's
Republic of China.
Construction of the Portland smelter
continued during the year. The first pot line
is expected to be activated late In 1966 and
the second In 1988 to provide a total capacity
of 300,000 tonnes per annum.
The participants in the Portland Smelter
Proles are now:
Alcoa of Australia Ltd 4S%
The Government o(Victona 35%
First National Resources Trust 10%
CMna International 7iust and Investment
Corporation (CITIC) 10%
Alcoa of Australia Ltd
$MJlions
Return on Shareholders Funds
Total Assets r-~
1500
1000
a
1981 1982 1983 1989 1985
In the first half of calendar year 1486,
Alcoa made a net profit of $3.7 million
compared with $27.1 million in the previous
corresponding period. The poor result
was attributed to depressed prices for the
Company's products due to the world
surplus of alumina and aluminium, increasing
costs in Australia and higher amortisation
of exchange losses due to a change in
accounting standards.
The aluminium smelteral Portland, V,noria, during
construction. Alcoa o(Aus(ralia have a 45% interest and
management responsibility for this smelter
17