As filed with Securities and Exchange Commission on August 31, 2022

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F/A

(Amendment No. 1)

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

OR

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

For the fiscal year ended December 31, 2021

OR

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

OR

☐    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report _____________

For the transition period from __________ to __________

Commission file number 001-15264

(Exact name of Registrant as specified in its charter)

ALUMINUM CORPORATION OF CHINA LIMITED

(Translation of Registrant’s name into English)

People’s Republic of China

(Jurisdiction of incorporation or organization)

No. 62 North Xizhimen Street, Haidian District, Beijing

People’s Republic of China (100082)

(Address of principal executive offices)

Zhu Runzhou

No. 62 North Xizhimen Street, Haidian District, Beijing

People’s Republic of China (100082)

(86) 10 8229 8322

ir@chalco.com.cn

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

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

Title of each class	Trading Symbol	Name of each exchange on which registered
American Depositary Shares*	ACH	New York Stock Exchange, Inc.
Class H Ordinary Shares**

*      Evidenced by American Depositary Receipts. Each American Depositary Share represents 25 H Shares.

**    Not for trading, but only in connection with the listing of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

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

None

(Title of Class)

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

None

(Title of Class)

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.

As of December 31, 2021:
Domestic shares, par value RMB1.00 per share	13,078,706,983
H Shares, par value RMB1.00 per share	3,943,965,968

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No þ

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

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 þ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ☐ Non-accelerated filer ☐ Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes þ No ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐

International Financial Reporting Standards as issued by the International Accounting Standards Board þ

Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No þ

Auditor PCAOB ID Number: 1424 Auditor Name: PricewaterhouseCoopers Zhong Tian LLP Auditor Location: Shanghai, the People's Republic of China

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes ☐ No ☐

Explanatory Note

Aluminum Corporation of China Limited is filing this Amendment No. 1 on Form 20-F (this “Amendment No. 1”) to our annual report on Form 20-F for the fiscal year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 22, 2022 (the “Original Filing”), to address several comments from the Staff of the SEC relating to certain legal and operational risks associated with our being based in and having the majority of our operations in China, and the Exhibit 96.1. Accordingly, we are restating in their entirety the following sections of our Form 20-F: (i) Part I; (ii) Part III - Item 19 (Exhibits); and (iii) Exhibit 96.1. As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by our president and chief financial officer are being filed as exhibits to this Amendment No. 1.

No attempt has been made in this Amendment No. 1 to modify or update in any way the financial statements or any other items or disclosures in the Original Filing except as required to reflect the amendments discussed above. Except as otherwise noted herein, this Amendment No. 1 continues to describe conditions as of the date of the Original Filing, and the disclosures contained herein have not been updated to reflect events, results or developments that occurred after the date of the Original Filing, or to modify or update those disclosures affected by subsequent events. Among other things, forward-looking statements made in the Original Filing have not been revised to reflect events, results or developments that occurred or facts that became known to us after the date of the Original Filing, and such forward-looking statements should be read in conjunction with the Original Filing and our filings with the SEC subsequent to the filing of the Original Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filing and our other filings with the SEC subsequent to April 22, 2022.

i

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS		iii
CERTAIN TERMS AND CONVENTIONS		iv
PART I		1
Item 1.	Identity of Directors, Senior Management and Advisors	1
Item 2.	Offer Statistics and Expected Timetable	1
Item 3.	Key Information	1
Item 4.	Information on the Company	22
Item 4A.	Unresolved Staff Comments	69
Item 5.	Operating and Financial Review and Prospects	69
Item 6.	Directors, Senior Management and Employees	96
Item 7.	Major Shareholders and Related Party Transactions	108
Item 8.	Financial Information	121
Item 9.	The Offer and Listing	122
Item 10.	Additional Information	122
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	135
Item 12.	Description of Securities Other Than Equity Securities	138
PART III		140
Item 19.	Exhibits	140

ii

Forward-Looking Statements

Certain information contained in this annual report, which does not relate to historical information, may be deemed to constitute forward-looking statements. The words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “believe” or similar expressions are intended to identify “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected. You should not place undue reliance on any such forward-looking statements, which speak only as of the date made. These forward-looking statements include, without limitation, statements relating to:

● future general economic conditions;

● future conditions in the international and China capital markets;

● future conditions in the financial and credit markets;

● future prices and demand for our products;

● future PRC tariff levels for alumina and primary aluminum;

● sales of our products;

● the extent and nature of, and potential for, future developments;

● production, consumption and demand forecasts of bauxite, coal, alumina and primary aluminum;

● expansion, consolidation or other trends in the primary aluminum industry;

● estimates of proven and probable reserves and measured, indicated and inferred resources with respect to our bauxite and coal mines;

● the effectiveness of our cost-saving measures;

● future expansion, investment and acquisition plans and capital expenditures;

● the severity, duration and spread of the COVID-19 pandemic, as well as the direct and indirect impacts of COVID-19 pandemic (as well as the efforts to contain it) on our operations and financial performance, the industry we are in, our suppliers and customers, the PRC economy and global economy;

● competition;

● changes in legislation, regulations and policies;

● the impact of the Holding Foreign Companies Accountable Act and any rules or regulations adopted by U.S. regulators to implement such legislation, including but not limited to the Interim Final Rule and the Final Rule with respect to the Holding Foreign Companies Accountable Act adopted by the SEC;

● the impact of the ongoing Russia-Ukraine conflict and the economic sanctions imposed on Russia, and their impact on the global economy;

● our research and development plans; and

● our dividend policy.

iii

These statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and future developments, as well as other factors we believe are appropriate in particular circumstances. However, whether actual results and developments will meet our expectations and predictions depends on a number of risks and uncertainties, which could cause actual results to differ materially from our expectations. These risks are more fully described in the section headed “Item 3. Key Information - D. Risk Factors.”

Consequently, all of the forward-looking statements made in this annual report are qualified by these cautionary statements. We cannot assure you that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected effect on us or our business or operations.

Certain Terms and Conventions

“Chalco,” “the Company,” “the Group,” “our Company,” “our Group,” “we,” “our” and “us” refer to Aluminum Corporation of China Limited and its subsidiaries and, where appropriate, to its predecessors;

“A Share(s)” and “domestic share(s)” refer to our domestic ordinary share(s), with a par value of RMB1.00 each, which are listed on the Shanghai Stock Exchange;

“ADR(s)” refers to the American Depositary Receipt(s);

“ADS(s)” refers to the American Depositary Share(s);

“alumina-to-silica ratio” refers to the ratio of alumina to silica in bauxite by weight;

“aluminum fabrication” refers to the process of converting primary aluminum or recycled aluminum materials into plates, strips, bars, tubes and other fabricated products;

“Baotou Aluminum” refers to Baotou Aluminum Co., Ltd., our wholly-owned subsidiary established under the PRC law;

“bauxite” refers to a mineral ore that is principally composed of aluminum;

“Bayer process” refers to a refining process that employs a strong solution of caustic soda at an elevated temperature to extract alumina from ground bauxite;

“Bayer-sintering combined process” and “Bayer-sintering series process” refer to the two methods of refining process developed in China which involve the combined application of the Bayer process and the sintering process to extract alumina from bauxite;

“Board” refers to our board of directors;

“Boffa Project” refers to the project to develop and operate a bauxite mine located in Boffa, Guinea, in accordance with a mining convention entered into by Chalco Hong Kong, Chalco Guinea Company S.A. and the Guinean government on June 8, 2018;

“CBEX” refers to China Beijing Equity Exchange, an approved equity exchange for the transfer of state-owned assets;

“Chinalco Assets” refers to Chinalco Assets Operation and Management Co., Ltd., a wholly-owned subsidiary of Chinalco;

“Chalco Energy” refers to Chalco Energy Co., Ltd., our wholly-owned subsidiary established under the PRC law;

“Chalco Hong Kong” refers to Chalco Hong Kong Ltd., our wholly-owned subsidiary established under Hong Kong Law;

“Chalco Logistics” refers to Chalco Aluminum Logistics Corporation Group Co., Ltd., our wholly-owned subsidiary established under the PRC law;

“Chalco Materials” refers to Chalco Materials Co., Ltd., our wholly-owned subsidiary established under the PRC law;

iv

“Chalco Mining” refers to Chalco Mining Co., Ltd., our wholly-owned subsidiary established under the PRC law;

“Chalco Ruimin” refers to Chalco Ruimin Company Limited, our subsidiary until June 2013 when we disposed of 93.30% of its equity interest to Chinalco;

“Chalco Shandong” refers to Chalco Shandong Co., Ltd., our wholly-owned subsidiary established under the PRC law;

“Chalco Shanghai” refers to Chalco Shanghai Company Limited, our wholly-owned subsidiary established under the PRC law;

“Chalco Southwest Aluminum” refers to Chalco Southwest Aluminum Company Limited, our subsidiary until June 2013 when we disposed of 60% of its equity interest to Chinalco;

“Chalco Southwest Aluminum Cold Rolling” refers to Chalco Southwest Aluminum Cold Rolling Company Limited, our wholly-owned subsidiary until June 2013 when we disposed of its entire equity interest to Chinalco;

“Chalco Trading” refers to China Aluminum International Trading Co., Ltd., our wholly-owned subsidiary established under the PRC law;

“Chalco Trading Group” refers to China Aluminum International Trading Group Co., Ltd., our wholly-owned subsidiary established under the PRC law;

“Chalco Xing County Alumina Project” refers to the Bayer process production system and ancillary facilities at Xing County, Lvliang City of Shanxi Province with production capacity of 800,000 tonnes of metallurgical grade alumina per year;

“China” and the “PRC” refer to the People’s Republic of China, excluding, for purposes of this annual report only, Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan;

“China Copper” refers to China Copper Co., Ltd., a wholly-owned subsidiary of Chinalco;

“China United Assets Appraisal” refers to China United Assets Appraisal Group Co., Ltd., a PRC qualified valuer;

“Chinalco” refers to our controlling shareholder, Aluminum Corporation of China and its subsidiaries (other than Chalco and its subsidiaries) and, where appropriate, to its predecessors;

“Chinalco Finance” refers to Chinalco Finance Co., Ltd.;

“CSRC” refers to China Securities Regulatory Commission;

“cut-off grade” refers to the grade (i.e., the concentration of metal or mineral in rock) that determines the destination of the material during mining. For purposes of establishing "prospects of economic extraction," the cut-off grade is the grade that distinguishes material deemed to have no economic value (it will not be mined in underground mining or if mined in surface mining, its destination will be the waste dump) from material deemed to have economic value (its ultimate destination during mining will be a processing facility). “Exchange Act” refers to the U.S. Securities Exchange Act of 1934, as amended;

“Euro” refers to the lawful currency of the Eurozone;

“Fushun Aluminum” refers to Fushun Aluminum Company Limited, our wholly-owned subsidiary established under the PRC law;

“Gansu Hualu” refers to Gansu Hualu Aluminum Company Limited, 51% of the equity interest of which is owned by us;

“Gansu Huayang” refers to Gansu Huayang Mining Development Company Limited, 70% of the equity interest of which is owned by us;

“GNF” refers to Guinea franc, the lawful currency of the Republic of Guinea;

v

“Guangxi Investment” refers to Guangxi Investment (Group) Co., Ltd., formerly known as Guangxi Development and Investment Co., Ltd., a PRC state-owned enterprise;

“Guizhou Development” refers to Guizhou Provincial Materials Development and Investment Corporation, a PRC state-owned enterprise and one of our promoters and shareholders;

“Guizhou Huajin” refers to Guizhou Huajin Aluminum Co., Ltd., 60% of the equity interest of which is owned by us;

“Guizhou Huaren” refers to Guizhou Huaren New Material Co., Ltd., 40% of the equity interest of which is owned by us;

“Guangxi Huasheng” refers to Guangxi Huasheng New Material Co., Ltd., 51% of the equity interest of which is owned by us;

“H Share(s)” refers to overseas listed foreign share(s) with a par value of RMB1.00 each, which are listed on the Hong Kong Stock Exchange;

“Henan Aluminum” refers to Chalco Henan Aluminum Company Limited, our subsidiary until June 2013 when we disposed of 90.03% of its equity interest to Chinalco;

“HK$” and “HK dollars” refer to Hong Kong dollars, the lawful currency of the Hong Kong Special Administrative Region of the PRC;

“Hong Kong Stock Exchange” refers to The Stock Exchange of Hong Kong Limited;

“Huaxi Aluminum” refers to Huaxi Aluminum Company Limited, our subsidiary until June 2013 when we disposed of 56.86% of its equity interest to Chinalco;

“Inner Mongolia Huayun” refers to Inner Mongolia Huayun New Materials Co., Ltd., 50% of the equity interest of which is owned by Baotou Aluminum;

“IRS” refers to Internal Revenue Service of the United States federal government;

“Japanese Yen” refers to the lawful currency of Japan;

“Jiaozuo Wanfang” refers to Jiaozuo Wanfang Aluminum Manufacturing Co., Ltd.;

“Ka” refers to kiloamperes, a unit for measuring the strength of an electric current, with one kiloampere equaling 1,000 amperes;

“kWh” refers to kilowatt-hours, a unit of electrical power, meaning one kilowatt of power for one hour;

“Lanzhou Aluminum” refers to Lanzhou Aluminum Co., Ltd., our wholly-owned subsidiary since January 2019, which was previously our wholly-owned branch, Lanzhou branch;

“Listed Company” refers to Aluminum Corporation of China Limited, the holding company of our Group that has been listed on the New York Stock Exchange since December 2001.

“Listing Rules” and “Hong Kong Listing Rules” refer to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange, as amended;

“LME” refers to the London Metal Exchange Limited;

“Logistics Zhongzhou” refers to China Aluminum Logistics Group Zhongzhou Co., Ltd., our indirect subsidiary;

“MIIT” refers to Ministry of Industry and Information Technology of the PRC;

vi

“MOF” refers to Ministry of Finance of the PRC;

“MW” refers to megawatt, a unit of electrical power;

“Nanchu” refers to ENanchu (http://www.enanchu.com/), a nonferrous metal-related portal site in PRC;

“NDRC” refers to China National Development and Reform Commission;

“Ningxia Energy” refers to China Aluminum Ningxia Energy Group Co., Ltd., formerly known as Ningxia Electric Power Group Co., Ltd., before we acquired 70.82% of its equity interest in January 2013;

“Northwest Aluminum” refers to Northwest Aluminum Fabrication Branch, our wholly-owned branch until June 2013 when we disposed of all its assets to a subsidiary of Chinalco;

“NYSE” and “New York Stock Exchange” refer to the New York Stock Exchange Inc.;

“ore-dressing Bayer process” refers to a refining process we developed to increase the alumina-to-silica ratio of bauxite;

“PBOC” refers to People’s Bank of China;

“Qingdao Light Metal” refers to Chalco Qingdao Light Metal Company Limited, our wholly-owned subsidiary until June 2013 when we disposed of its entire equity interest to Chinalco. In December 2017, we acquired 100% of the equity interest in Qingdao Light Metal through Chalco Shandong at a consideration of RMB300.4 million to further our prospective strategic layout on secondary aluminum;

“qualified person” refers to an individual who is a mineral industry professional with at least five years of relevant experience in the type of mineralization and type of deposit under consideration and in the specific type of activity that person is undertaking on behalf of the registrant; and an eligible member or licensee in good standing of a recognized professional organization at the time the technical report is prepared. “refining” refers to the chemical process used to produce alumina from bauxite;

“RMB” and “Renminbi” refer to the lawful currency of the PRC;

“SAT” refers to State Administration of Taxation of the PRC;

“SAFE” refers to State Administration of Foreign Exchange of the PRC;

“SASAC” refers to State-owned Assets Supervision and Administration Commission of the State Council of China;

“SEC” refers to the U.S. Securities and Exchange Commission;

“Securities Act” refers to the U.S. Securities Act of 1933, as amended;

“Shandong Huayu” refers to Shandong Huayu Alloy Material Co., Ltd., 55% of the equity interest of which is owned by us;

“Shanxi Huasheng” refers to Shanxi Huasheng Aluminum Company Limited, 51% of the equity interest of which is owned by us;

“Shanxi Huaxing” refers to Shanxi Huaxing Aluminum Co., Ltd., a wholly-owned subsidiary established under the PRC law.

“Shanxi Huayu” refers to Shanxi Huayu Energy Investment Co., Ltd., a wholly-owned subsidiary established under the PRC law.

“Shanxi New Material” or “Shanxi Huaze” refers to Chalco Shanxi New Material Co., Ltd., formerly known as Shanxi Huaze Aluminum and Power Co., Limited, 85.98% of the equity interest of which is owned by us;

vii

“Shanxi Other Mines” refers to the nine mines to which we entrusted another party to conduct mining activities, including Changjialing mine, Guxian mine, Loufan mine, Nanpo mine, Xishan mine, Yangjiashan mine, Niucaogou mine, Xiwupu mine and Jiaokou Xisongzhuang mine in Shanxi Province;

“Shanxi Zhongrun” refers to Shanxi China Huarun Co., Ltd., 40% of the equity interest of which is owned by us;

“SHFE” refers to the Shanghai Futures Exchange;

“sintering process” refers to a refining process employed to extract alumina from bauxite by mixing ground bauxite with supplemental materials and burning the mixture in a coal-fired kiln;

“smelting” refers to the electrolytic process used to produce molten aluminum from alumina;

“tonne” refers to the metric ton, a unit of weight, that is equivalent to 1,000 kilograms or 2,204.6 pounds;

“US$,” “dollars” and “U.S. dollars” refer to the lawful currency of the United States;

“Xinghua Technology” refers to Chinalco Shanxi Jiaokou Xinghua Technology Ltd., 66% of the equity interest of which is owned by us;

“Yangtze” refers to the Shanghai Changjiang Nonferrous Metals Spot Market;

“Yixin Aluminum” refers to Heqing Yixin Aluminum Co., Ltd., an indirect subsidiary of Chinalco;

“Yunnan Aluminum” refers to Yunnan Aluminum Co., Ltd., an indirect subsidiary of Chinalco;

“Yunnan SASAC” refers to the State-owned Assets Supervision and Administration Commission of Yunnan Provincial People’s Government;

“Zhangze Electric Power” refers to Shanxi Zhangze Electric Power Co., Ltd., which owns 14.02% of equity interest in Shanxi New Material;

“Zhengzhou Institute” refers to Chalco Zhengzhou Research Institute of Non-ferrous Metal Co., Ltd., our wholly-owned subsidiary, which primarily provides research and development services;

“Zhongzhou Aluminum” refers to Chalco Zhongzhou Aluminum Co., Ltd., our wholly-owned subsidiary established under the PRC law;

“Zhongzhou Aluminum Plant” refers to Henan Zhongzhou Aluminum Plant Co., Ltd., a wholly-owned subsidiary of Chinalco;

“Zhongzhou Logistics” refers to Henan Zhongzhou Logistics Co., Ltd., which had been a wholly-owned subsidiary of Chinalco and was dissolved in September 2020;

“Zunyi Alumina” refers to Chalco Zunyi Alumina Co., Ltd., which was merged into Zunyi Aluminum in June 2018; and

“Zunyi Aluminum” refers to Zunyi Aluminum Co., Ltd., 67.45% of the equity interest of which is owned by us.

Translations of amounts in this annual report from Renminbi to U.S. dollars and vice versa have been made at the rate of RMB6.3726 to US$1.00, the exchange rate as set forth in the H.10 statistical release of the Federal Reserve Board for December 30, 2021. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated below, or at all.

Any discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.

viii

PART I

Item 1.Identity of Directors, Senior Management and Advisors

Not applicable.

Item 2.Offer Statistics and Expected Timetable

Not applicable.

Item 3.Key Information

Significant Risks Associated with Being Based in and Having the Majority of Our Operations in China

We face legal and operational risks associated with being based in and having the majority of our operations in China. Changes in PRC economic, political or social conditions or government policies could materially adversely affect our business and results of operations. The PRC government has the authority to exert significant influence on the ability of a China-based company, including us, to conduct its business, and investors of Chalco and our business face potential uncertainty as a result. For example, we face risks associated with PRC governmental authorities’ significant oversight and discretion over our businesses and financing activities, the requirement of regulatory approvals for offerings conducted overseas by and foreign investment in China-based issuers, the enforcement of anti-monopoly regime as well as the risk of delisting given the PCAOB is currently unable to conduct complete inspection on our auditors, which may impact our ability to conduct certain businesses, accept foreign investments, or list on a United States stock exchange. The materialization of these risks may result in a material adverse change to our business operations and financial condition, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, and cause our ADSs to significantly decline in value or become worthless. See “Item 3. Key Information – D. Risk Factors – Our operations are affected by a number of risks relating to conducting business in the PRC. The PRC government has significant authority to intervene or influence the operations of a China-based company, such as us, at any time. The materialization of any such risk may result in a material adverse change to our business, prospects, financial condition and results of operations, and cause your investment in our ADSs to significantly decline in value or become worthless” and “Item 3. Key Information – D. Risk Factors – Our ADSs will be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors who are located in China. In addition, legislative and regulatory developments related to U.S.-listed China-based companies due to lack of PCAOB inspection and other developments may have a material adverse impact on our listing and trading in the United States and the trading prices of our ADSs. The potential delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

An investment in our ADSs involves a high degree of risk and should be considered speculative. You should carefully consider all risk factors set out in “Item 3. Key Information – D. Risk Factors” and other information before investing in our ADSs. If any event arising from these risks occurs, our business, prospects, financial condition, results of operations or cash flows could be materially adversely affected, the trading price of our ADSs could decline and all or part of your investment may be lost.

Requisite Permissions and Approvals

We are principally subject to governmental supervision and regulation by five agencies of the PRC government:

● the NDRC, which sets and implements the major policies concerning China’s economic and social development, approves investments exceeding certain amounts, coordinates and improves the reform of the economic system;

● the Ministry of Natural Resources of China, which has the authority to grant land use rights and mining right permits;

● the MIIT, which formulates industrial policies and investment guidelines for all industries, including the aluminum industry;

● The Ministry of Ecology and Environment of China, which is responsible for supervision and administration of environmental protection in China; and

● the CSRC, the securities regulatory commission of China.

1

See “Item 4. Information of the Company – B. Business Overview – Regulatory Overview.” As Chalco is incorporated in China, our capital markets financing activities are subject to approval by the CSRC, regardless of whether the funds are raised in or outside China. We must obtain prior approval from the CSRC for issuance of equity securities or equity-linked securities. Our offering of corporate bonds in China is also subject to supervision of the CSRC. Our offering of bonds outside China shall be filed with the NDRC. The governmental and regulatory interference could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

As an industrial producer of alumina, primary aluminum and other non-ferrous metals, our capital markets financing activities are not subject to approval by the Cyber Administration of China, or the CAC. Furthermore, our ordinary course of business is not subject to permission requirements from the CAC. Accordingly, we believe that our business operations have not been directly affected by the regulations and policies that have been issued by the CAC to date.

As of December 31, 2021 and up to the date of this annual report, we have received all requisite permissions and approvals that are material to our operations, and no permissions or approvals that are material to our operations have been denied. However, if we do not receive or maintain any permissions or approvals that are material to our operations, inadvertently conclude that such permissions or approvals are not required, or the applicable laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, our business operations and financial condition could be materially adversely affected, and our ADSs could significantly decline in value or become worthless.

Transfers of Cash within Our Group and Dividend Payment

Any determination related to our dividend policy will be made at the discretion of our board of directors after considering its financial condition, results of operations, capital requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any financing instruments. Subject to the PRC Company Law and our Articles of Association, our board of directors may authorize and declare a dividend to shareholders at such time and of such an amount as they think fit if they are satisfied, on reasonable grounds, that immediately following the dividend the value of its assets will exceed its liabilities and we will be able to pay our debts as they become due. See “Item 8. Financial Information - Dividend Policy” for details of our dividend policy.

Chalco’s cash dividends, if made, are declared in Renminbi with respect to our H shares on a per share basis and paid in HK dollars. The Bank of New York Mellon, as depositary, converts the HK dollar dividend payments and distributes them to holders of ADSs in U.S. dollars, less expenses of conversion. See “Item 10. Additional Information - E. Taxation” for tax consequences of dividends made to investors of our ADSs.

The Listed Company’s payment of dividends is dependent on receipt of funds from its subsidiaries by way of dividend payments. Current PRC regulations permit our PRC subsidiaries to pay dividends to the Listed Company only out of its accumulated after-tax profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Our PRC subsidiaries could further set aside a portion of its after-tax profits to fund a discretionary reserve, although the amount to be set aside, if any, is determined at the discretion of their shareholder, i.e. the Listed Company. Although the statutory reserves can be used, among other ways, to increase the registered capital, the reserve funds are not distributable as cash dividends except in the event of liquidation. Under PRC Enterprise Income Tax Law, dividends payment from our subsidiaries to the Listed Company are exempt from taxation.

The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. See “Item 10. Additional Information - D. Exchange Controls”  Although we have not experienced any difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends in the past, we cannot assure you that we will not experience such difficulties for the payment of dividends in the future.

For the years ended 2019, 2020 and 2021, the Listed Company received dividends of RMB2,127.2 million, RMB1,797.4 million and RMB4,059.8 million from our subsidiaries, primarily including our principal subsidiaries disclosed in “Item 4. Information on the Company – C. Organizational Structure.” For the years ended December 31, 2019 and 2020, we did not make dividend payment because we had accumulated losses as of December 31, 2019 and 2020, respectively. As of December 31, 2021, we had retained earnings of RMB6,824.2 million. As disclosed in our current reports on Form 6-K furnished to the SEC on June 21 and 28, 2022, the final dividends payable for 2021 amount to approximately RMB544,891,195.38 in total, and the final dividends payable on each H share for 2021 is HK$0.0372 (tax inclusive), which is expected to be paid on August 19, 2022 to those shareholders whose names appear on our register of members on July 8, 2022.

2

A.Selected Financial Data

Reserved.

B.Capitalization and Indebtedness

Not applicable.

C.Reasons for the Offer and Use of Proceeds

Not applicable.

D.Risk Factors

Our business and financial condition and results of operations are subject to various changing business, competitive, economic, political and social conditions in China and worldwide. In addition to the factors discussed elsewhere in this annual report, the following are some of the important factors that could cause our actual results to differ materially from those projected in any forward-looking statements.

The audit reports included in this annual report are prepared by auditors who are not inspected by the Public Company Accounting Oversight Board and, as such, you are deprived of the benefits of such inspection.

Auditors of companies that are registered with the SEC and traded publicly in the United States, including our independent registered public accounting firms, must be registered with the U.S. Public Company Accounting Oversight Board (United States) (the “PCAOB”) and are required by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and professional standards. Because we have substantial operations within the PRC and the PCAOB is currently unable to conduct full inspections of the work of our auditors as they relate to those operations without the approval of the Chinese authorities, our auditors’ work related to our operations in China is not currently inspected by the PCAOB.

This lack of PCAOB inspections of audit work performed in China prevents the PCAOB from regularly evaluating audit work of any auditor that was performed in China including that performed by our auditors. As a result, investors are deprived of the full benefits of PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause our investors and potential investors to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.

Our ADSs will be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors who are located in China. In addition, legislative and regulatory developments related to U.S.-listed China-based companies due to lack of PCAOB inspection and other developments may have a material adverse impact on our listing and trading in the United States and the trading prices of our ADSs. The potential delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.

As part of continued regulatory focus in the United States on access to audit and other information currently protected by foreign law, in particular the PRC’s law, on December 18, 2020, the United States enacted the Holding Foreign Companies Accountable Act, or the HFCA Act. The HFCA Act includes requirements for the SEC to identify issuers whose audit reports are prepared by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed by a non-U.S. authority in the auditor’s local jurisdiction. The HFCA Act also requires public companies on this SEC list to certify that they are not owned or controlled by a foreign government and make certain additional disclosure in their SEC filings that cover a “non-inspection” year after the HFCA Act becomes effective. In addition, if the auditor of a U.S.-listed company is not subject to PCAOB inspections for three consecutive “non-inspection” years after the law becomes effective, the SEC is required to prohibit the securities of these issuers from being traded on a U.S. national securities exchange, such as the New York Stock Exchange, on OTC markets in the United States or through any other method within the SEC’s jurisdiction to regulate.

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to determine, as contemplated under the HFCA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that

3

jurisdiction. Final rules implementing certain requirements of the HFCA Act, or the Final Rules, were adopted by the SEC on December 2, 2021 and generally became effective on January 10, 2022. The Final Rules implement the submission and disclosure requirements in the HFCA Act, which apply to registrants the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate, or Commission-Identified Issuers. The Final Rules require Commission-Identified Issuers to submit documentation to the SEC establishing that, if true, it is not owned or controlled by a governmental entity in the public accounting firm’s foreign jurisdiction. The Final Rules also require that a Commission-Identified Issuer that is a “foreign issuer” provide certain additional disclosures in its annual reports. Specifically, Item 16I (Disclosure Regarding Foreign Jurisdictions that Prevent Inspections) has been added in Form 20-F, which requires disclosure in a foreign issuer’s annual report regarding the audit arrangements of, and governmental influence on, such foreign issuer. Further, the Final Rules established procedures the SEC will follow to identify issuers and to impose trading prohibitions on the securities of certain Commission-Identified Issuers, as required by the HFCA Act. On December 16, 2021, the PCAOB issued the HFCA Act Determination Report, according to which our auditor is subject to the determination that the PCAOB is unable to inspect or investigate it completely.

Under the Final Rules, the SEC will identify Commission-Identified Issuers for fiscal years beginning after December 18, 2020. On May 26, 2022, we were listed on the “conclusive list of issuers identified under the HFCA Act,” indicating that we are now Commission-Identified Issuers subject to the delisting provisions if we remain on the list for three consecutive years. A Commission-Identified Issuer is required to comply with the submission and disclosure requirements in the annual report for each year in which it was identified. Since we have been identified as a Commission-Identified Issuer based on this annual report, we will be required to comply with the submission or disclosure requirements in our annual report filing covering the fiscal year ending December 31, 2022. Under the HFCA Act and the Final Rules, our securities will be prohibited from trading on the NYSE and in over-the-counter markets after we are identified as a Commission-Identified Issuer for three consecutive years, and this ultimately would result in our ADSs being delisted from the NYSE and prohibited from over-the-counter trading after we file our annual report for the fiscal year ending December 31, 2023 in 2024.

Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would amend the HFCA Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three years. It is unclear whether and when the U.S. House of Representatives will pass the Accelerating Holding Foreign Companies Accountable Act. In the case that such bill becomes the law, our ADSs would be delisted from the NYSE and prohibited from over-the-counter trading in the U.S. after we file our annual report for the fiscal year ending December 31, 2022 in 2023.

We understand that there have been dialogues among the CSRC, the SEC and the PCAOB regarding the inspection of PCAOB-registered accounting firms in China. Furthermore, on April 2, 2022, PRC government issued the “Provisions on Strengthening Confidentiality and Archives Administration in Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comment)”, which deleted the old requirement that “on-site inspections should be mainly conducted by PRC regulatory authorities, or rely on the inspection results of PRC regulatory authorities”, but still required, among others, that inspection and evidence collection should be conducted by way of cross-border regulatory cooperation. There can be no assurance that PRC regulatory authorities will reach a regulatory cooperation agreement with the SEC and the PCAOB, or our auditor or we will be able to comply with requirements imposed by the U.S. regulators.

The delisting of our ADSs would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our ADSs. Also, such a delisting would adversely affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. Holders of our ADSs may convert the ADSs into our H shares listed on the Hong Kong Stock Exchange but will incur costs in order to do so. See “Item 12. Description of Securities Other than Equity Securities” for further information. The value and liquidity of our ADSs may therefore be materially and adversely affected.

Our operations are affected by a number of risks relating to conducting business in the PRC. The PRC government has significant authority to intervene or influence the operations of a China-based company, such as us, at any time. The materialization of any such risk may result in a material adverse change to our business, prospects, financial condition and results of operations, and cause your investment in our ADSs to significantly decline in value or become worthless.

As most of our assets and operations are located in the PRC, we are subject to a number of risks relating to conducting business in the PRC, including the following:

● Our business, prospects, financial condition, and results of operations may be influenced to a significant degree by political, economic, and social conditions in China generally. The PRC government has significant authority to intervene or

4

influence operations of a China-based company, such as us, at any time. The PRC government has recently indicated an intent to exert more oversight and control over listings conducted overseas and/or foreign investment in China-based issuers. Any such action, if taken against us, may hinder our ability to offer or continue to offer our securities to investors, result in a material adverse change to our business operations, and damage our reputation, which could cause our ADSs to significantly decline in value or become worthless.

● The PRC government continues to shape the structure and development of the aluminum industry through industry guidelines for energy conservation, safety, environmental protection and quality. The central and local PRC government will give more support to entities that meet the standards in such industry guidelines. If the PRC government changes its current industry guidelines or the interpretation of those industry guidelines, we may face pressure on profit margins and constraints on our ability to expand our business operations.

● Although the PRC has been one of the world’s fastest-growing economies in terms of GDP growth in the past 30 years, the global financial crisis that unfolded in 2008, coupled with the ongoing structural adjustment of the PRC economy in the past few years, has led to a marked slowdown in the economic growth of the PRC. For example, the GDP growth rate of the PRC decreased from 11.4% in 2007 to 6.1% in 2019. Furthermore, the outbreak and global spread of the COVID-19 in 2020 and 2021 has adversely affected global and China’s economy and financial market in general. As a result, the compound annual GDP growth rate of China was 5.1% in 2020 and 2021. Please refer to “– Our business may be materially and adversely affected by the COVID-19 pandemic” for further details of the impact of the outbreak of COVID-19. A slowdown or decline in the PRC economy could reduce business activities and demand for our products. In addition, the PRC government exercises control over China’s economic growth through the allocation of resources, control of payments of obligations denominated in foreign currencies and monetary and tax policies. Some of these measures benefit the overall economy of China, but may have a materially adverse impact on us.

● We are subject to reviews and inspections by various governmental authorities and regulatory agencies. These reviews and inspections could cover a broad range of aspects in relation to our business and operations, including financial reporting, tax reporting, internal control and compliance with applicable laws, rules and regulations. We cannot predict the impact of any findings of these reviews and inspections to be carried out by governmental authorities and regulatory agencies in the future, and we cannot assure you that the outcome of any such reviews and inspections would not have a material adverse effect on our business, financial condition, results of operations and prospects.

● In 2005, China adopted a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on supply and demand with reference to a basket of currencies. Since then the exchange rate between the U.S. dollar and Renminbi has fluctuated and become increasingly unpredictable following the global financial crisis in 2008. In April 2012, the PRC government took a milestone step in turning the Renminbi into a global currency by doubling the size of its trading band against the U.S. dollar to 1%, pushing through a crucial reform that further liberalizes its financial markets. The PBOC further allows the Renminbi trading band against the U.S. dollar to rise or fall 2% from a mid-point every day, effective on March 17, 2014, compared with its previous 1% limit. In August 2015, the PBOC announced that the daily central parity quotes the market-makers reported to the China Foreign Exchange Trade System operated by the PBOC before the market opens should be based on the closing rate of the inter-bank foreign exchange rate market on the previous day, supply and demand in the market, and price movement of major currencies, effective on August 11, 2015. In recent years, the Renminbi has fluctuated against the U.S. dollar, at times significantly. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future. Any appreciation or depreciation of the Renminbi will affect the value of our U.S. dollar-denominated borrowings and overseas investments, the prices of our export sales denominated in foreign currencies and the Renminbi equivalent value of our trade and notes receivable denominated in foreign currencies, which may affect our financial condition and results of operations. Our financial condition and operating performance may also be affected by changes in the value of currencies other than Renminbi in which our earnings and obligations are denominated.

● There might be uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations. The Chinese legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases may be cited for reference but have limited precedential value. Over the past decades, the PRC government has promulgated a comprehensive system of laws, rules and regulations governing economic matters. However, because these laws, rules and regulations are relatively new, and because of the relatively limited volume of published cases and their non-binding nature, and because the laws, rules and regulations often give the relevant administrative and court authorities

5

certain discretion in how to interpret and enforce them, uncertainties regarding the interpretation and enforcement of these laws, rules and regulations may adversely affect our operations.

We are subject to, and incur costs to comply with, environmental laws and regulations.

As we produce air emissions, discharge waste water, and handle hazardous substances at our bauxite mines, alumina refineries and primary aluminum smelters, we are subject to, and incur costs to comply with, environmental laws and regulations.

Given the magnitude, complexity and continuous amendments to these laws and regulations, compliance therewith may be onerous or may involve substantial financial and other resources to establish efficient compliance and monitoring systems. The liabilities, costs, obligations and requirements associated with these laws and regulations may therefore be substantial and may delay the commencement of, or cause interruptions to, our operations. Non-compliance with the relevant laws and regulations applicable to our operations may even result in substantial penalties or fines, suspension or revocation of our relevant licenses or permits, termination of government contracts or suspension of our operations. For example, relevant supervision authorities released a public notification of the dust, noise, relocation and other issues of Baotou Aluminum in 2020. In response to this notification, the Company and Baotou Aluminum attached great importance to the issues involved, analyzed the issues, and communicated with local governments and local residents proactively. As of the end of 2020, a majority of the issues involved have been rectified, dust and noise pollution have been effectively controlled, and the relocation of residents has been progressing smoothly under the organization of the local government. In 2021, Baotou Aluminum completed the project of “transformation from shipment by truck to shipment by rail,” established relevant facilities to reduce the dust and noise and engaged expert to analyze status of environmental governance and protection. However, as the environmental protection standards and requirements may be further enhanced, we cannot assure you that the similar events would not occur in the future, if such incidents were to occur, it could impact our operating results, financial condition and reputation, all of which could adversely affect our profitability and ability to retain existing customers and to attract new customers.

In addition, the environmental laws and regulations in the PRC and other jurisdictions in which we operate continue to evolve. As a result, we may incur significant additional costs if relevant laws and regulations change or enforcement of existing laws and regulations becomes more rigorous. For instance, in April 2020, the Law on Prevention and Control of Environmental Pollution Caused by Solid Waste was amended to impose stricter liabilities on enterprises that produce solid waste. The National Catalogue of Hazardous Wastes was also amended and the new version became effective on January 1, 2021, which detailed and reclassified some hazardous wastes. As we generate solid waste during our production process, we may incur higher costs to comply with the requirements under the amended law. Since 2017, the PRC government has carried out regulations and comprehensive campaigns to control air pollution in response to the poor air quality in autumn and winter in Beijing, Tianjin, Hebei and their surrounding areas and the Fenhe and Weihe plain, pursuant to which we may reduce output of our relevant plants from time to time. Further, our overseas expansion projects are subject to foreign environmental laws and regulations. Failure to comply with environmental laws and regulations may trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of monetary penalties, the imposition of remedial requirements and the issuance of orders enjoining future operations, all of which may materially and adversely affect our business operations.

We are subject to administrative policies and orders relating to China’s energy-saving and emission reduction requirements that could adversely affect our production.

We are subject to administrative energy-saving and emission reduction policies and orders carried out by the central and provincial governments. The MIIT issued the Standard Conditions for Aluminum Industry on July 18, 2013 and updated it on February 28, 2020, which set forth various standards for existing enterprises, including but not limited to standards for environmental protection, energy consumption, and utilization of resources. We cannot assure you that the relevant government authorities will not issue more stringent standards or rules, which may require us to incur additional costs or expenses to comply with these standards or rules, and our existing production may be delayed for facility upgrading or suspended before full compliance with these standards or rules. The occurrence of any of the foregoing could have an adverse effect on our business, results of operations and financial condition.

You may experience difficulties in effecting service of legal process and enforcing judgments against us and our management, and the ability of U.S. authorities to bring actions in the PRC may also be limited.

Most of our assets and our subsidiaries are located in the PRC. In addition, most of our directors and officers reside within the PRC, and most of the assets of our directors and officers are located within the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside the PRC upon most of our directors or officers, including with respect to matters arising under applicable laws and regulations. Moreover, the PRC does not have treaties providing for the reciprocal recognition and

6

enforcement of judgments of courts with the United States, the United Kingdom or most other Western countries, and Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States.

As a result, recognition and enforcement in the PRC or Hong Kong of judgments of a court in the United States and any of the other jurisdictions mentioned above in relation to any matter not subject to a binding arbitration provision may be difficult or impossible. Even if you sue successfully in a U.S. court or any of the other jurisdictions mentioned above, you may not be able to collect on such judgment against us or our directors and officers. In addition, the SEC, the U.S. Department of Justice and other U.S. authorities may also have difficulties in bringing and enforcing actions against us or our directors or officers in the PRC. Furthermore, class action lawsuits, which are available in the United States for investors to seek remedies, are generally uncommon in the PRC.

Our business is vulnerable to downturns in the general economy and industries in which we operate or which we serve. A significant reduction in demand could materially and adversely affect our business, financial condition and results of operations.

Demand for our products depends on the general economy and level of activity and growth in the industries where we operate or serve. Adverse development in economic and market conditions, such as a significant economic downturn or a downturn in the commodity sector or the financial markets, could have a material adverse effect on our business, financial condition, results of operations and the price of our ordinary shares or ADSs. Development of the relevant industries is subject to various factors, including but not limited to market fluctuations of prices of commodities, general political or economic conditions, technology development, government regulations and investment plans and changes in domestic and global production capacity, many of which are beyond our control.

7

We are unable to predict cycles of the global and domestic economies. Concerns over inflation, energy costs, geopolitical issues, trade tensions, the availability and cost of credit, unemployment, consumer confidence, declining asset values, capital market volatility and liquidity issues have created difficult operating conditions for us in the past and may continue to do so in the future. For example, since 2018, there were continuing trade tensions between the U.S. and China, resulting in increased tariffs and escalating tensions between the two countries. On January 15, 2020, the two parties signed the China-U.S. phase-one economic and trade agreement. Since then, the PRC government and the U.S. government have granted tariff exemptions on certain goods. However, it is still unclear when future phase negotiations between the two countries will begin and whether there will be further trade agreements following such negotiations. It is also unclear if future disputes will occur or the two countries will be able to negotiate the issues to restore a mutually beneficial economic and trade cooperation. Future actions or escalations by either the U.S. government or the PRC government could have a material adverse effect on the business environment in general, global, Chinese and/or U.S. economic conditions and the stability of global, Chinese and/or U.S. financial markets, which in turn, may adversely affect our business, financial condition and results of operations. In addition, on November 12, 2020, the President of the United States signed Executive Order 13959 (as subsequently amended on January 13, 2021 and June 3, 2021, the “Executive Order”), which prohibits certain transactions in securities of certain entities listed in the annex to the Executive Order (each, a “Restricted Entity”). Currently, neither we nor Chinalco are on the list of Restricted Entities. However, if the Executive Order is further amended, or the Office of Foreign Assets Control of the U.S. Department of Treasury exercised its power pursuant to the Executive Order, to include us or Chinalco as a Restricted Entity in the future, U.S. persons as defined under the Executive Order may be prohibited from purchasing our securities. As a result, the value and liquidity of our ADSs may be materially and adversely affected, which may lead to significant volatility in our ADS trading price. Furthermore, the PRC government has, from time to time, adjusted its monetary, fiscal and other policies and measures to manage the rate of growth of the economy or the overheating and overcapacity in certain industries or markets. In addition, the global outbreak of COVID-19 and the efforts to contain it have negatively impacted the global economy and financial markets. For further details of the impact of outbreak of COVID-19 on the general economy, please refer to “– Our business may be materially and adversely affected by the COVID-19 pandemic.”

The global economy began to recover from the COVID-19-induced recession in 2021 and the commodities market had an unparalleled growth. Due to the recovery of demand for aluminum globally, in 2021, the average spot price of alumina on the Australian FOB increased by 21.8% to US$331 per tonne and the average international cash price for primary aluminum on the LME increased by 45.5% to US$2,480 per tonne. During the same period, the average spot price of alumina in the domestic market increased to RMB2,798 per tonne, representing an increase of 19.7% compared to 2020. Although the overall trend of the industries we are in was upward in 2021, there is no assurance that there will not be any further and significant fluctuations, which may materially and adversely affect our business, financial condition and results of operations. Recently, the Russia-Ukraine military conflict has caused, and continues to intensify, significant geopolitical tensions in Europe and across the world. The resulting economic sanctions imposed by the United States, the European Union, the UK and other countries may continue to significantly impact supply chains, lead to market disruptions including significant volatility in commodities’ prices, and bring heightened near-term uncertainty to the global financial system. Escalation of the Russia-Ukraine conflict could lead to other additional impacts which may adversely affect our business, such as disruption of international trade flows, extreme market pricing volatility, with particular impact on the energy sector, industrial supply chains, shipping, and regulatory and contractual uncertainty, and increased geopolitical tensions around the world. These factors could disrupt the global markets in ways that are difficult to predict and estimate in advance as to their potential impact on our business, financial position, or operational results.

As a result of the foregoing, the global and domestic economic conditions or any particular industry in which we operate or which we serve may grow at a lower-than-expected rate or even experience a downturn. Uncertainty about future economic conditions makes it challenging for us to forecast our results of operations, make business decisions and identify risks that may affect our business. If we are not able to timely and appropriately adapt to changes resulting from the difficult macroeconomic environment, our business, financial condition and results of operations may be materially and adversely affected.

Volatility in the prices of alumina, primary aluminum, other non-ferrous metal and other commodities may adversely affect our business, financial condition and results of operations.

The prices of the products we produce and trade, including alumina, primary aluminum, other non-ferrous metal and coal products, have experienced significant fluctuation historically and are expected to continually fluctuate in response to general economic conditions, supply and demand, the level of inventories, interruption caused by unforeseen international or domestic events such as global outbreak of COVID-19, uncertainty of or changes in domestic or foreign laws or policies and many other factors, which are beyond our control.

8

We price our alumina and primary aluminum products by reference to international and domestic market prices, and domestic supply and demand, each of which may fluctuate beyond our control. We may not be able to effectively respond to a sudden fluctuation in alumina or primary aluminum prices. For example, due to the recovery of demand for aluminum globally, in 2021, the average spot price of alumina on the Australian FOB increased by 21.8% to US$331 per tonne and the average international cash price for primary aluminum on the LME increased by 45.5% to US$2,480 per tonne. During the same period, the average spot price of alumina in the domestic market increased to RMB2,798 per tonne, representing an increase of 19.7% compared to 2020, and the average spot prices of primary aluminum at SHFE increased by 34.2% to RMB18,953 per tonne. In 2021, the average external selling prices for our self-produced alumina and primary aluminum, regardless whether the sales were recognized in our trading segment, were RMB2,785 per tonne and RMB19,099 per tonne, respectively, representing an increase by 13.4% and 34.8%, respectively, as compared to the prices in 2020. Nevertheless, the prices of alumina and primary aluminum may decline due to, among other things, decrease in market demand of those products and any slowdown of economic growth in China. Because our prices are affected by a variety of factors, most of which are beyond our control, we may not be able to respond promptly to the fluctuation in alumina or primary aluminum prices in international market or domestic market. There is no assurance that there will not be any further and significant fluctuations in prices of our key products, including alumina and primary aluminum, which may materially and adversely affect our business, financial condition and results of operations. In addition, since our profit margin for trading non-ferrous metal products and coal products is based on price fluctuations in the short term, we need to make the correct prediction of the price fluctuations of these commodities on the markets to maintain our profit margin. If market price fluctuations on the market do not match our prediction, we may incur substantial losses.

In addition, as we generate profit from the differences between the purchase and sales prices of the non-ferrous metal products and the coal products we deal in, significant fluctuations in these prices may cause the value of the outsourced products in transit or in inventory to decline, and if the carrying value of our existing inventories exceeds the market price in the future periods, we may need to make additional provisions for our inventories’ value, which may have a material and adverse effect on our profit level and other financial performance. See Note 13 to our audited consolidated financial statements for information about our inventories. As a result, any significant fluctuation in market prices for these commodities could materially and adversely affect our business, financial condition and results of operations.

Our business requires substantial capital expenditures that we may not always be able to obtain at reasonable costs and on acceptable terms.

Our plans to upgrade and expand our production capacity will require substantial capital expenditures. For the years ended December 31, 2019, 2020 and 2021, our total capital expenditures were approximately RMB11.8 billion, RMB4.6 billion and RMB4.7 billion, respectively. We expect our estimated capital expenditures in 2022 to be a total of approximately RMB6.8 billion. See “Item 4. Information on the Company – D. Property, Plants and Equipment – Our Expansion” and “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Capital Expenditures and Capital Commitments” for details of our expansion and capital expenditures. We may also need additional funding for debt servicing, working capital, other investments, potential acquisitions and joint ventures and other corporate requirements.

We may need to seek external financing, such as bank and other loans as well as bond offerings, to satisfy our capital needs if cash generated from our operations is insufficient to fund our capital expenditures or if our actual capital expenditures and investments exceed our plans. Our ability to obtain external financing at reasonable costs and on acceptable terms is subject to a variety of factors, such as our credit ratings, financial market conditions and our past or projected financial performance. Although we have been profitable in recent years, we cannot guarantee that we will not incur losses in the future, in which case the rating agencies may downgrade our credit ratings. In addition, if financial markets experience significant volatility and disruption, it may result in a decrease in the availability of liquidity and credit for borrowers and increase in interest rate or other financing cost. Failure to obtain sufficient funding at reasonable costs and on acceptable terms for our development plans could delay, reduce the scope of, or eliminate future activities or growth initiatives and adversely affect our business and prospects.

9

Our business may be materially and adversely affected by the COVID-19 pandemic.

Since the end of 2019, COVID-19, a disease caused by a novel strain of coronavirus, has spread in China and globally, and the World Health Organization declared the COVID-19 outbreak a pandemic in March 2020. The COVID-19 pandemic has led the governments and other authorities around the world, including China, to impose measures intended to control its spread, including quarantines, restrictions on travel and public gatherings, temporary closure of certain businesses and facilities. While still continuing, the COVID-19 pandemic, as well as efforts to contain it, has caused significant economic and financial disruptions around the world, including disruption on manufacturing operations, logistics and global supply chains and significant volatility and disruption of financial markets. We have taken measures to control and manage the impact of COVID-19, including measures to protect health and safety of our employees, maintain ventilation system and promote vaccinations among all employees. However, if the virus, in particular the Delta and Omicron variants thereof, further spreads worldwide, including China or other jurisdictions in which we, our suppliers or customers operate or have property or projects, or further control measures are adopted and continue to stay in place in these or other regions, we may face further disruptions on our normal operation, sales, project construction, supply chain and transportation channel, labor shortage and other limitations on our business activities due to restrictions on our employees’ ability to travel, infection of management and employees, suspension or closure of facilities, additional costs arising from precautionary infection control and hygienic measures, and other impacts, which could be material and adverse to our business, financial condition and results of operations. For example, China has recently experienced upticks in cases that have prompted selective restrictions in affected regions such as Shanghai.

In addition, the market prices of primary aluminum and alumina have been volatile since the COVID-19 outbreak. Although, because of the recovery of the downstream business activities in China and globally, the market prices of primary aluminum and alumina have increased in 2021, there is no assurance that the demand for primary aluminum and alumina will not be weakened by the COVID-19 pandemic any more, and any volatility or decreases of the market prices of primary aluminum and alumina may result in reduction of our revenue and profit, increase of our inventory amount and other material and adverse impacts on our financial condition and results of operations.

If the global public health crisis caused by COVID-19 pandemic continues, it may have an adverse impact on the global and China’s economies, which may, among other things, exacerbate turbulence in commodity market, discourage or disrupt investment and production, increase total inventories of primary aluminum or other products in the industry, bring more uncertainty to the consumption of aluminum-made products and the prices of primary aluminum and alumina, and cause other adverse impacts on the industry we are in. An economic downturn including financial market disruption, or a market perception that this situation may occur or develop, may also cause increase of financing costs, or reduce available sources of financing for operation or expansion. In addition, significant financial market volatility and uncertainty may adversely affect the market prices of our ordinary shares and ADSs. Credit risks of customers and suppliers and other counterparty risks may also increase. These factors may materially and adversely affect our business, financial condition and results of operations. We may also experience negative effects from other future health epidemics or outbreaks beyond our control. These events are impossible to forecast and difficult to prevent. Any of these events could have a material adverse effect on our results of operations and financial condition.

Our operations consume substantial amounts of electricity, and our profitability may decline if electricity costs rise or if our electricity supplies are interrupted.

Our operations consume substantial amounts of electricity. Although we generally expect to meet the electricity consumption requirements for our alumina refineries and primary aluminum smelters from a combination of internal and external sources, our results of operations may be materially and adversely affected by any significant increase in electricity costs or interruptions in electricity supply.

Cost of electricity is the principal production cost in our primary aluminum operations. Our average electricity cost per kWh (including tax) of our primary aluminum smelters increased by 27% from 2020 to 2021. There is no assurance that the electricity costs will not further increase in the future. For instance, in 2021, the PRC government issued certain policies related to electricity pricing that could increase our electricity cost. See “Item 4. Information on the Company – B. Business Overview – Regulatory Overview – Electricity Supply and Price” for further details. If we are unable to pass on increases in energy costs to our customers, our operating margin, financial condition and results of operations could be materially and adversely affected.

10

With the implementation of the policy of “carbon dioxide peaking and carbon neutrality,” a series of policies have been introduced to control both the total amount and intensity of energy consumption and restrict the energy-intensive and high-emission industries, resulting in drastic market fluctuations and a sharp increase in production costs. A series of stringent measures such as electricity consumption restriction and production restriction and restriction on approval of projects have been adopted in various regions, resulting in large-scale production reduction in the industry, which led to a shortage of supply and aggravated the uncertainty of new or resumed production capacity in the second half of 2021. We cannot assure you that our production capacity will not be further affected by such policies, the occurrence of which could have a material adverse impact on our business, financial condition and results of operations.

In addition, interruptions in the supply of electricity can result in costly production shutdowns, increased costs associated with restarting production and the waste of production in progress. A sudden loss of electricity, if prolonged, can cause damage to or the destruction of production equipment and facilities. In such an event, we may need to expend significant capital and resources to repair or replace the affected production equipment to restore our production capacity. In the past, various regions across China experienced shortages and disruptions in electricity supply, especially during peak demand summer season or under severe weather conditions. For instance, certain subsidiaries of our Company were affected by electricity shortage due to electricity consumption restriction in the second and third quarters of 2021 and the suspended production volume reached a maximum of 3% of our total production capacity in October and November 2021. We cannot assure you that our operations will not suffer from shortages or disruptions in electricity supply, the occurrence of which could have a material adverse impact on our business, financial condition and results of operations.

Our operations consume substantial amounts of coal, and our operations may be adversely affected if we are not able to procure sufficient coal or if coal prices rise significantly.

We rely heavily on coal as our energy and fuel source in our operations. As we increase our alumina refining capacity, our consumption of coal will increase accordingly. If we are not able to obtain the amount of coal needed for our production due to a shortage of coal, constraints on coal transportation or any other reason, we may be forced to reduce our production output or suspend our alumina refining operations, which could materially and adversely affect our financial condition and results of operations. Although we have acquired equity interest in a number of coal mines, we expect to continue to rely substantially on third-party coal suppliers for the supply of coal. Our average purchase price per unit tonne of thermal coal increased by approximately 52.4% in 2021 from the level in 2020. See “Item 5. Operating and Financial Review and Prospects – A. Operating Results – Overview – Factors Affecting Our Results of Operations – Manufacturing Costs.” There is no assurance that the coal prices will not further increase or fluctuate. If we are unable to pass on increases or otherwise significant fluctuations in coal prices to our customers or offset price increases through productivity improvements, our operating margin, financial condition and results of operations could be adversely affected.

Our business and industry may be affected by the development of alternative energy sources and climate change.

Our operations consume substantial amounts of coal, the combustion of which generates significant greenhouse gas and other pollutants, and negatively contributes to climate change. A number of governments or governmental bodies have introduced or are contemplating legislative and regulatory changes in response to the potential impacts of climate change. These regulatory mechanisms may impact our operations directly or indirectly through our customers or supply chain. For example, the deepening of supply-side structural reform and the policy of “carbon dioxide peaking and carbon neutrality” have urged the industry in which we operate to optimize the energy consumption structure, reduce energy consumption, and develop deep-processing products with high added values. We may have to increase our capital expenditures in order to comply with such revised or new legislation or regulations, and changes to our profit or loss may occur due to increased or decreased demand for our products and indirectly due to changes in costs of goods sold, which may adversely affect our results of operations and financial condition.

In addition, we have invested in coal mining operations. Although revenues attributable to our energy segment accounted for only approximately 2.8% of our total revenues in 2021 (after elimination of inter-segment sales), we might still be affected by any change on the PRC thermal power industry, which have relied on coal as main source of fuel. The PRC thermal power industry may be affected by the development of alternative energy sources, climate change and global environmental factors. In particular, pursuant to the environmental protection goal set in China’s 14th Five-Year Plan, the PRC government plans to continue to encourage the development of new energy sources from 2021 to 2025. As such, alternative energy industries may rapidly develop and gradually gain mainstream acceptance in the PRC and the rest of the world. If alternative energy technologies continue to develop and prove suitable for wide commercial application in the PRC and overseas, demand for conventional energy sources, such as coal, could be reduced. Such reduction in demand for coal could have a material adverse effect on the coal mining industry and, consequently, negatively affect our business, results of operations and financial condition.

11

We may not be able to continue competing successfully in the markets in which we operate.

In 2021, we supplied approximately 43.8% of our total production of alumina to our own smelters and sold substantially all of the remaining self-produced alumina and all of our self-produced primary aluminum to our domestic customers. Our alumina (with chemical alumina products included) and primary aluminum production represented approximately 23.6% and 10.1%, respectively, of total domestic production in China in 2021. We face competition from both domestic and international alumina and primary aluminum producers. Our principal competitors are major domestic refineries and smelters. These producers compete with our alumina and primary aluminum operations on the basis of product cost, quality and pricing. In addition, we face increasing competition from international alumina and primary aluminum suppliers as a result of the elimination of tariffs on imports of primary aluminum and alumina into China. See “Item 4. Information on the Company – B. Business Overview – Competition” for further details.

Increasing competition in our product markets may reduce our selling prices or sales volumes, which will have a material adverse effect on our financial condition and results of operations. If we are unable to price our products competitively, maintain or increase our current share of China’s alumina and primary aluminum markets or otherwise maintain our competitiveness, our financial condition, results of operations and profitability could be materially and adversely affected.

Our overseas expansion exposes us to political and economic risks, commercial instability and events beyond our control in the countries in which we plan to operate.

We have overseas projects from time to time. For example, in 2020, we completed the construction of the Boffa Project, a project for the construction and development of a bauxite mine located in Boffa, Guinea. Although the Boffa Project has been completed and put into production, due to uncertainties involved in the overseas projects, we cannot assure you that all of our overseas expansion or investments will be successful or that we will not suffer foreign exchange losses in connection with our overseas investment.

In addition, operations in the overseas markets may also expose us to a number of risks including expropriation and nationalization of our assets in foreign countries, civil unrest, acts of terrorism, war, or other armed conflict; shortages of construction equipment and materials; severe weather conditions; social security, public health and safety, labors and construction safety and similar issues; epidemic diseases and infectious diseases; natural disasters; inflation; currency fluctuations, devaluations and conversion restrictions; confiscatory taxation or other adverse tax policies, governmental activities that limit or disrupt markets, restrict payments or limit the movement of funds, governmental activities that may result in the deprivation of contractual rights; lack of a well-developed legal system that makes it difficult to enforce our contractual rights; uncertainties in laws and policies; and governmental activities that may result in the inability to obtain or retain licenses required for operations. For example, in September 2021, President of Guinea was captured by the country’s armed forces in a coup. While our Boffa Project has not been materially impacted as of the date of this annual report, we cannot assure you that it will not be adversely affected given the fluid situation in Guinea.

Our profitability and operations could be adversely affected if we are unable to obtain a steady supply of raw materials at competitive prices.

Historically, the price for bauxite, our most important raw material for alumina production, has been volatile. We obtain bauxite for our operations from our mines and external suppliers. See “Item 4. Information on the Company – B. Business Overview – Raw Materials – Alumina – Supply.” The extents to which we procure bauxite from each of these sources affect the security of our supply or cost of bauxite. The supply of bauxite could be affected by various factors, including geographic conditions of bauxite mines, government policies, market prices and competition, many of which are beyond our control. We rely on overseas suppliers to obtain a portion of bauxite we use for production. Indonesia used to be a major source of our imported bauxite. As a result of the ban imposed by the Indonesia Government on the exportation of unprocessed bauxite and nickel, since January 2014, we have not been able to import bauxite from Indonesia for the use of our alumina refineries in China, and our operation of bauxite mining in Indonesia has been suspended since September 2014. See “Item 4. Information on the Company – B. Business Overview – Our Mines” for more details of our bauxite mines in Indonesia. If we exhaust our stockpiles or our procurement of bauxite from external suppliers is interrupted for any reasons, and cannot find an alternative source of bauxite at competitive prices, our financial condition, results of operations and profitability could be adversely affected.

In addition, our results of operations can be affected by increases in the cost of other raw materials and other key inputs such as energy. If we cannot obtain a steady supply of key raw materials at competitive prices, our financial condition and results of operations could be materially and adversely affected.

12

Any transportation interruption or any material increase in our transportation costs could have a material adverse effect on our business, financial condition and results of operations.

Our operations require the reliable transportation of raw materials and supplies to our refining and smelting sites and finished products to our customers. Our alumina and primary aluminum products are mainly transported by rail and trucks. There is no assurance that we can always enjoy sufficient transportation capacity or we will not experience transportation interruption in the future. Furthermore, natural disasters, severe weather conditions and outbreak of epidemic diseases and infectious diseases may cause interruption to the transportation system, which could in turn affect the transportation of our products. Please refer to “– Our business may be materially and adversely affected by the COVID-19 pandemic” for further details of the impact of COVID-19 pandemic on the transportation system. In addition, any changes in fuel prices or fuel supply may be unpredictable and beyond our control. There is no assurance that shortage of fuel will not occur in the future. Any surge in fuel prices or shortage of fuel supply may lead to increases in our operation and transportation costs. If we are unable to make timely deliveries due to logistical and transportation disruptions, or transfer the increased costs to our customers, our production, reputation and results of operations may be adversely affected.

Estimates of mineral reserves and mineral resources are uncertain and the volume and grade of minerals actually extracted may vary from our estimates.

Our estimates of mineral reserves and mineral resources have been prepared in accordance with the disclosure requirements of Subpart 1300 of U.S. Securities and Exchange Commission Regulation S-K (“Regulation S-K 1300”). Compliance with Regulation S-K 1300 may be subject to varying interpretations in some cases due to their lack of specificity, which could result in continuing uncertainty regarding compliance matters and substantial costs associated with compliance.

There are numerous uncertainties inherent in mineral estimates. Such estimates are, to a large extent, based on assumed prices for the commodities we produce, primarily bauxite and coal, and interpretations of geologic data obtained from drill holes and other exploration techniques, which may not necessarily be indicative of future results. Our mineral estimates are based on the latest available geological and geotechnical studies. We conduct ongoing studies of our mining properties to optimize economic values and to manage risk. Valid estimates made at a given time may significantly change when new information becomes available.

Estimates of mineral reserves, or the cost at which we anticipate the mineral reserves will be recovered, are based on assumptions, such as prices of alumina, aluminum and coal and other economic inputs. Changes to such assumptions may require revisions to reserve estimates which could affect our asset carrying values and may also negatively impact our future financial condition and results. We revise our mine plans and estimates of recoverable proven and probable mineral reserves as required in accordance with the latest available studies. Until mineral reserves are actually mined and processed, the quantity of minerals and grades must be considered as an estimate only.

Additionally, the term “mineral resources” does not indicate recoverable proven and probable mineral reserves as defined by Regulation S-K 1300. Estimates of mineral resources are subject to further exploration and evaluation of development and operating costs, grades, recoveries and other material factors, and, therefore, are subject to considerable uncertainty. Certain mineral resources may not meet the threshold for mineral reserve modifying factors, such as engineering, legal and/or economic feasibility, that would allow for the conversion to mineral reserves. Accordingly, no assurance can be given that the estimated mineral resources not included in mineral reserves will become recoverable proven and probable mineral reserves.

The estimation of mineral resources and reserves is a subjective process that is partially dependent upon the judgment of the qualified person preparing such estimates. The process relies on the quantity and quality of available data and is based on knowledge, mining experience, statistical analysis of drilling results and industry practices. If the market prices for the commodities we produce decline from assumed levels, if production costs increase or recovery rates decrease, or if applicable laws and regulations are adversely changed, we can offer no assurance that the mineral reserves can be mined or processed profitably. If we determine that certain of our estimated recoverable proven and probable mineral reserves have become uneconomic, this may ultimately lead to a reduction in our aggregate reported mineral reserves, which could have a material adverse effect on our business, financial condition and results of operations.

13

Our previous adjustments of our business segments and historical results may not be indicative of our future prospects.

In 2013, we entered into a new business segment, the energy segment, through acquisition of Ningxia Energy. In the past few years, we have streamlined our existing business to focus on the productions of alumina and primary aluminum. For instance, in December 2018, we acquired 50% equity interests in Shanxi Huaxing through the Shanghai United Assets and Equity Exchange at a price of approximately RMB2,665.2 million from Baotou Transportation Investment Group Co., Ltd. Upon completion of the acquisition, Shanxi Huaxing became a wholly-owned subsidiary of the Company. The acquisition is conducted for purposes of enhancing our profitability and is in line with our strategic layout of alumina and aluminum business, as the increase of our shareholding in Shanxi Huaxing, an alumina plant, is expected to enhance the synergy with our primary aluminum production in Shanxi, where we have newly added production capacity of primary aluminum.

There is no assurance that we will enter into a new business segment or continue to streamline our existing business as we have done so in the past. Moreover, we cannot assure you that the benefit of entering into a new business segment or streamlining our existing business will be fully realized as expected or at all.

While our revenue increased by 45.0% from RMB185,990.6 million in 2020 to RMB269,748.2 million in 2021, primarily due to the year-on-year increase in the prices of alumina and electrolytic aluminum, the financial performance was driven by a wide range of factors, many of which are out of our control or may not be sustainable or indicative of future growth or performance, such as the prices of our products and raw materials. As a result, our historical results may not be indicative of our future prospects and results of operations.

Our failure to successfully manage our business expansion, including our expansion into new areas of business, would have a material adverse effect on our results of operations and prospects.

We have made investments in business expansion in line with our development strategy through organic growth, acquisitions and joint ventures. In addition, we may, from time to time and when we deem appropriate, expand into new industries which we believe have synergies with our existing operations.

Our expansion has created, and will continue to place, substantial demand on our resources. Managing our growth and integrating the acquired businesses will require us to, among other things:

● comply with the laws, regulations and policies applicable to the acquired businesses, including obtaining timely approval for the construction or expansion of production and mining facilities as required under the relevant laws of PRC and foreign jurisdictions;

● maintain adequate control on our business expansion to prevent, among other things, project delays or cost overruns;

● accumulate expertise and experience in managing the new businesses;

● gain market acceptance for new products and services and establish relationships with new customers and suppliers;

● achieve sufficient utilization of new production facilities to recover costs;

● manage relationships with employees, customers and business partners during the course of our business expansion and integration of new businesses;

● attract, train and motivate members of our management and qualified workforce to support successful business expansion;

● access debt, equity or other capital resources to fund our business expansion, which may divert financial resources otherwise available for other purposes;

● divert significant management attention and resources from our other businesses; and

● strengthen our operational, financial and management controls, particularly those of our newly acquired subsidiaries, to maintain the reliability of our reporting processes.

14

Any significant difficulty in meeting the foregoing or similar requirements could delay or otherwise constrain our ability to implement our expansion plans, or result in failure to achieve the expected benefits of the combination or acquisition or write-offs of acquired assets or investments, which in turn would limit our ability to increase operational efficiency, reduce marginal manufacturing costs or otherwise strengthen our market position. Failure to obtain the intended economic benefits from the business expansion could adversely affect our business, financial condition, results of operations and prospects. In addition, we may also experience mixed results from our expansion plans in the short term.

Furthermore, there is no assurance that we will be able to identify attractive acquisition targets, obtain favorable deal terms in any acquisition, secure applicable governmental approvals for any proposed investments, accurately estimate the mineral resources and reserves of these acquisition targets or obtain the necessary funding to complete such acquisitions on commercially acceptable terms or at all. Acquisitions may result in the incurrence and inheritance of debts and other liabilities, assumption of potential legal liabilities in respect of the acquired businesses, and incurrence of impairment charges related to goodwill and other intangible assets, any of which could harm our business, financial condition and results of operations. In particular, if any of the acquired businesses fail to perform as we expect, we may be required to recognize a significant impairment charge, which may materially and adversely affect our business, financial condition and results of operations. As a result, there can be no assurance that we will be able to achieve the strategic purpose of any acquisition, the desired level of operational integration or our investment return target.

Our joint ventures and strategic investments may not be successful.

We may from time to time enter into joint ventures or make strategic investments to grow our business and operations. For example, we have participated in joint ventures and strategic investments in coal mining, in line with our development strategy to diversify our product offering and partially offset our future energy costs. In addition, we have acted as joint venture partner or strategic investor in certain projects which engage in primary aluminum and aluminum alloy manufacturing to diversify our product offering, strategically position ourselves along the industrial chain and facilitate our enterprise transformation and upgrade. If our joint ventures, strategic investments or other investments experience fluctuation in performance or incur losses, our business, financial condition and results of operations may be adversely affected. For further details of certain of our joint ventures and strategic investments, please see “Item 4. Information on the Company – A. History and Development of the Company” and “Item 4. Information on the Company – D. Property, Plants and Equipment – Our Expansion.”

In addition, our joint ventures and subsidiaries which operate coal mines have been facing increasing uncertainties. While the coal price rose rapidly in the first three quarters of 2021 due to short supply, it then declined to a reasonable range in November 2021 due to the policy adjustment and increase of coal supply. If coal price further decreases in the future, the business, financial condition and results of operations of these joint ventures which operate coal mines may be adversely affected.

15

Failure to maintain optimal utilization of our production facilities will adversely affect our gross and operating margins.

During the past few years, we expanded the production capacity by completing our construction, upgrading or remolding of some of our alumina and primary aluminum production facilities. If we are able to maintain satisfactory facility utilization rates and increase our production output, this increase in our production capacity would enable us to reduce our unit costs through economies of scale, as fixed costs will be spread over a higher volume of output units. Conversely, underutilization of our existing and newly acquired or constructed production facilities may increase our marginal production costs and prevent us from realizing the intended economic benefits of our expansion.

Since 2013, we have implemented flexible production arrangements from time to time for certain alumina and primary aluminum production facilities in response to prevailing market conditions and government policies. Although we did not implement flexible production arrangements in 2021, we cannot assure you that we will not do so in the future. We may also increase our external purchases of alumina and primary aluminum for trading purposes to capitalize on fluctuating market prices and to enhance resource planning to achieve cost savings in our production. The increase in our external purchases will reduce our utilization of certain production facilities, but may not result in a proportionate decrease in fixed costs such as leases and depreciation of plant, property and equipment.

If we fail to maintain optimal utilization rates and spread fixed costs over a high volume of output units, our gross and operating margins may be adversely affected.

We may be required to record impairment charges in the future.

If business conditions deteriorate, long-lived assets need to be reviewed for possible impairment. Impairment loss needs to be recognized to the extent that the carrying amount exceeds the recoverable amount. In 2019, 2020 and 2021, we recorded impairment loss of property, plant and equipment of RMB259.4 million, RMB416.8 million and RMB2,328.1 million, respectively. In addition, we made net credit impairment of receivables of RMB171.0 million, RMB979.2 million and RMB1,384.9 million in 2019, 2020 and 2021. We cannot guarantee that we will not incur any impairment loss or our impairment loss will not increase in the future due to various reasons including, but not limited to, strategic decisions made in response to changes in economic and competitive conditions, the impact of the economic environment on our customer base and material adverse changes in our relationship with significant customers. If we record significant impairment charges, our results of operations may be materially and adversely affected.

Our mining operations have limited mine lives and eventual closure of these operations will entail costs and risks regarding ongoing monitoring, rehabilitation and compliance with environmental standards.

Our existing mining operations in the PRC and overseas have limited mine lives and will eventually be depleted. We need to perform certain procedures to remedy and rehabilitate the environmental and social impact that our mining operations have had on local communities and the environment. Remediation, rehabilitation, closure and removal of our facilities will incur various costs and are subject to various risks. The key costs and risks for mine closures include, among others, (i) long-term management of permanent engineered structures and acid rock drainage; (ii) closure in accordance with local or international environmental standards; (iii) orderly retrenchment of employees and third-party contractors; and (iv) orderly transfer of the site, its associated permanent structures and community development infrastructure and programs to new owners. There is no assurance that such closure of mines will be successful and without delays or additional costs, in which case we may be subject to increased costs, penalties or other legal or administrative actions, damages to reputation, or even suspension and cancellation of mining permits, the occurrence of which would cause a material adverse effect on our business, financial condition and results of operations.

16

Failure to discover new reserves or resources, maintain or enhance existing reserves or resources, develop new mining operations or expand our current mining operations could negatively affect our business, financial condition and results of operations.

Mining exploration is unpredictable in nature. The success of any mining exploration program depends on various factors, many of which are beyond our control. Due to the unpredictable and speculative nature of the mining industry, there is no assurance that any exploration program that we are currently undertaking or may undertake in the future will result in the discovery of valuable reserves or resources. There is no assurance that reported resources can be converted into reserves. Furthermore, actual results upon production may differ from those anticipated at the time of discovery. To access additional reserves in explored areas, we will need to successfully complete development projects, including but not limited to extending existing mines and developing new mines. There are a number of uncertainties inherent in the development and construction of any new mine or an extension of an existing mine, including but not limited to (i) the availability and timing of necessary governmental approvals; (ii) the timing and cost necessary to construct mining and processing facilities; (iii) the availability and cost of labor, utilities, auxiliary materials and other supplies and the accessibility of transportation and other infrastructure; and (iv) the availability of funds to finance construction and production activities. There is no assurance that any future exploration activities or development projects will extend the life of our existing mining operations or result in any new economic mining operations and such failure may have a material adverse effect on our business, financial condition and results of operations.

Our indebtedness could adversely affect our business, financial condition and results of operations.

We have relied, and expect to continue to rely, on both short-term and long-term borrowings to fund a significant portion of our capital requirements. As of December 31, 2021, we had approximately RMB24,506.1 million in outstanding short-term bonds and short-term bank borrowings (including the current portion of long-term bank and other borrowings) and RMB64,095.9 million in outstanding long- and medium-term bonds and long-term bank and other borrowings (excluding the current portion of these borrowings). On March 22, 2022, subject to approval at our 2021 annual general meeting that is expected to be held in 2022, our Board approved to authorize the issuance of debt financing instruments and bonds in the PRC (including various issued domestic bonds) and overseas bonds with an aggregate outstanding balance of all bonds not exceeding RMB50 billion, the term of which authorizations will commence on the date of approval at our 2021 annual general meeting and close upon the conclusion of our 2022 annual general meeting. Although we have been managing our debt and assets with the goal of maintaining our debt at an appropriate level, there is no assurance that such efforts would be successful or the level of our debt will be further decreased. Please see Note 19 and Note 44 to our audited consolidated financial statements for more detailed information about our borrowings and recent issuance of bonds and notes in 2022. This level of debt could have significant consequences on our operations, including:

● making it more difficult for us to fulfill payment and other obligations under our outstanding debt, including repayment of our debt and credit facilities should we be unable to obtain extensions for any such debt or credit facilities before they mature. Please see “Item 5 – Operating and Financial Review and Prospects – B. Liquidity and Capital Resources” for maturities of our outstanding long-term borrowings;

● reducing the availability of cash flows to fund working capital, capital expenditures, acquisitions and other general corporate purposes;

● exposing us to interest rates fluctuations on our borrowings and the risk of being unable to rollover, extend or refinance our borrowings as necessary;

● potentially increasing the cost of additional financing and making it more difficult for us to conduct equity financings in the capital markets or obtain government approvals to seek additional financing; and

● putting pressure on our ADS price due to concerns of our ability to repay our debt.

17

Our ability to meet our payment and other obligations under our outstanding debt depends on our ability to generate cash flows in the future or to refinance such debt. In 2021, we carried out capital preservation and appreciation businesses by using daily reserve fund for investments such as structural deposits. However, we cannot assure you that such capital preservation and appreciation businesses will be successful or profitable, or our business in general will generate sufficient cash flows from operations, to satisfy our obligations under our outstanding debt and to fund other liquidity needs. If we are not able to generate sufficient cash flows to meet such obligations, we may need to refinance or restructure our debt, reduce or delay capital investments, or seek additional equity or debt financing. The sale of additional equity securities could result in dilution to our ADS holders. A shortage of financing could in turn impose limitations on our ability to plan for, or react effectively to, changing market conditions or to expand through organic and acquisitive growth, thereby reducing our competitiveness. We cannot assure you that future financing will be available in amounts or on terms acceptable to us, if at all.

The instruments governing our senior debt contain covenants that restrict our ability to take certain corporate actions and pay dividends.

We issue perpetual securities from time to time to meet our capital expenditure and working capital requirements. Please refer to “Item 4. Information on the Company – A. History and Development of the Company – Senior Perpetual Capital Securities Offering” for further details.

In November 2019 and December 2020, we issued RMB1,500 million perpetual medium-term notes with an initial distribution rate at 4.20% (the “2019 Perpetual Medium-term Notes”) and RMB1,000 million perpetual medium-term notes with an initial distribution rate at 4.45% (the “2020 Perpetual Medium-term Notes”), respectively, in China. Pursuant to the terms of the 2019 Perpetual Medium-term Notes and the 2020 Perpetual Medium-term Notes, while any coupon distribution payments are unpaid or deferred, our Company cannot declare or pay dividends to shareholders or decrease the share capital, or make material fixed asset investments. Therefore, our ability to pay dividends in respect of our ordinary shares and the ADSs may be limited under certain circumstances.

In addition, if these perpetual securities are categorized as debt due to changes of accounting standard or other reasons, or if we choose to redeem these perpetual securities, our total equity may be reduced, which may be adverse to our financial condition or the price of our ordinary shares or ADSs.

The interests of our controlling shareholder who exerts significant influence over us may conflict with ours.

As of December 31, 2021, our largest shareholder, Chinalco, directly owned 29.67% of our issued share capital and indirectly owned an additional 2.49% of our issued share capital through its controlled entities. The interests of Chinalco may conflict or even compete with our interests and those of our public shareholders. Chinalco may take actions that are in the interest of its subsidiaries, associates and other related entities to our detriment. For example, Chinalco may seek to influence our decision as to the amount of dividends we declare and distribute. Any increase in our dividend payout would reduce funds otherwise available for reinvestment in our businesses and thus may adversely affect our future prospects and financial condition.

In addition, we enter into transactions with related parties, including Chinalco and its subsidiaries and associates, which provide a range of services to us, including engineering and construction services, social services, land and property leasing as well as the supply of raw and supplemental materials. See “Item 7. Major Shareholders and Related Party Transactions – B. Related Party Transactions” for detailed information. It would be difficult to find an alternative source for some services that we receive from Chinalco. Our cost of operations may increase if Chinalco, its subsidiaries and associates are unable to continue providing such services to us.

In January 2019, Yunnan SASAC transferred its 51% equity interest in Yunnan Metallurgical Group Co., Ltd. to China Copper, a wholly-owned subsidiary of Chinalco, with no consideration. As Yunnan Aluminum, an affiliated company of Yunnan Metallurgical Group Co., Ltd., competes with us in the business segments of alumina and primary aluminum, Chinalco, as the indirect controlling shareholder of Yunnan Aluminum and our direct controlling shareholder, issued a letter of undertakings on non-competition to us, according to which Chinalco undertook to start in 2019 planning the integration of the businesses in which Yunnan Aluminum and we compete with each other, and address such business competition within five years. For further details, please see “Item 4. Information on the Company – A. History and Development of the Company.” While we intend to closely monitor Chinalco’s planning and implementation of such business integration and make timely public disclosure about significant progress made, due to the uncertainties involved in such business integration, however, we cannot assure you that business competition between Yunnan Aluminum and us would be addressed without undue delays or at all, or the plan of such business integration or the implementation thereof would be viewed by you or other investors as most favorable to us or our shareholders.

18

We are subject to accidents and natural disasters that may adversely affect our performance.

We may experience accidents and natural disasters in the course of our operations, which may cause significant property damage and personal injuries. Significant accidents and natural disasters may cause interruptions to our operations or result in property or environmental damage, increase in operating expenses or loss of revenues. The occurrence of accidents, natural disasters and the resulting consequences may not be covered adequately, or at all, by the insurance policies we carry. Losses or payments incurred by us as a result of major accidents or natural disasters may have a material adverse effect on our results of operations.

We have not obtained valid titles or land use rights to certain properties or land parcels that we occupy.

We have not obtained valid ownership certificates to certain properties that we occupy. These properties are used primarily for production plants and daily operations management. As of December 31, 2021, the book value of our properties with defective titles is RMB6,609.2 million, which represents approximately 3.4% of our total asset value. In addition, we had not obtained land use rights to certain land parcels, which we use primarily for our production plants. As of December 31, 2021, the book value of these land parcels is RMB734.4 million, representing approximately 0.4% of our total asset value. We have applied to the appropriate authorities to obtain the relevant ownership certificates. We cannot give any assurance that ownership dispute will not occur or that third parties will not assert any claims against us for compensation in respect of any use of these properties or land parcels.

Our business involves inherent risks and occupational hazards, which could damage our reputation, subject us to liability claims and cause substantial costs to us.

Our business involves inherent risks and occupational hazards. Under our mining operations, we engage or may engage in certain inherently risky and hazardous activities, including, among others, operations at height or on dangerous terrains, underground excavation and construction, use of heavy machinery, mining and handling of flammable and explosive materials, and we are therefore subject to risks associated with these activities, including, among others, geological catastrophes, toxic gas and liquid leakages, equipment failures, industrial accidents, fire, explosions and underground water leakages. Although we conduct geological assessments on mining conditions and adapt our mining plans to the mining conditions at each mine, we cannot assure you that adverse mining conditions will not endanger our workforce, increase our production costs, reduce our bauxite or coal output or temporarily suspend our operations. The occurrence of any of the foregoing events or conditions could have a material adverse impact on our business and results of operations. Additionally, we are exposed to operational risks associated with industrial or engineering activities, such as maintenance problems or equipment failures. These risks and hazards may result in personal injury and fatal casualties, damage to or destruction of properties or production facilities, and pollution and other environmental damage. Any of these consequences, to the extent they are significant, could result in business interruption, possible legal liability and damage to our business reputation and corporate image.

Our mines and operating facilities may be damaged by water, gas, fire or cave-ins due to unstable geological structures. Any significant accident, business disruption or safety incident could result in substantial uninsured costs and the diversion of our resources, which could materially and adversely affect our business operations and financial condition.

We may be subject to product liability claims.

Some of the products we sell or manufacture may expose us to product liability claims relating to property damage or personal injury. The successful assertion of product liability claims against us could result in significant damage payments and harm to our reputation, which in turn could have a material adverse effect on our business, financial condition and results of operations.

We are subject to litigation risks.

In the ordinary course of business, claims involving project owners, customers, suppliers and subcontractors may be brought against us and by us in connection with our operations. If we were found to be liable on any of the claims, we would have to incur a charge against earnings to the extent a reserve had not been established for the matter in our accounts, or to the extent the claims were not sufficiently covered by our insurance coverage. Both claims brought against us and by us, if not resolved through negotiations, are often subject to lengthy and expensive litigation or arbitration proceedings, and claims against us may also result in freeze of or restrictions on our bank deposits or other assets during such lengthy legal proceedings. Charges associated with claims brought against us and write-downs associated with claims brought by us could have a material adverse impact on our business, financial condition, results of operations and cash flow. Moreover, legal proceedings resulting in judgments or findings against us may harm our reputation and damage our prospects for future contract or business awards.

19

We face counterparty risks.

While we generally sell goods and provide services to reputable customers and evaluate the customers’ credit in accordance with our internal risk management criteria, such as their credit history and likelihood of default, we have limited access to information about our customers, and we may encounter difficulties in the collection of receivables in certain countries that we have less experience in our dealings. Therefore, we cannot guarantee that all of our customers will fully perform their obligations under their respective contracts with us, and the deterioration of any customers’ credit or payment conditions may result in those customers defaulting on their contractual obligations, which could materially and adversely affect our business, financial condition and results of operations. In addition, disputes with governmental entities and other public organizations could potentially lead to contract termination if these remain unresolved or it may take a considerably longer period of time to resolve the disputes with counterparties in the private sector, and payments from these entities and organizations may be delayed as a result.

We face risks related to our derivative instruments.

From time to time, we may utilize derivative instruments to minimize our exposure to fluctuations in the price of primary aluminum and other products. We primarily use futures contracts and option contracts traded on the SHFE and LME to hedge against fluctuations in the price of primary aluminum. All of our future contracts and option contracts are held for hedging purpose. As of December 31, 2021, the fair value of the outstanding futures and option contracts recognized in financial assets and financial liabilities amounted to nil and RMB69 million, respectively. In the process of hedging with futures and options, we cannot assure you that we will not incur any loss, which may have an adverse effect on our financial condition and results of operations.

We may face challenges to our intellectual property rights which could adversely affect our reputation, business and financial position.

We own important intellectual property, including patents and trademarks. Our intellectual property plays an important role in maintaining our competitive position in a number of the markets that we serve. Our competitors may develop technologies that are similar or superior to our proprietary technologies or design around the patents we own or license. Developments or assertions by or against us relating to intellectual property rights, and any inability to protect or enforce these rights, could adversely affect our business and competitive position.

We may be exposed to claims in relation to the unsatisfactory performance of third-party service providers, and disputes with business partners may also adversely affect our business.

We rely on third-party service providers for certain services, including but not limited to mining infrastructure construction, logistics services or warehouse management. Therefore, we are exposed to the risk that our third-party service providers may fail to perform their obligations, which may adversely affect our business operations. In addition, from time to time, we cooperate with business partners to develop our business, including acquiring strategic mining resources or businesses that complement our own business line. Furthermore, we operate certain projects through joint venture arrangements and may enter into further joint ventures in the future along with the expansion of our operations. We may have disputes with these business partners or joint venture partners over various aspects, such as performance of each party’s obligations, scope of each party’s responsibilities, product quality and logistics services. If such disputes cannot be settled in a timely manner, our financial condition and business may be adversely affected.

Failure to hire and retain management executives and other qualified personnel could adversely affect our business and prospects.

The growth of our business operations depends on the continued services of our senior management team. The industry experience, expertise and contributions of our executives and other members of our senior management are essential to our continued success. We will require an increasing number of experienced and competent executives in the future to implement our growth plans. If we were to lose the services of any of our key management members and were unable to recruit and retain personnel with equivalent qualifications at any time, the management and growth of our business could be adversely affected.

Competition for qualified personnel in general is intense in the PRC and other markets where we operate. We cannot guarantee that we will be able to maintain an adequately skilled labor force necessary for us to execute our projects or to perform other corporate activities, nor can we guarantee that staff costs will not increase as a result of a shortage in the supply of skilled personnel. If we fail to attract and retain personnel with suitable managerial, technical or marketing expertise or maintain an adequate labor force on a continuous basis, our business operations could be adversely affected and our future growth and expansions may be inhibited.

20

We may not be able to detect and prevent fraud or other misconduct committed by our employees, representatives, agents, customers, affiliates or other third parties.

We may be exposed to fraud or other misconduct committed by our employees, representatives, agents, customers, affiliates or other third parties that could subject us to litigation, financial losses and sanctions imposed by governmental authorities, as well as adversely affect our reputation, business, financial condition, results of operations and ADS trading prices. Such misconduct may include, among others:

● hiding unauthorized or unsuccessful activities, resulting in unknown and unmanaged risks or losses;

● intentionally concealing material facts, or failing to adequately perform necessary due diligence or risk analysis procedures designed to identify potential risks;

● improperly using or disclosing confidential information;

● engaging in improper activities or activities that might be subject to penalties, fines or sanctions;

● misappropriation of funds;

● conducting transactions that exceed authorized limits;

● engaging in misrepresentation or fraudulent, deceptive or otherwise improper or illegal activities;

● engaging in unauthorized or excessive transactions to the detriment of our customers; or

● otherwise not complying with applicable laws or our internal policies and procedures.

Our internal control procedures are designed to monitor our operations and ensure overall compliance. However, such internal control procedures may be unable to identify, detect or prevent all incidents of non-compliance or suspicious transactions in a timely manner, if at all. In addition, we do not have control over the activities conducted on their own by those of our customers, affiliates or other third parties.

There is no assurance that fraud or other misconduct by our employees, representatives, agents, customers, affiliates or other third parties will not occur in the future. If such fraud or other misconduct does occur and to the extent that our employees, representatives, agents, customers, affiliates or other third parties are penalized for any of their non-compliance activities or are otherwise subject to any sanctions laws of foreign jurisdictions, it may cause negative publicity of us as a result, and could have a material adverse effect on our business, financial condition, results of operations and our ADS trading prices.

Cyber attacks and security breaches may threaten the integrity of our intellectual property and other sensitive information and disrupt our business operations, which could adversely affect our reputation, business and financial position.

We face global cybersecurity threats, which may range from uncoordinated individual attempts to sophisticated and targeted measures directed at us. Cyber attacks and security breaches may include, but are not limited to, attempts to access information, computer viruses, denial of service and other electronic security breaches. Cyber attacks and security breaches may cause equipment failures, loss of information and limited access to systems. For manufacturing companies, cyber attacks and security breaches may result in the theft of sensitive data, including valuable technical and marketing information, disruptions to operations and breakdown of industrial control system. The economic costs to us to eliminate or alleviate cyber attacks and security breaches could be significant and may be difficult to estimate or calculate because the loss may differ based on the identity and motive of the programmer or hacker, which are often difficult to identify. Further, the perpetrators of cyber attacks and security breaches are not restricted to specific groups or persons. These attacks may be committed by company employees or external actors operating in any geography, including jurisdictions where law enforcement measures to address such attacks are unavailable or ineffective, and may even be launched by or at the behest of nation states. In addition, new and amended PRC regulatory requirements regarding network security and information protection have been adopted in recent years to further strengthen the regulation in those areas. In 2021, both Data Security Law and Personal Information Protection Law were promulgated and became effective. We may be required to devote significant resources to establishing and maintaining our compliance with such new or amended legislation or regulations.

21

Although we have not experienced any material cybersecurity incidents in the past, we cannot assure you that we will not experience them in the future. Due to the evolving nature of cybersecurity threats, the scope and impact of any future incident cannot be predicted. While we devote significant resources to security measures to safeguard our systems and mitigate potential risks, such as deploying network protection devices and performing regular security assessment, there is no assurance that such actions will be sufficient to prevent cyber attacks or security breaches that manipulate or improperly use our systems or networks, compromise confidential or otherwise protected information, destroy or corrupt data, or otherwise disrupt our operations. The occurrence of such events could negatively impact our reputation and our competitive position and could result in litigation with third parties, regulatory action, loss of business, potential liability and increased remediation costs, any of which could have an adverse effect on our financial condition and results of operations.

We are subject to risks normally associated with cross-border transactions, and our export products may become subject to anti-dumping or countervailing duty proceedings.

During the past few years, we generated marginal revenue from exports of certain chemical alumina products and aluminum fabrication products and also from time to time from exports of certain non-ferrous metals and minerals products to foreign jurisdictions. In 2021, we only engaged in the export of certain chemical alumina products and aluminum fabrication products to foreign countries including, among others, South Korea, Japan and countries in Southeast Asia and revenue generated from such export accounted for approximately 4.8% of our total revenues in 2021. Such foreign jurisdictions and other countries may take restrictive measures, including, among others, imposition of tariffs, anti-dumping duties and other non-tariff barriers, to protect their own markets. The sales of our product in overseas markets may be adversely affected by increases in or new impositions of anti-dumping duties, countervailing duties, quotas or tariffs imposed on our exports. Further increases in or new imposition of anti-dumping duties, countervailing duties, quotas or tariffs on our sales in these markets could adversely affect the exports to these regions in the future. For example, since 2018, the U.S. government has imposed tariffs and other trade barriers on products imported from China, which elicited retaliatory tariff increases by the PRC government on the U.S. products. Since October 1, 2018, the U.S. government had imposed a 10% tariff on various aluminum products imported from China, including chemical alumina products. Starting from May 2019, this tariff rate was increased to 25%. In 2021, we exported approximately 24,000 tonnes of chemical alumina products to the United States, the revenue generated from which represented approximately 0.04% of our total revenues in 2021. Other than exports of chemical alumina products, we did not have any other exports to the United States in 2021. There is no assurance that such export volume of chemical alumina products will not further decrease in the future. In addition, such trade frictions and tariffs involved may decrease China’s aluminum export to the United States and other countries and reduce global aluminum consumption, which could in turn have a material adverse effect on the demand of our products as well as our business, financial condition and results of operations. On January 15, 2020, the PRC government and the U.S. government entered into the U.S.-China Phase One trade deal agreement. Since then, the PRC government and the U.S. government have granted tariff exemptions on certain goods. However, it is not yet clear what further actions the U.S. government and the PRC government may take. There is no assurance that a broader trade agreement would be successfully negotiated between the U.S. and China, or no additional tariffs or other trade barriers would be imposed. If there is any escalation in trade frictions, we cannot assure you whether such development would not have a material adverse effect on the business environment in general, global economic conditions and the stability of global financial markets. Any of these factors affected by the developments in trade barriers could in turn have a material adverse effect on our business, financial condition and results of operations.

By virtue of our transactions with parties outside the PRC, we will be subject to the risks normally associated with cross-border business transactions and activities. We will also be exposed to the risk of changes in social, legal, political and economic conditions in the foreign jurisdictions. In particular, unexpected changes in regulatory requirements, tariffs and other trade barriers and price or exchange controls could limit our operations and make the repatriation of profits difficult.

Item 4.Information on the Company

A.History and Development of the Company

We were incorporated as a joint stock limited company under the Company Law of the PRC on September 10, 2001 under the corporate name Aluminum Corporation of China Limited. Our principal executive and registered office is located in the People’s Republic of China at No. 62 North Xizhimen Street, Haidian District, Beijing, China 100082, and our telephone number is (86) 10 8229 8322. Our website address is www.chalco.com.cn. The information on our website does not constitute a part of this annual report. Our U.S. public filings are available at the website maintained by the SEC at www.sec.gov, which contains reports, proxies and information statements, and other information regarding issuers that file electronically with the SEC.

Pursuant to a reorganization agreement entered into among Chinalco, Guangxi Investment and Guizhou Development in 2001, substantially all of Chinalco’s alumina and primary aluminum production operations, as well as a research institute and other related

22

assets and liabilities, were transferred to us upon our formation. We acquired our bauxite mining operations and associated mining rights from Chinalco in a separate mining rights agreement.

Our A Shares have been listed on the Shanghai Stock Exchange since April 2007. Our H Shares and our ADSs, currently each representing 25 H Shares, have been listed on the Hong Kong Stock Exchange and New York Stock Exchange, respectively, since December 2001.

We are a vertically integrated aluminum producer with operations in bauxite and coal mining, alumina refining and primary aluminum smelting. We also produce ancillary products and services derived from or related to our aluminum operations. In addition, we are engaged in trading and logistics of alumina, primary aluminum, other non-ferrous metal products, coal products and raw and ancillary materials in bulk domestically and internationally. Since 2013, we have expanded our operations into power generation. See “– B. Business Overview” for more details.

We have substantially increased the size and scope of our operations through organic growth as well as selective acquisitions and joint ventures. Our key operating assets currently include six subsidiaries mainly engaged in bauxite mining; two integrated alumina and primary aluminum production plants; nine stand-alone alumina refineries; eight stand-alone primary aluminum smelters; one stand-alone secondary aluminum producer; four stand-alone carbon production plants; one integrated power generation company with coal mining operations and one institute providing research and development services. All of our principal alumina and primary aluminum production facilities are operated in accordance with ISO14001 standards.

For the details of our principal capital expenditures for the previous three years ended December 31, 2021 and those planned for 2022, see “Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Capital Expenditures and Capital Commitments.” We currently do not have any significant divestiture in progress.

Private Placement of A Shares

On March 8, 2012, our Board resolved to issue up to 1.25 billion A Shares in the PRC. The A Share issue plans previously proposed by our Board on June 30, 2009 and January 30, 2011 and approved by our shareholders at the extraordinary general meeting, A Share class meeting and H Share class meeting held on August 24, 2009 and on April 14, 2011, respectively, ceased. Pursuant to the new issue plan approved by our Board on March 8, 2012, we planned to issue up to 1.25 billion A Shares, with a nominal value of RMB1.00 each, by way of private placement for expected proceeds not exceeding RMB8 billion. We intended to issue the A Shares to no more than ten specific target subscribers within six months of obtaining the approval of the CSRC. The issue price of A Shares to be offered shall be not less than 90% of the average trading price of our A Shares in 20 trading days immediately preceding the pricing determination date. We intended to apply proceeds from this private placement to finance Chalco Xing County Alumina Project, Zhongzhou branch Ore-dressing Bayer Process expansion construction project and to supplement working capital. The issue plan was approved by the SASAC on April 5, 2012 and by our shareholders at the extraordinary general meeting, A Share class meeting and H Share class meeting held on May 4, 2012. On August 24, 2012, our Board resolved to adjust the issue plan by proposing, among others, to increase the number of A Shares to be issued to up to 1.45 billion A Shares. The adjusted issue plan was approved by the SASAC and our shareholders at an extraordinary general meeting, A Share class meeting and the H Share class meeting on October 12, 2012 and by the CSRC on December 7, 2012. On March 14, 2013, we obtained the approval from the CSRC on our proposed private placement of A Shares under such adjusted issue plan, with effective period of six months after the approval date. However, the CSRC temporarily retrieved its approval in July 2013 due to its ongoing investigation of the sponsor of our proposed private placement of A Shares. The period of authorization to the Board relating to the adjusted issue plan was extended by our shareholders at the 2013 annual general meeting, A Share class meeting held on June 27, 2014 and H Share class meeting held on June 27, 2014, with an effective period of 12 months after the approval date. On January 4, 2015, we submitted the “Report regarding the resumption of the approval of non-public offering of shares of Aluminum Corporation of China Limited” to the CSRC. On April 24, 2015, we received the Approval in Relation to the Non-public Issuance of Shares by Aluminum Corporation of China Limited issued by the CSRC, pursuant to which we were approved to issue no more than 1,450,000,000 new shares. We completed the non-public issuance of A Shares on June 15, 2015 and issued an additional 1,379,310,344 A Shares pursuant to the specific mandate as approved at the annual general meeting of the Company on June 27, 2014. Upon completion, the total number of A Shares of the Company was increased from 13,524,487,892 to 14,903,798,236. Please refer to “– Subscription of Equity Interest of Certain Subsidiaries and Subsequent Issuance of Additional A Shares” for further changes of our issuance of A Shares.

Disposal of Aluminum Fabrication Business

We disposed of substantially all of our aluminum fabrication operations to Chinalco pursuant to the approval of shareholders at the 2012 annual general meeting on June 27, 2013.

23

On May 13, 2013, we submitted the tender notice to CBEX to dispose of the equity interest we held in eight aluminum fabrication enterprises, including Henan Aluminum, Chalco Southwest Aluminum, Chalco Southwest Aluminum Cold Rolling, Huaxi Aluminum, Qingdao Light Metal, Chalco Ruimin, Chalco Sapa Aluminum Products (Chongqing) Co., Ltd. and Guizhou Chalco Aluminum Co., Ltd. (collectively, “Aluminum Fabrication Interests”) through open tender. Chinalco participated in and won the bid for the Aluminum Fabrication Interests on June 7, 2013. We entered into an agreement (the “Aluminum Fabrication Interests Transfer Agreement”) with Chinalco on June 9, 2013 for the disposal of Aluminum Fabrication Interests for a consideration of RMB3,242.2 million. Such consideration was the initial bidding price, which was determined with reference to the appraised value of the Aluminum Fabrication Interests. Pursuant to the Aluminum Fabrication Interests Transfer Agreement, Chinalco agreed to pay the consideration in cash in two installments, namely, 30% of the consideration to be paid within five business days after the effective date of the agreement and 70% of the consideration to be paid by June 30, 2014. Chinalco must pay interest for the second installment for the period starting from the date immediately after the effective date until the payment date at the one-year lending rate set by the PBOC. The disposal was approved at the 2012 annual general meeting held on June 27, 2013 and we completed the disposal on June 27, 2013. Chinalco paid the consideration in full by June 2014.

As a condition of the disposal of the Aluminum Fabrication Interests, on June 9, 2013, we entered into an agreement with Chinalco to transfer the outstanding entrusted loans we provided to Henan Aluminum and Qingdao Light Metal as of December 31, 2012 to Chinalco for a consideration of RMB1,756.0 million. Such consideration was determined based on negotiations between the parties, with reference to the appraised total value of the loans. Pursuant to the agreement, Chinalco agreed to pay the consideration in cash in five equal installments of RMB351.2 million, with the last installment, together with the relevant interests at the one-year lending rate set by the PBOC, to be paid by June 30, 2017. The transfer was approved at the 2012 annual general meeting held on June 27, 2013 and we completed the transfer on June 27, 2013. The payment was fully settled by Chinalco in accordance with the agreement.

In addition, we entered into an agreement with Northwest Aluminum Fabrication Plant, a subsidiary of Chinalco, on June 6, 2013 to dispose of all the assets of Northwest Aluminum for RMB1,659.6 million. Such consideration was determined based on negotiations between the parties, with reference to the appraised net asset value of Northwest Aluminum. Pursuant to the agreement, Northwest Aluminum Fabrication Plant agreed to pay the consideration in cash in five equal installments of RMB331.9 million, with the last installment, together with the relevant interests at the one-year lending rate set by the PBOC, to be paid by June 30, 2017. The disposal was approved at the 2012 annual general meeting held on June 27, 2013 and we completed the disposal on June 27, 2013. The payment was fully settled by Northwest Aluminum Fabrication Plant in accordance with the agreement.

Disposal of Assets of Alumina Production Line of Guizhou Branch

On June 6, 2013, we entered into an agreement with Guizhou Aluminum Plant, a subsidiary of Chinalco, to dispose of the assets of the alumina production line of our Guizhou branch for a consideration of RMB4,429.0 million. Such consideration was determined based on negotiations between the parties, with reference to the appraised net asset value of such alumina assets of our Guizhou branch. Pursuant to the agreement, Guizhou Aluminum Plant agreed to pay the consideration in cash in five equal installments of RMB885.8 million, with the last installment, together with the relevant interests at the one-year lending rate set by the PBOC, to be paid by June 30, 2017. The disposal was approved at the 2012 annual general meeting held on June 27, 2013 and we completed the disposal on June 27, 2013. The payment was fully settled by Guizhou Aluminum Plant in accordance with the agreement.

We decided to dispose of the assets of the alumina production line of Guizhou branch because the district in which they were located had been changed from an industrial district to a commercial district based on the local urban plan, which would significantly increase Guizhou branch’s environmental compliance costs. We built a new alumina refinery, Guizhou Huajin, in an area relatively close to major bauxite and coal mines in Guizhou Province, which commenced production with an annual capacity of 1.6 million tonnes of alumina in 2015.

24

Senior Perpetual Capital Securities Offering

In October 2013, we completed the issuance of US$350 million in aggregate principal amount of 6.625% senior perpetual capital securities (the “2013 Senior Perpetual Securities”) through Chalco Hong Kong Investment Company Limited (the “Bond Issuer”), our wholly-owned subsidiary, which was exempted from, and not subject to, registration under the Securities Act. The 2013 Senior Perpetual Securities are guaranteed by Chalco Hong Kong and its certain subsidiaries. The 2013 Senior Perpetual Securities also have the benefit of a keepwell deed dated October 29, 2013 entered into by the Issuer, the Company, Chalco Hong Kong and the trustee and a deed of equity interest purchase undertaking dated on October 29, 2013 entered into by the Company and the trustee, both deeds being executed in favor of the trustee. The 2013 Senior Perpetual Securities were listed on the Hong Kong Stock Exchange on October 30, 2013. The net proceeds from the issue of the 2013 Senior Perpetual Securities after deduction of issuance costs are RMB2,122.6 million and have been on-lent to the Company or any of its subsidiaries for general corporate use. Coupon payments of 6.625% per annum on the 2013 Senior Perpetual Securities are paid semi-annually in arrears from October 29, 2013, and may be deferred at our discretion unless, during the six-month period ending on the day before the relevant scheduled coupon payment date, we have, or the Bond Issuer or Chalco Hong Kong has, declared or paid a discretionary dividend, distribution or other discretionary payment on or in respect of, or have/has at its discretion repurchased, redeemed or otherwise acquired, any securities of lower or equal rank, subject to certain exceptions. The 2013 Senior Perpetual Securities have no fixed maturity and are callable only at our option on or after October 29, 2018, at their principal amounts together with any accrued, unpaid or deferred coupon interest payments. We redeemed the 2013 Senior Perpetual Securities in October 2018.

On October 27, 2015, our Company issued RMB2,000 million perpetual medium-term notes at an initial distribution rate of 5.50% (the “2015 Perpetual Medium-term Notes”). The proceeds from the issuance were RMB2,000 million and were used for repayments of interest-bearing loans and borrowings. Coupon payments of 5.50% per annum on the 2015 Perpetual Medium-term Notes are paid annually in arrears from October 29, 2015 and may be deferred at the discretion of our Company. The 2015 Perpetual Medium-term Notes have no fixed maturity and are callable only at our option on October 29, 2020 or any coupon distribution date after October 29, 2020 at their principal amounts together with any accrued, unpaid or deferred coupon distribution payments. We repaid the principal amounts together with any accrued, unpaid or deferred coupon distribution payments of the 2015 Perpetual Medium-term Notes on October 29, 2020.

On October 31, 2016, the Bond Issuer issued US$500 million senior perpetual securities (the “2016 Senior Perpetual Securities”) at a rate of 4.25%. The 2016 Senior Perpetual Securities are guaranteed by one of our subsidiaries, Chalco Hong Kong. The 2016 Senior Perpetual Securities also have the benefit of a keepwell deed entered into by the Bond Issuer, the Company, Chalco Hong Kong and the trustee. The 2016 Senior Perpetual Securities were listed on the Hong Kong Stock Exchange on November 7, 2016. The net proceeds from the issue of the 2016 Senior Perpetual Securities were approximately RMB3,374 million and were on-lent to the Company or any of its subsidiaries for general corporate use. Coupon payments of 4.25% per annum on the 2016 Senior Perpetual Securities have been made semi-annually on April 29 and October 29 in arrears from November 7, 2016 and may be deferred at our discretion. The first coupon payment date was April 29, 2017. The 2016 Senior Perpetual Securities have no fixed maturity date and are callable only at our option on or after November 7, 2021 at their principal amounts together with any accrued, unpaid or deferred coupon distribution payments. We repaid the principal amounts together with any accrued, unpaid or deferred coupon distribution payments of the 2016 Senior Perpetual Securities on November 7, 2021.

On October 19, 2018, we issued RMB2,000 million perpetual medium-term notes with an initial distribution rate at 5.10% (the “2018 Perpetual Medium-term Notes”). The proceeds from the issuance were RMB2,000 million. The proceeds were used for the repayment of interest-bearing loans and borrowings. Coupon payments of 5.10% per annum on the 2018 Perpetual Medium-term Notes are made annually in arrears from October 19, 2018 and may be deferred at our discretion. The 2018 Perpetual Medium-term Notes have no fixed maturity date and are callable only at our option on October 23, 2021 or any coupon distribution date after October 23, 2021 at their principal amounts together with any accrued, unpaid or deferred coupon distribution payments. We repaid the principal amounts together with any accrued, unpaid or deferred coupon distribution payments of the 2018 Perpetual Medium-term Notes on October 23, 2021.

25

On November 19, 2019, we issued RMB1,500 million perpetual medium-term notes with an initial distribution rate at 4.20% (the “2019 Perpetual Medium-term Notes”). The proceeds from the issuance were RMB1,499 million. The proceeds were used for the repayment of interest-bearing loans and borrowings. Coupon payments of 4.20% per annum on the 2019 Perpetual Medium-term Notes have been made annually in arrears from November 19, 2019 and may be deferred at our discretion. The 2019 Perpetual Medium-term Notes have no fixed maturity date and are callable only at our option on November 20, 2022 or any coupon distribution date after November 20, 2022 at their principal amounts together with any accrued, unpaid or deferred coupon distribution payments. The coupon distribution rate will be reset to a percentage per annum equal to the sum of (a) the initial spread of 1.31 per cent, (b) the China Treasury Rate, and (c) a margin of maximum 300 Bps every five years after November 20, 2022. While any coupon distribution payments are unpaid or deferred, the Company cannot declare or pay dividends to shareholders or decrease the share capital, or make material fixed asset investments.

On December 2, 2020, the Company issued RMB1,000 million perpetual medium-term notes with an initial distribution rate at 4.45% (the “2020 Perpetual Medium-term Notes”). The proceeds from the issuance of the 2020 Perpetual Medium-term Notes were RMB1,000 million. The proceeds were used for the repayment of interest-bearing loans and borrowings. Coupon payments of 4.45% per annum on the 2020 Perpetual Medium-term Notes have been made annually in arrears from December 2, 2020 and may be deferred at the discretion of the Company. The 2020 Perpetual Medium-term Notes have no fixed maturity date and are callable only at our option on December 3, 2022 or any coupon distribution date after December 3, 2022 at their principal amounts together with any accrued, unpaid or deferred coupon distribution payments. The coupon distribution rate will be reset to a percentage per annum equal to the sum of (a) the initial spread of 1.42 percent, (b) the China Treasury Rate, and (c) a margin of maximum 300 Bps every two years after December 3, 2022. While any coupon distribution payments are unpaid or deferred, the Company cannot declare or pay dividends to shareholders or decrease the share capital, or make material fixed asset investments.

Transfer of Equity Interest in Shanxi Huaxing

The Chalco Xing County Alumina Project, which was carried out by Shanxi Huaxing, commenced construction in May 2011 and undertook full operation in 2014. After completion of private placement of A Shares in June 2015, the Board resolved to replace the funds which have been invested by us in advance with the proceeds raised from the private placement of A Shares. In light of our strategic blueprint for the development of Shanxi aluminum recycle industrial park, we planned to introduce strategic investors for joint investment and cooperation to develop a new model of integrated coal, electricity and aluminum operations. In December 2015, we entered into an equity transfer agreement with Shenzhen CR Yuanta Asset Management Co., Ltd., a state-owned entity, to transfer 50% equity interests in Shanxi Huaxing, a wholly-owned subsidiary, through the Shanghai United Assets and Equity Exchange at a price of RMB2,351 million (the “2015 Equity Transfer Agreement”). The price was determined based on the appraisal value provided by an independent qualified appraisal company. According to the 2015 Equity Transfer Agreement, 30% of the consideration amounting to RMB705 million has been received by us in December 2015. In December 2016, Shenzhen CR Yuanta Asset Management Co., Ltd. transferred the 50% of equity interest in Shanxi Huaxing to Baotou Transportation Investment Group Co., Ltd. As agreed among Shenzhen CR Yuanta Asset Management Co., Ltd., Baotou Transportation Investment Group Co., Ltd. and the Company, Baotou Transportation Investment Group Co., Ltd., shall assume the payment obligation on the outstanding consideration of RMB1,646,035,160 payable by Shenzhen CR Yuanta Asset Management Co., Ltd. to the Company under the 2015 Equity Transfer Agreement and settle the outstanding consideration in full together with interest accrued thereon from January 1, 2017 to the date of payment before March 31, 2017. The payment was fully settled by Baotou Transportation Investment Group Co., Ltd. in March 2017.

In December 2018, we entered into an equity transfer agreement with Baotou Transportation Investment Group Co., Ltd., pursuant to which we agreed to acquire 50% equity interest in Shanxi Huaxing through the Shanghai United Assets and Equity Exchange at a price of approximately RMB2,665.2 million, which we paid in full in December 2018. Upon completion of the acquisition, Shanxi Huaxing became a wholly-owned subsidiary of the Company. The acquisition is conducted for the purpose of enhancing our profitability and is in line with our strategic layout of alumina and aluminum business, as the increase of our shareholding in Shanxi Huaxing, an alumina plant, is expected to enhance the synergy with our primary aluminum production in Shanxi, where we have newly added production capacity of primary aluminum.

26

Transfer of Shares of Jiaozuo Wanfang

On January 22, 2015 and January 23, 2015, we decreased our shareholding in Jiaozuo Wanfang by 4,758,858 shares through the securities exchange system of the Shenzhen Stock Exchange. In March 2015, we transferred 100,000,000 shares of Jiaozuo Wanfang to Geo-Jade Petroleum Corporation by way of agreement after the public solicitation for potential transferees. On June 25, 2015, we further transferred 42,550,900 shares of Jiaozuo Wanfang by way of block trading through the securities exchange system of the Shenzhen Stock Exchange. On December 18, 21 and 22, 2015, we reduced our shareholding in Jiaozuo Wanfang by 16,695,100 shares through the centralized bidding trading system of the Shenzhen Stock Exchange. From December 23 to 25, 2015, we reduced our shareholding in Jiaozuo Wanfang by 13,865,000 shares through the centralized bidding trading system of the Shenzhen Stock Exchange and block trading. As a result, we held 29,582,057 shares of Jiaozuo Wanfang as of December 31, 2015, representing 2.46% of the total share capital of Jiaozuo Wanfang. During the period from July 8, 2016 to September 27, 2016, we reduced our shareholding of Jiaozuo Wanfang by an aggregate of 16,628,098 shares via the Shanghai Stock Exchange centralized bidding trading system, representing approximately 1.39% of the total share capital of Jiaozuo Wanfang. The average price of reduction was approximately RMB8.73 per share. After the reduction, the Company remained holding 12,953,959 shares of Jiaozuo Wanfang, representing approximately 1.09% of its total share capital. During the period from September 29, 2016 to January 26, 2017, we reduced our shareholding of Jiaozuo Wanfang by an aggregate of 12,953,959 shares via the Shanghai Stock Exchange centralized bidding trading system, representing approximately 1.09% of the total share capital of Jiaozuo Wanfang. The average price of reduction was approximately RMB10.19 per share. After such reduction in our shareholding, we no longer hold any shares of Jiaozuo Wanfang.

Disposal of Certain Assets of Guizhou Branch

Guizhou branch entered into a land reserve acquisition cooperation agreement with the People’s Government of the Baiyun District of Guiyang, Guiyang Land Reserve Center, and Guizhou Aluminum Plant on November 13, 2015. As the land of Guizhou Aluminum Plant occupied by the primary aluminum plant of Guizhou branch shall be transferred to the respective land resources and reserve authorities, Guizhou branch sold the relevant assets, including buildings and structures located on the land occupied by the primary aluminum plant of Guizhou branch, to the Guiyang Land Reserve Center for a total consideration of RMB1.95 billion. The consideration was determined based on the asset appraisal conducted by an independent asset appraisal firm.

Disposal of the Environmental Protection Business

On May 30, 2016, the Board approved the transfer of the environmental protection assets in relation to the desulfurization, denitration and dedusting of the coal-fired generating units of five entities, namely Lanzhou branch, Baotou Aluminum, Shandong Huayu, Maliantai Power Station and Liupanshan Power Station of Ningxia Energy, by way of public bidding. On June 29, 2016, the assets transfer agreement in relation to disposal of the above environmental protection assets were entered into between Beijing Aluminum SPC Environment Protection Tech Co., Ltd., which had won the bid for the acquisition of the assets, and us. Pursuant to the asset transfer agreement, the aggregate consideration for the above environmental protection assets disposal was RMB1,754 million which was paid in two installments in June 2016 and December 2016, respectively.

We decided to dispose the environmental protection assets to reduce our capital investments and generate cash flows. We have been complying with the relevant standards of environmental protection through professional services rendered by specialized environmental protection companies.

Development of Gold Leasing Financing

On May 30, 2016, the Board resolved to develop gold leasing business to financing working capital. From 2016 to 2019, we have entered into several agreements with Bank of Communications Co., Ltd., China Everbright Bank and Agriculture Bank of China to finance working capital via gold leasing. We repaid the remaining gold leasing financing and did not enter into any new gold leasing agreement in 2020 and 2021.

27

Establishment of Industry Investment Fund

On May 23, 2017, the Company, Bank of Communications International Trust Co., Ltd. (“BOCOMMTRUST”) and Chinalco Jianxin Investment Fund Management (Beijing) Company Limited (“Chinalco Jianxin”) entered into a partnership agreement in relation to the establishment of Beijing Chalco Bocom Size Industry Investment Fund Management Partnership (Limited Partnership) (the “Industry Fund”). On September 27, 2017, the Company, BOCOMMTRUST, Chinalco Jianxin and Bocommtrust Asset Management Co., Ltd. (“Bocommtrust Asset”) entered into certain agreements with respect to Chinalco Jianxin’s withdrawal from and Bocommtrust Asset’s participation in the Industry Fund. On the same day, the Company, BOCOMMTRUST and Bocommtrust Asset entered into a capital contribution agreement and a new partnership agreement in relation to the Industry Fund. Pursuant to these agreements, the general partner of the Industry Fund changed from Chinalco Jianxin to Bocommtrust Asset while Chinalco Jianxin remained as the manager of the Industry Fund.

The Industry Fund provided funding for the construction of our major projects, replenish our working capital and support our structural adjustment, transformation and upgrade. As of December 31, 2021, the Industry Fund had exited all its investment and thereafter had been closed down and liquidated.

Merger and Reorganization of Shanxi Branch and Shanxi Huaze

On August 8, 2017, we entered into a reorganization agreement with Zhangze Electric Power, pursuant to which we contributed certain assets related to alumina production of our Shanxi branch, with an appraised net value of RMB3,425.7 million equaling the appraised net value of the assets and liabilities of Shanxi branch, to Shanxi Huaze. The assets injected into Shanxi Huaze included, among others, inventories, buildings, structures, machinery and equipment. Upon completion of our asset contribution in 2017, our shareholding in Shanxi Huaze increased from 60% to 85.98% and Shanxi Huaze was renamed to Shanxi New Material.

Subscription of Equity Interest of Certain Subsidiaries and Subsequent Issuance of Additional A Shares (“Asset Restructuring”)

On December 4, 2017, we entered into certain investment and debt conversion agreements (the “Initial Agreements”) with Huarong Ruitong Equity Investment Management Co., Ltd. (“Huarong Ruitong”), China Life Insurance Company Limited (“China Life”), Shenzhen Zhaoping Chalco Investment Center LLP (“Zhaoping Investment”), China Pacific Life Insurance Co., Ltd. (“CPIC Life”), China Cinda Asset Management Co., Ltd. (“China Cinda”), BOC Financial Asset Investment Co., Ltd. (“BOC Financial”), ICBC Financial Asset Investment Co., Ltd. (“ICBC Financial”) and ABC Financial Asset Investment Company Limited (“ABC Financial”) (collectively, the “Restructuring Investors”). Pursuant to the Initial Agreements, Huarong Ruitong, China Life, Zhaoping Investment, CPIC Life, BOC Financial, ICBC Financial and ABC Financial have agreed to make cash contributions to our wholly-owned subsidiaries, Chalco Shandong, Zhongzhou Aluminum, Baotou Aluminum and Chalco Mining (collectively, the “Target Subsidiaries”), while the principal of loans owed by Chalco Mining to Huarong Ruitong, Zhaoping Investment, China Cinda and BOC Financial prior to signing of the Initial Agreements would be treated as capital contribution to Chalco Mining and converted into equity interest in Chalco Mining held by Huarong Ruitong, Zhaoping Investment, China Cinda and BOC Financial. The Restructuring Investors have agreed to acquire 30.80%, 36.90%, 25.67% and 81.14% of equity interest of Chalco Shandong, Zhongzhou Aluminum, Baotou Aluminum and Chalco Mining, respectively, with an aggregate capital contribution of approximately RMB12.6 billion. Under the Initial Agreements, we have also agreed to acquire equity interest held by the Restructuring Investors in the Target Subsidiaries with consideration in the form of our A Shares to be issued to the Restructuring Investors. On December 20, 2017, the Initial Agreements and the transactions contemplated thereunder were approved at our 2017 second extraordinary general meeting. In December 2017, the capital contribution to the Target Subsidiaries by the Restructuring Investors was completed in accordance with the terms of the Initial Agreements.

28

Subsequently, on January 31, 2018, we entered into equity acquisition agreements (the “Further Agreements”) with the Restructuring Investors. Pursuant to the Further Agreements, we have agreed to acquire all the equity interest held by the Restructuring Investors in the Target Subsidiaries with consideration in the form of A Shares of the Company to be issued to the Restructuring Investors (the “Proposed Issuance”). The number of A Shares in issue pursuant to the Proposed Issuance would equal the appraised value of equity interest held by Restructuring Investors in Target Subsidiaries as of December 31, 2017 determined by China United Assets Appraisal divided by the issue price. The aforementioned appraised value might be subject to further adjustment by competent PRC authorities upon filing of the valuation report by China United Assets Appraisal. The issue price has been set at RMB6.00 per A Share with reference to 90% of the average trading price of our A Shares during the last 60 trading days prior to January 31, 2018 (i.e., the last 60 trading days prior to the suspension of trading of our A Shares) in accordance with rules and regulations of the PRC applicable to transaction of this kind. The appraised value, subject to further adjustment, was RMB12.7 billion and therefore we would issue to the Restructuring Investors approximately 2.1 billion A Shares in aggregate, representing approximately 14.2% of the total issued share capital of the Company as of January 31, 2018 and approximately 12.4% of the enlarged total issued share capital of the Company upon completion of the Proposed Issuance. On July 30, 2018, we entered supplemental equity acquisition agreements with the Restructuring Investors, amending, among others, the final consideration of the proposed acquisition and the number of the consideration shares to be issued from approximately RMB12,703.7 million and approximately 2,117,280,800 to approximately RMB12,713.2 million and 2,118,874,715, respectively. The Proposed Issuance was approved by our shareholders, the SASAC and the CSRC in 2018. In February 2019, all equity interests of Target Subsidiaries held by the Restructuring Investors were transferred to us, which resulted in us holding 100% equity interests of all Target Subsidiaries. On February 25, 2019, we issued an aggregate of 2,118,874,715 A Shares to the Restructuring Investors and our total share capital increased from 14,903,798,236 shares to 17,022,672,951 shares. The shares issued to the Restructuring Investors could be traded on the Shanghai Stock Exchange since February 26, 2020 after the expiry of the 12-month lock-up period.

Cash contributions received from the Restructuring Investors have been used by us for the repayment of loans. The Asset Restructuring has helped to reduce the gearing ratios of these subsidiaries and us as a whole.

Boffa Project

On June 8, 2018, Chalco Hong Kong and Chalco Guinea Company S.A., a wholly-owned subsidiary of Chalco Hong Kong, entered into a mining convention (the “Mining Convention”) with the Guinean government, pursuant to which Chalco Hong Kong agreed to provide investment funds while the Guinean government agreed to provide mining licenses and rights to transport mining products for the development and operation of the Boffa Project, a project for the construction and development of a bauxite mine located in Boffa, Guinea.

Based on our preliminary research and analysis and after taking into account various factors, including but not limited to (i) the bauxite reserve and the minable quantity in the mining area of the Boffa Project; (ii) the advancement and effectiveness of the existing development technologies; (iii) labor costs, transportation expenses and other development costs and other factors, the total investment of the Boffa Project is estimated to be approximately US$706 million, subject to adjustment pursuant to the actual needs, which will be mainly allocated in the construction of mines, ports and lightering system and is expected to be funded through capital investment together with shareholders’ loans or bank loans. According to our preliminary design plan, the total investment for the construction of mines is estimated to be approximately RMB3,088 million. The Boffa Project was completed and put into operation in April 2020. As of December 31, 2021, an aggregate of RMB2,821 million of capital expenditure had been incurred for the Boffa Project.

In accordance with the Mining Convention, a mining company (the “Mining Company”) and a port company (the “Port Company”) are established to act as the main operating bodies for mines construction and ports construction, respectively. In accordance with the Mining Convention, we own 85% and 95% equity interests in the Mining Company and the Port Company, respectively, while the Guinean government and its wholly-owned companies collectively own 15% and 5% equity interests in the Mining Company and the Port Company, respectively. Pursuant to the Mining Convention, Chalco Hong Kong shall grant the Guinean government and/or its wholly-owned companies an option to obtain additional equity interests in the Mining Company and grant Societe Guineenne de Patrimoine Minier, a company wholly-owned by the Guinean government, an option to obtain additional equity interests in the Port Company (together, the “Options”). If the Options are exercised in full, our equity interests in the Mining Company and Ports Company will reduce to 65% and 90%, respectively. As of December 31, 2021, the Options had not been exercised.

29

With a large reserve of resources, we believe the Boffa Project would provide sustainable bauxite resources for our alumina production and its high ore grades would help reduce alkali and energy consumption in our alumina production. In addition, as the mines are close to port, we are able to consolidate inland waterway transportation and maritime transportation, which benefits long-term development of the project and effectively controls investment risks at the early stage.

The Boffa Project commenced construction in September 2018 with an expected annual bauxite output capacity of 12 million tonnes. The project was completed and put into operation in April 2020. From then through the end of 2021, we extracted approximately 20.4 million tonnes of bauxite from the Boffa mine. The annual bauxite output capacity is expected to increase to 15 million tonnes in 2022.

Merger and Reorganization of Zunyi Alumina and Zunyi Aluminum

On June 21, 2018, in order to streamline our production chains, enhance synergistic effects and control operating costs, we entered into a contribution agreement with other shareholders of Zunyi Aluminum, pursuant to which we contributed all assets in Zunyi Alumina to Zunyi Aluminum. The appraised net value of Zunyi Alumina, equaling the appraised net value of its assets and liabilities, was RMB2,311 million. Upon completion of the merger, our shareholding in Zunyi Aluminum increased from 62.1% to 67.445%.

Controlling Shareholder’s Shareholding Increase in the Company

On June 24, 2018, Chinalco notified us of its plan to increase its shareholding in us via the trading system of the Shanghai Stock Exchange in an amount of not less than RMB400 million and not more than RMB1 billion in 12 months. Chinalco would, based on its reasonable judgment on our share price as well as the fluctuations of our share prices and the overall trend in the capital market, gradually implement the plan on increase in shareholding to the extent not exceeding 2% of our total share capital. The purpose of such increases in shareholding is to boost confidence of investors, protect the interests of minority shareholders and stabilize the capital market based on Chinalco’s confidence in the future development of the company and the recognition of our value.

For the period from June 25, 2018 to June 24, 2019, as the result of the aforesaid plan, Chinalco increased its shareholding in us by 160,512,964 A shares (representing approximately 0.94% of our total issued share capital as of June 24, 2019) in the amount of RMB608 million on a cumulative basis via the trading system of the Shanghai Stock Exchange. In addition, during the same period of time, Chinalco also, through its subsidiaries, had increased its shareholding in us by 115,276,000 H shares (representing approximately 0.68% of our total issued share capital as of June 24, 2019) in the amount of HK$365 million on a cumulative basis via the trading system of the Hong Kong Stock Exchange.

Acquisition of Carbon Assets and Equity Interests

On August 30, 2018, our Group and the affiliates of Chinalco Assets entered into a series of assets transfer agreements and equity transfer agreements for the acquisition of certain carbon assets and equity interests from the affiliates of Chinalco Assets, including: (i) the assets of the carbon plant under Shandong Aluminum Industry Co., Ltd; (ii) the assets of the carbon plant under Pingguo Aluminum Company Limited; (iii) 49% equity interests of Baotou Sendu Carbon Company Limited; and (iv) 57.69% and 19.96% equity interests of Chibi Great Wall Carbon Products Company Limited from two separate shareholders. Upon completion of the acquisition, we expect this acquisition would help us consummate our industrial chain, ensure our steady production, and improve our competitiveness and anti-risk capabilities, as carbon products are one of major raw materials for production of primary aluminum. As of December 2018, we had paid the total consideration of RMB735.6 million in full and the acquisition had been completed.

30

Transfer Between China Copper and Yunnan SASAC

On November 13, 2018, China Copper, a wholly-owned subsidiary of our controlling shareholder, entered into a transfer agreement with Yunnan SASAC, pursuant to which Yunnan SASAC shall transfer its 51% equity interest in Yunnan Metallurgical Group Co., Ltd. to China Copper with no consideration. The transfer was approved by the SASAC on December 19, 2018, by the State Administration for Market Regulation on December 20, 2018 and by the CSRC on December 29, 2018. Chinalco completed the transfer on January 8, 2019. As Yunnan Aluminum, an affiliated company of Yunnan Metallurgical Group Co., Ltd., competes with us in the business segments of alumina and primary aluminum, on January 2, 2019, Chinalco, as the indirect controlling shareholder of Yunnan Aluminum and our direct controlling shareholder, issued a letter of undertakings on non-competition to us in order to address business competition and safeguard the legitimate interests of the Company and our minority shareholders. According to the letter of undertakings, Chinalco undertook to start in 2019 planning the integration of the businesses in which Yunnan Aluminum and we compete with each other, and address business competition between Yunnan Aluminum and us within five years.

Transfer of Primary Aluminum Capacity Quota of Shanxi Huasheng

On May 28, 2019, Shanxi Huasheng and Yixin Aluminum entered into a transfer agreement, pursuant to which Shanxi Huasheng agreed to sell to Yixin Aluminum the primary aluminum capacity quota of 190,000 tonnes at a total transfer consideration of RMB950 million and a transfer price of RMB5,000 per tonne. With the adjusted number of annual capacity quota finally determined by relevant PRC authority, we completed the transfer of the primary aluminum capacity quota of 170,000 tonnes to Yixin Aluminum with the total transfer consideration of RMB850 million in June 2019. We expect this transfer would help to reverse Shanxi Huasheng’s losses, achieve its transformation and upgrading, and optimize our industrial layout and asset structure.

Proposed Issuance of H Shares

On June 29, 2021, our shareholders at the 2020 annual general meeting passed a special resolution, which will remain valid until the earliest of (i) the conclusion of our next annual general meeting, (ii) the expiration of 12 months following the date of passing the resolution, or (iii) the date on which the authority set out in this resolution is revoked or varied by a special resolution at a general meeting. The resolution authorizes us to issue additional H Shares up to 20% of the number of H Shares in issue as of the resolution date. Our Board has been authorized to determine the use of the proceeds. The proposed issuance is subject to all the necessary approval by the CSRC and/or other relevant PRC government authorities.

Our Gallium Assets

On August 27, 2019, we entered into a capital contribution agreement with China Rare Metals and Rare Earths Company Ltd., a subsidiary of Chinalco, pursuant to which we agreed to make a capital contribution of RMB352,848,100 to China Rare Metals and Rare Earths Company Ltd. with our gallium assets. Upon completion of the transaction in August 2019, the shareholding proportion we held in China Rare Metals and Rare Earths Company Ltd. increased from 14.62% to 23.94%. In September 2021, we repurchased the gallium assets from three branches of China Rare Metals and Rare Earths Company Ltd for a cash consideration of RMB395,624,218.12.

Capital Contribution to Yixin Aluminum

On December 10, 2019, we entered into a capital contribution agreement with Yixin Aluminum and its shareholders, pursuant to which we agreed to make a capital contribution of RMB850 million in cash to Yixin Aluminum, which we paid in full in December 2019. Upon completion of the transaction, we held 38.90% equity interests of Yixin Aluminum. We expect this capital contribution to facilitate us in participating in the green development layout on the integration of hydropower and aluminum in Yunnan Province and obtaining competitive assets for our principal business.

31

Subscription for A Shares of Yunnan Aluminum

On December 19, 2019, we entered into a shares subscription agreement with Yunnan Aluminum, pursuant to which we agreed to subscribe through non-public offering for 314,050,688 A shares of Yunnan Aluminum at a price of RMB4.10 per share with the total subscription amount of RMB1,287,607,820.80. The subscription price of RMB4.10 per A share was determined through bidding and based on the minimum issuance price of the non-public offering by Yunnan Aluminum, which represented 90% of the average trading price of the shares in the 20 trading days prior to the first day of the issuance period, namely December 13, 2019. We paid the consideration in full and 314,050,688 A shares of Yunnan Aluminum were registered under our name in December 2019, representing approximately 10.04% of the total share capital of Yunnan Aluminum. Pursuant to the shares subscription agreement, we shall not transfer the subscribed A shares thereto within 36 months from the listing date. We expect our subscription for A shares of Yunnan Aluminum will help resolve business competitions between Yunnan Aluminum and us and is in line with our development strategies and in our interests as a whole.

On December 23, 2020 and March 16, 2021, we entered into a conditional shares subscription agreement and a supplemental agreement with Yunnan Aluminum, respectively, pursuant to which we agreed to subscribe for A shares of Yunnan Aluminum to be issued through non-public offering with the total subscription amount ranging from RMB200 million to RMB320 million. On December 2, 2021, we entered into a supplemental agreement with Yunnan Aluminum, pursuant to which we agreed to subscribe for 36,240,090 A shares of Yunnan Aluminum at a price of RMB8.83 per share with a total subscription amount of RMB319,999,994.70 and the subscription price per share is finally determined based on the results of enquiry. Upon completion of this subscription in December 2021, Yunnan Aluminum did not become a subsidiary of the Company.

B.Business Overview

Our Principal Products

We are a leading enterprise in the non-ferrous metal industry in China. In terms of comprehensive scale, we ranked among the top enterprises in the global aluminum industry. We have benefited from the development of the PRC aluminum market, the world’s largest aluminum market. We refine bauxite into alumina, which is then smelted into primary aluminum. In addition to alumina and primary aluminum, we also produce and sell chemical alumina products (alumina hydrate and alumina-based industrial chemical products) and carbon products (carbon anodes and cathodes). We are also engaged in the trading and logistics of alumina, primary aluminum, other non-ferrous metal products, coal products and raw and ancillary materials in bulk manufactured by us or sourced from external suppliers domestically and abroad. In addition, we are engaged in coal mining and power generation. The remainder of our revenues was derived from research and development activities and other products and services. Accordingly, we organize and manage our operations in five business segments: alumina segment, primary aluminum segment, trading segment, energy segment and corporate and other operating segment. After elimination of inter-segment sales, revenues attributable to our alumina segment, primary aluminum segment, trading segment, energy segment, and corporate and other operating segment accounted for approximately 6.9%, 23.7%, 66.4%, 2.8% and 0.1%, respectively, of our total revenues in 2021.

Our alumina segment includes the mining and purchasing of bauxite and other raw materials, and production and sale of alumina as well as chemical alumina. Alumina accounted for approximately 93.1% of our total production volume for this segment in 2021. Chemical alumina products are used in the production of chemical, pharmaceutical, ceramic and construction materials. In the process of refining bauxite into alumina, we produce gallium as a by-product, which is a rare, high value metal with applications in the electronics and telecommunication industries.

Our primary aluminum segment includes the procurement of alumina, other raw materials, supplemental materials and electrical power, the production and sale of primary aluminum and aluminum-related products, such as carbon products, aluminum alloy products , renewable aluminum and other aluminum products. Our principal primary aluminum products are ingots, molten aluminum and aluminum alloys, which accounted for approximately 18.6%, 44.1% and 37.3%, respectively, of our total production volume of primary aluminum in 2021. Our standard 20 kilogram remelt ingots are used for general aluminum fabrication in the construction, electricity, electronics, transportation, packaging, machinery and durable goods industries. We internally produce substantially all the carbon products used at our smelters and sell our remaining carbon products to external customers.

32

Our trading segment is mainly engaged in the trading of alumina, primary aluminum, aluminum fabrication products, other non-ferrous metal products, and crude fuels such as coal products, as well as supplemental materials and logistics and transport services to our internal manufacturing plants and external customers. We established our trading business under Chalco Trading as a separate segment in July 2010 as a result of our operational structural adjustment. Since 2014, we have established Chalco Materials, Chalco Logistics and Chalco Trading Group to continuously promote and deepen development of our trading business, jointly constituting our trading segment. Established in 2018, Chalco Trading Group has undertaken the businesses that used to be operated by Chalco Trading.

Our energy segment includes the research and development, production and operation of energy products, including coal mining and conventional coal-fire power generation as well as renewable energy generation such as wind power and solar power. We are also engaged in new energy equipment production. We established our energy segment in January 2013 as a result of our acquisition of Ningxia Energy in line with our development strategy to partially offset our future energy costs. In 2021, we supplied the majority of the electricity we generated for our own production use, supplied a portion of the coal output to our own electric power plant and sold the remaining portion to external customers. Ningxia Energy supplied the electricity it generated mainly to the state grid in China.

Our corporate and other operating segment mainly includes corporate and other aluminum-related research, development, and our other activities.

Our Production Capacity

As of December 31, 2021, our annual alumina production capacity and primary aluminum production capacity was approximately 20.86 million tonnes and 4.46 million tonnes, respectively. The following table sets forth the production capacity of each of our principal plants by business segment as of the indicated date:

	As of December 31, 2021
Plant	Alumina	Primary Aluminum
	(in thousand tonnes)(1)
Guangxi branch	2,210	—
Zhongzhou Aluminum	3,050	—
Qinghai branch	—	420
Guangxi Huasheng	2,000	—
Chalco Mining	2,410	—
Chalco Shandong	2,270	—
Shanxi New Material	2,600	424
Chongqing branch	800	—
Lanzhou Aluminum	—	450
Zunyi Aluminum	1,000	375
Shandong Huayu	—	65
Baotou Aluminum(2)	—	1,340
Zhengzhou Institute	20	—
Liancheng branch	—	550
Guizhou Huajin	1,600	—
Xinghua Technology	900	—
Shanxi Huaxing	2,000	—
Guizhou Huaren	—	400
Shanxi Zhongrun	—	432
Total	20,860	4,456

(1) Production capacity is calculated based on designed capacity, which takes into account various assumptions including downtime for ordinary maintenance and repairs, the ore grade of bauxite feedstock and subsequent capacity modifications.

(2) Including the primary aluminum production capacity of Inner Mongolia Huayun, a subsidiary of Baotou Aluminum.

In 2021, we produced approximately 16.23 million tonnes of alumina (excluding chemical alumina products), 4.12 million tonnes of chemical alumina products and 3.86 million tonnes of primary aluminum. Our production of alumina (with chemical alumina products included) and primary aluminum represented approximately 23.6% and 10.1%, respectively, of the total output of alumina (with chemical alumina products included) and primary aluminum in China in 2021.

33

The following table sets forth a breakdown of our production volume by product segment for the periods indicated:

	Year Ended December 31,
Production Volume by Product	2019	2020	2021
	(in thousand tonnes, except Gallium)
Alumina segment
Alumina	13,803	14,526	16,229
Chemical alumina products	3,802	3,942	4,123
Gallium (in tonnes)(1)	98	95	137
Primary aluminum segment
Primary aluminum(2)	3,788	3,695	3,863
Carbon	1,472	1,840	2,055

(1) As we repurchased our gallium assets in 2021 after disposal through capital contribution in 2019, we present the production volume as if we never disposed of our gallium assets. See “– A. History and Development of the Company – Our Gallium Assets” for details.

(2) Including ingots, molten aluminum and aluminum alloys.

Production Process

Alumina

Alumina is refined from bauxite, an aluminum-bearing ore, through a chemical refining process. The refining process applied is determined by the mineral composition of the bauxite used in production. Our refineries may employ the Bayer process, the Bayer-sintering series process, the Bayer-sintering combined process or the ore-dressing Bayer process. Most of the bauxite reserves in China contain diasporic bauxite, which contains high alumina content but relatively high silica content, resulting in bauxite reserves with low alumina-to-silica ratio. The Bayer process cannot efficiently refine diasporic bauxite that has not undergone processing to increase its alumina-to-silica ratio. The Bayer-sintering process and the Bayer-sintering combined process are suitable for refining low alumina-to-silica ratio bauxite. We have developed and improved these processes to increase our refining yield. In addition, we also produce some chemical alumina products (alumina hydrate and alumina-based industrial chemical products).

Primary Aluminum

We smelt alumina into primary aluminum through electrolytic reduction. The electrolytic process takes place in a reduction cell, or pot, a steel shell lined with carbon cathodes and refractory materials. Powerful electric currents are passed through the pot to produce molten aluminum. The molten aluminum is transferred to holding furnaces and then poured directly into molds to produce foundry ingots, or further refined to form fabricating ingots, which may be used directly in the aluminum fabrication process. The primary aluminum we produce is in the form of ingots, molten aluminum and aluminum alloys.

All of our primary aluminum smelters use pre-bake anode reduction pot-lines. In the pre-bake reduction process, the anodes are pre-formed in a separate facility where pollutants can be contained. The cells themselves are enclosed with removable panels so that the waste gas produced during the process can be extracted using large exhaust fans. Our waste gas is treated and purified to reduce dust and fluoride emissions to acceptable levels set by state environmental protection agencies.

Production Facilities

Alumina

We currently operate 11 alumina refineries and one research institute with a total designed annual production capacity of approximately 20.86 million tonnes as of December 31, 2021. Two of our refineries are integrated with primary aluminum smelters. In 2021, we produced approximately 16.23 million tonnes of alumina and approximately 4.12 million tonnes of chemical alumina products. The overall utilization rate for our refineries was 86% as of December 31, 2021.

34

The following table sets forth the annual production capacity, output of alumina and chemical alumina products, utilization rate and production process applied in each of our alumina refineries and our Zhengzhou Institute:

		As of December 31, 2021			For the Year Ended December 31, 2021
						Chemical
		Annual			Alumina	Alumina
		Production	Utilization		Production	Products
		Capacity(1)	Rate(2)		Output	Output	Production Process
	(in thousand tonnes, except percentages)
Shanxi New Material		2,600	62	%	1,570	70	Bayer-sintering
Chalco Mining		2,410	74	%	1,363	36	Bayer-sintering
Chalco Shandong		2,270	100	%	1,615	2,666	Sintering and Bayer
Zhongzhou Aluminum		3,050	84	%	2,027	1,054	Sintering and Bayer
Guangxi branch		2,210	100	%	2,288	185	Bayer
Zunyi Aluminum		1,000	100	%	1,043	10	Bayer
Chongqing branch(3)		800	0	%	—	—	Bayer-sintering
Zhengzhou Institute(4)		20	0	%	—	27	Bayer
Guizhou Huajin		1,600	100	%	1,631	—	Bayer
Xinghua Technology		900	100	%	962	15	Bayer
Shanxi Huaxing		2,000	100	%	1,591	—	Bayer
Guangxi Huasheng		2,000	100	%	2,140	60	Bayer
Total		20,860	86	%	16,229	4,123

(1) Production capacity is calculated based on designed capacity, which takes into account various assumptions including downtime for ordinary maintenance and repairs, the ore grade of bauxite feedstock and subsequent capacity modifications.

(2) Capacity utilization rate is calculated by dividing our utilized production capacity as of the date indicated by our total designed annual production capacity.

(3) Since 2018, we have leased the alumina production facilities of our Chongqing branch to a third party.

(4) The chemical alumina products produced at our Zhengzhou Institute are sold commercially and such sales are included in our total revenues.

Primary Aluminum

We operate nine primary aluminum smelters in China. Our smelters had an aggregate annual production capacity of approximately 4.46 million tonnes as of December 31, 2021.

In 2021, we produced approximately 3.86 million tonnes of primary aluminum and the average utilization rate for our smelters was 86% as of December 31, 2021. The following table sets forth the annual production capacity, aluminum output, utilization rate and smelting equipment used in each of our aluminum smelters:

		As of December 31, 2021			For the Year Ended December 31, 2021
		Annual
		Production	Utilization		Aluminum
Plant		Capacity(1)	Rate(2)		Output(3)	Smelting Equipment
	(in thousand tonnes, except percentages)
Baotou Aluminum(4)		1,340	99	%	1,276	200Ka, 240Ka, 400Ka and 500Ka pre-bake
Lanzhou Aluminum		450	99	%	415	200Ka and 350Ka pre-bake
Qinghai branch		420	99	%	404	180Ka and 210Ka pre-bake
Shandong Huayu(5)		65	0	%	—	240Ka pre-bake
Shanxi New Material		424	84	%	298	300Ka pre-bake
Zunyi Aluminum		375	92	%	398	200Ka and 400Ka pre-bake
Liancheng branch		550	28	%	151	200Ka and 500Ka pre-bake
Guizhou Huaren		400	92	%	437	500Ka
Shanxi Zhongrun		432	100	%	484	500Ka
Total		4,456	86	%	3,863

(1) Production capacity takes into account designed capacity, downtime for ordinary maintenance and repairs and subsequent capacity modifications.

35

(2) Capacity utilization rate is calculated by dividing our utilized production capacity as of the date indicated by our total designed annual production capacity.

(3) Includes ingots, molten aluminum and aluminum alloys.

(4) Including the primary aluminum production facilities at Inner Mongolia Huayun, a subsidiary of Baotou Aluminum.

(5) Shandong Huayu halted its primary aluminum production since 2019. See “- Principal Facilities – Shandong Huayu” for details.

Raw Materials

Alumina

Bauxite is the principal raw material in alumina production. Most of the bauxite in China is monohydrate, consisting mainly of aluminosilicate compounds. Bauxite deposits have been discovered across a broad area of central China and are especially abundant in the southern and northern parts of central China. The largest bauxite deposit in China lies in the Shanxi Province.

Rock Formation and Mineralization. Except for our Guangxi Pingguo mine which is an accumulation deposit due to original erosion, the bauxite deposits of our mines in China usually have similar stratigraphic sequences. Primary bauxite deposit, as a type of sedimentary boehmite (Al₂O₃.H₂O) of the Carboniferous or Permian age, is contained in clay rock, limestone or coal seams. A zonary red shale is usually located at the bottom of the bauxite and the red seam distributes over the irregular “karst-type” erosion face on the top of Ordovician limestone. Aluminum deposits in northern China are usually covered with a very thick Quaternary weathering.

The thickness and quality of deposits vary with our mine locations. Quality is usually consistent in smooth sections but changes sharply in karst “billabong” terrain. The level of hardness of minerals also varies. A sequence that includes a seam of hard bauxite of fine quality in the middle and soft bauxite of inferior quality on the bottom and top seams is common in deposits.

Generally, deposits are horizontal or with an obliquity of 0 to 8 degrees, but there are also steep deposits at an angle of 75 degrees, such as in our Guizhou mine. Most of the original mineralization is not influenced by folds and faults, and some fractures of a low obliquity and folds emerge in certain deposits, which is evident in the Guizhou mine area. In most of the Guizhou mine area, the underground mining method must be used due to the obliquity of its bauxite body reaching 70 degrees with the influence of folds and several meters of dislocation arising from partial faults.

Economic Significance. Our bauxite deposits in China are divided into three groups. They are primarily distinguished by drill hole spacing and the composition of the deposit, which can encompass rock formations such as intercalated clays, bauxite, footwall iron clay or Ordovician limestone. Bauxite deposit groups vary in the thickness and mineral quality of its reserves.

We use the Chinese bauxite deposit estimation method, which is calculated using cut-off grades and thickness to outline continuous areas within the limits defined by samples of marginal grade. We utilize actual limiting sample points that are joined to create a polygonal outline, and grades are then calculated using a length weighted arithmetic average. We believe that the Chinese bauxite deposit estimation method of test boring, inspection pit, trial trench, density, tonnage analysis and calculation applied to the geological work of bauxite in China is an appropriate method to analyze these types of deposits.

Supply. To support the growth of our alumina production, we continuously seek opportunities to streamline and optimize our bauxite procurement. Except for Chalco Shandong, all of our refineries are located in the four provinces where over 90% of China’s potentially mineable bauxite has been found. We generally source our domestic bauxite from mines close to our refineries to control transportation costs. Historically, we have procured our bauxite supply principally from three sources:

● our own bauxite mining operations, which include the mining operations of the Boffa mine in Guinea since 2020;

● jointly-operated mines; and

● other suppliers, which principally include small independent mines in China and international suppliers.

On average, our refineries consumed approximately 2.4 tonnes of bauxite to produce one tonne of alumina in 2021. Our mines supplied approximately 28.1 million tonnes of bauxite to our refineries in 2021. We purchase bauxite from a number of suppliers and do not depend on any supplier for our bauxite requirements.

36

The following table sets forth the volumes and percentages of bauxite supplied by our own mines and other suppliers for the periods indicated:

		Year Ended December 31,
		2019			2020		2021
				Percentage		Percentage		Percentage
		Bauxite		of Bauxite	Bauxite	of Bauxite	Bauxite	of Bauxite
		Supply		Supply	Supply	Supply	Supply	Supply
				%		%		%
	(in thousand tonnes, except percentages)
Own mines(1)		14,791.2	(2)​	37.6	20,498.3	46.4	28,140.0	63.5
Other suppliers		24,499.9		62.4	23,723.2	53.6	16,204.3	36.5
Total		39,291.1		100.0	44,221.5	100.0	44,344.3	100.0

(1) Including the bauxite supplied by the Boffa mine in Guinea since 2020.

(2) In 2019, bauxite supplied by our own mines exceeded the bauxite output from our own mines because we supplied certain inventory of bauxite extracted prior to 2019.

Own Mines. As of December 31, 2021, we owned and operated 14 mines in China that had approximately 173.01 million tonnes of aggregate bauxite reserves. In addition, we own Boffa mine in Guinea, which had approximately 111.69 million tonnes of total bauxite reserves as of December 31, 2021. In 2019, 2020 and 2021, we extracted approximately 14.4 million tonnes, 17.2 million tonnes and 16.0 million tonnes, respectively, of bauxite from our domestic mines. In addition, in 2020 and 2021, we extracted approximately 8.1 million tonnes and 12.3 million tonnes of bauxite from the Boffa mine, respectively. We continue to explore new bauxite reserves to replenish our reserves. Please refer to “– Our Mines” for further details of our own bauxite mines.

Other Suppliers. In addition to our mines, we also source bauxite from other suppliers. The majority of other domestic suppliers are small independent mines. Small independent mines are not affiliated with us and generally have annual bauxite production capacities not exceeding 200,000 tonnes. These mines have been an important source of bauxite for our operations. We purchase bauxite directly from small independent mines or through local distributors that procure bauxite from these mines. In addition, we also secure a portion of bauxite overseas. In 2021, bauxite secured from other suppliers accounted for approximately 36.5% of our total bauxite supply, primarily because our demand for bauxite exceeded the production of our mines.

Bauxite Procurement. The production and quality management department at our headquarters is responsible for the oversight and coordination of our supply of bauxite in general. The sales and marketing department is responsible for management and coordination of procurement of imported bauxite. To determine how our bauxite requirement will be allocated among our principal sources each year, we first estimate our total bauxite needs for the year. Based on market conditions, production costs and other factors, we determine the amount of bauxite that we wish to source from our mines, and the remaining requirements from other suppliers.

Alumina-to-Silica Ratio. The production method for alumina refining is determined by the mineral composition of the bauxite, in particular, its alumina-to-silica ratio. Most of the bauxite reserves in China are diasporic with low alumina-to-silica ratios. Based on our current technology and economic considerations, an efficient application of the Bayer process requires bauxite with an alumina-to-silica ratio of 4.5:1 or higher, while the Bayer-sintering process can refine bauxite with an alumina-to-silica ratio as low as 4:1. In 2021, the average alumina-to-silica ratio of the proven and probable reserves of our mines ranges from approximately 3.73:1 to 34.16:1.

Prices. There is neither governmental regulation on bauxite prices nor an official trading market for bauxite in China. We negotiate bauxite prices with our suppliers based on ore quality, mining costs, market conditions, transportation costs and various governmental taxes or levies, including a resource tax imposed by local governments. Our total bauxite cost is currently influenced by the following factors:

● the cost of our mining operations;

● the market conditions relating to purchases from small independent mines; and

● the market conditions relating to purchases from overseas.

37

The average purchase price of bauxite per tonne from our other suppliers in 2021 decreased by approximately 6.2% to RMB386.83 compared to 2020, primarily because (i) with higher bargaining power due to less reliance on external bauxite suppliers, we were able to procure bauxite from external suppliers with a lower price in 2021, and (ii) the international freight decreased in 2021, in each case compared to that in 2020. The average cost of bauxite per tonne from our own mines is mainly related to the cost of our bauxite mining operations and transportation costs. In 2021, the average cost of bauxite per tonne from our own mines increased by approximately 6.3% to RMB299.03 compared to 2020, mainly due to increase of the cost of our bauxite mining operations.

We purchase a substantial amount of bauxite to satisfy our alumina production needs. Additionally, to fully utilize the bauxite from our mines, we refine all bauxite that meets the minimum technical requirements for our production of alumina. We also purchase higher-grade ore from other suppliers and blend the ore of various grades to meet the technical requirements for our alumina production. This practice allows for flexibility and the inclusion of lower-grade bauxite to optimize the use of bauxite deposits available to us.

Primary Aluminum

An average of approximately 1.91 tonnes of alumina and 13,361 kWh of electricity was required to produce one tonne of primary aluminum ingots in 2021.

Alumina and electricity, the two principal components of costs in the smelting process, accounted for approximately 40% and 37%, respectively, of our unit primary aluminum production costs in 2021. Apart from alumina and electricity, we also require carbon anodes, carbon cathodes, fluoride salt and cryolite for our smelting operations.

Alumina is the main raw material used in the production of primary aluminum. Our primary aluminum plants that do not have integrated alumina refining operations onsite obtain alumina internally from our alumina refineries located elsewhere or externally on the market.

Our Mines

Overview of Our Mining Properties and Operations

As of December 31, 2021 and up to the date of this annual report, our mining operations are primarily related to bauxite mines and also cover certain coal mines.

Bauxite Mines

As of December 31, 2021, we owned and operated 14 bauxite mines in China and one bauxite mine in Guinea. In accordance with the requirements of Regulation S-K 1300, we consider our Boffa mine in Guinea as the sole mining property that is material to our business. Please refer to “– D. Property, Plants and Equipment – Boffa Mine” for more details of Boffa mine and refer to Exhibit 96.1 for the technical report summary that has been prepared for Boffa mine in accordance with Regulation S-K 1300 and Item 601(b)(96) of Regulation S-K, or the Technical Report Summary.

38

The following map shows the locations of our 14 bauxite mines in China.

Bauxite Mines in China

39

The following table sets forth information for our bauxite mines as of December 31, 2021 and the annual production for the three years ended December 31, 2021:

Bauxite Production

Amount of

Mining Permit(1)

Exploration Permit(1)

(in Thousand tonnes)

ownership

Mining

Exploration

Processing

intersests and

Mining

permit

Area

permit

Area

plants and

Mine

Location

Operator

method

renewal

(km2)

renewal

(km2)

Stage

2019

2020

2021

facilities (2)

Pingguo mine

Guangxi Zhuang Autonomous Region, China

100% owned and operated by Chalco (Guangxi branch)

Open pit

March 2024 – April 2036

229.70

November 2021(3) –January 2022

82.05

Partially production and partially exploration

5,988

5,806

5,531

Washing and crushing system

Guizhou mine(4)

Guizhou Province, China

100% owned and operated by Chalco (Guizhou branch)

Open pit/underground

October 2024 – December 2038

34.93

N/A

N/A

Production

1,921

2,000

1,962

Crushing system

Zunyi mine

Guizhou Province, China

Owned and operated by Zunyi Aluminum, a 67.45% subsidiary of Chalco

Open pit/underground

July2026 – May 2031

17.28

December 2020 – June 2026

6.25

Partially production and partially exploration

904

1,003

1,004

Crushing system

Nanchuan mine

Chongqing Municipality, China

100% owned and operated by Chalco (Chongqing branch)

Underground

December 2022 – November 2026

10.25

N/A

N/A

Production suspended

0

0

0

Crushing system

Xuping mine(5)

Henan Province, China

100% owned and operated by Chalco (Zhongzhou Aluminum)

Open pit/underground

May 2019 – September 2031

34.63

N/A

N/A

Production

172

277

168

Crushing system

Sanmenxia mine

Henan Province, China

100% owned and operated by Chalco (Zhongzhou Aluminum)

Underground

May 2025 – February 2035

13.03

N/A

N/A

Production

445

507

170

Crushing system

Jiaozuo mine

Henan Province, China

100% owned and operated by Chalco (Zhongzhou Aluminum)

Open pit/underground

September 2018 – October 2024

17.07

N/A

N/A

Production

111

388

335

Crushing system

Zhengzhou area business department(5)

Henan Province, China

100% owned and operated by Chalco (Chalco Mining)

Open pit/underground

June 2021– October 2031

58.98

N/A

N/A

Production

601

853

922

Crushing system

Luoyang area business department(5)

Henan Province, China

100% owned and operated by Chalco (Chalco Mining)

Open pit/underground

June 2022 – October 2031

7.30

July 2017 – March 2027

29.59

Partially production and partially exploration

379

753

741

Crushing system

Sanmenxia area business department(5)

Henan Province, China

100% owned and operated by Chalco (Chalco Mining)

Open pit/underground

December 2020 – October 2031

14.53

February 2021 – February 2026

5.51

Partially production and partially exploration

375

400

337

Crushing system

Xiaoyi mine

Shanxi Province, China

100% owned and operated by Chalco (Shanxi New Material(6))

Open pit

June 2018 – September 2031

24.67

N/A

N/A

Production

843

499

999

Crushing system

Shanxi Other Mines

Shanxi Province, China

100% owned and operated by Chalco (Shanxi New Material(6))

Open pit/underground

September 2017 – July 2035

41.64

July 2013- January 2023

21.07

Partially production and partially exploration

560

1,523

1,135

Crushing system

Yangquan mine

Shanxi Province, China

100% owned and operated by Chalco (Chalco Shandong)

Open pit

September 2031 – May 2036

5.78

N/A

N/A

Production

133

426

429

Crushing system

Huaxing mine

Shanxi Province, China

100% owned and operated by Chalco (Shanxi Huaxing)

Underground

September 2020(3) – August 2022

17.44

November 2021 – December 2022

13.49

Partially production and partially exploration

2,018

2,768

2,278

Crushing system

Boffa mine(7)

Boffa, Guinea

Owned and operated by Chalco Guinea Company S.A., an 85% subsidiary of Chalco

Open pit

July 2018 – July 2033

1,248.16

N/A

N/A

Production

0

8,062

12,303

Various facilities (7)

Total

1,775.40

157.96

14,441

25,265

28,314

40

(1) All conditions to retain our properties or leases have been fulfilled as of December 31, 2021. Each mine may be covered by one or more mining permits and/or exploration permits and the range of permit renewal dates is set forth above.

(2) We have modern facilities at our bauxite mines in China, which were designed by professional PRC mine design institutes and adhere to international standards. Our bauxite mines are either open pit or underground. Our bauxite mines generally have mining offices and transportation facilities that have access to local roads and highways. In addition, we utilize advanced heavy equipment such as bulldozers and scrapers. All of our mining facilities in China are connected to the local or regional electric power grids. Our mining facilities are also connected to reliable water sources, all of which were sufficient for the requirements of each individual mine. For details of the processing plants and other available facilities for these mines, see “– Principal Facilities.”

(3) We are in the process of renewing these permits.

(4) Including both Guizhou No. 1 mine and Guizhou No. 2 mine throughout this annual report.

(5) To enhance our mine management system and improve management efficiency and coordination, in 2020, Mianchi mine was renamed as Sanmenxia area business department; Luoyang mine was renamed as Luoyang area business department; Xiaoguan mine, Gongyi mine, Dengfeng mine and Xinmi mine were integrated as Zhengzhou area business department; and Xuchang mine and Pingdingshan mine were integrated as Xuping mine. These new names are used throughout this annual report.

(6) As disclosed in “– C. Organizational Structure,” Chalco does not own 100% ownership interests of Shanxi New Material. Nevertheless, Chalco holds the permits for 100% interests of Xiaoyi mine and Shanxi Other Mines while Shanxi New Material is the operator of these mines.

(7) For details of our sole individually material mining property, Boffa mine, please refer to “– D. Property, Plants and Equipment – Boffa Mine.”

For the years ended December 31, 2019, 2020 and 2021, we extracted approximately 14.4 million tonnes, 17.2 million tonnes and 16.0 million tonnes, respectively, of bauxite from our domestic mines. In addition, in 2020 and 2021, we extracted approximately 8.1 million tonnes and 12.3 million tonnes of bauxite from the Boffa mine, respectively. The decrease in the volume of bauxite extracted from our domestic mines in 2021 was primarily because (i) some of the mine resources depleted and the replacements failed to meet the previous output in a timely manner, (ii) safety and environmental protection control standards improved in some regions where certain mines were located, (iii) we proactively reduced the production of a small number of mines with low-grade ore. The increase in the volume of bauxite extracted from Boffa mine in 2021 was primarily because our Boffa mine entered into normal operation stage for the full year of 2021.

We hold the requisite mining permit for three bauxite mines (i.e. PT ALUSENTOSA, PT KALMIN and PT VISITAMA) in West Kalimantan, Indonesia through our 96.28% owned subsidiary, PT Nusapati Prima. Our bauxite deposits in Indonesia are lateritic gibbsite and were formed by weathering and leaching of aluminum-rich silicate rock in tropical climates. We have suspended our bauxite mining in Indonesia since September 2014 due to restraints on export of bauxite imposed by the Indonesian government. Since 2017, the Indonesian government has issued, and amended from time to time, relevant rules pursuant to which export of bauxite may be allowed upon satisfaction of certain requirements. We have been actively exploring the possibility of meeting these requirements. However, Indonesia plans to stop the exports of bauxite in 2022. We do not expect to engage in exploration, development or production of bauxite on PT ALUSENTOSA, PT KALMIN or PT VISITAMA mines in the near future. Our mines in Indonesia have access to local roads. The mineral resources and mineral reserves of PT ALUSENTOSA, PT KALMIN and PT VISITAMA are also not available.

We are required to obtain mining rights permits to conduct mining activities. Under PRC laws and regulations, a mining enterprise must prepare and submit exploration reports for a mine to the local government to obtain a mining rights permit for a mine. A mining right owner is also permitted to lease the mining right through a lease arrangement. The mining rights permit is subject to renewal on a regular basis.

Furthermore, the mining right owner is required to obtain land use rights on the land in order to operate the mines. We lease the land use rights relating to our mines in China from Chinalco pursuant to a land use rights lease agreement that became effective upon our formation. Chinalco’s land use rights relating to over 90% of our mining properties in China are for 50-year terms beginning on July 1, 2001. The remaining land use rights relating to other mines in China are for shorter terms, some as short as one year. All of our land use rights lease agreements end on the expiry date of the mining rights or the end of the working life of the mine, whichever is earlier. Both the land use rights and land use rights lease agreements are renewable.

41

The following table sets forth our capital expenditures for our bauxite mines for the periods indicated:

	Year Ended December 31,
	2019	2020		2021
	(RMB in thousands)
Capital Expenditures
Infrastructure construction	1,314,802.9	831,375.0	(1)​	279,536.0	(1)​
Facility upgrade	6,079.8	—	(2)​	—
Total	1,320,882.7	831,375.0		279,536.0

(1) The decreases in capital expenditures on infrastructure construction in 2020 and 2021 were primarily attributable to the completion of construction of the Boffa Project in April 2020. See “– A. History and Development of the Company – Boffa Project” for more details.

(2) The decrease in capital expenditures on facility upgrade in 2020 was primarily because our technology transformation projects had been completed and we did not have any new technology transformation projects in 2020.

Coal Mines

As of December 31, 2021, our non-wholly owned subsidiaries owned and operated five coal mines in China.

We completed the acquisition of 70.82% of the equity interest in Ningxia Energy in January 2013, which holds mining rights or exploration rights for certain coal deposits in Ningxia Autonomous Region. The coal mines directly owned and operated by Ningxia Energy include Wangwa mine, Wangwa No.2 mine and Yindonggou mine. In addition, Ningxia Energy holds 50% of interest in Ningxia Yinxing Coal Industry Co., Ltd., which owns and operates Yinxingyijing mine. As the other 50% owner of in Yinxingyijing mine does not participate in its operation, Ningxia Energy is able to control its operation and consolidate its financial statements. Each of Wangwa mine, Wangwa No.2 mine, Yindonggou mine and Yinxingyijing mine is an underground thermal coal mine in extraction stage. The operations at these coal mines are powered by electricity from local power grids and are accessible by public roads. For the year ended December 31, 2021, Ningxia Energy incurred capital expenditures of approximately RMB360.4 million on infrastructure construction.

We acquired 70% of the equity interest in Gansu Huayang in March 2011, which holds exploration rights for a portion of Luochuan mine in Gansu Province. We renewed the exploration permit in 2020, which will expire in October 2025. We are in the process of applying for the exploration permit for the rest of Luochuan mine. Luochuan mine is an underground mine. We have completed the exploration but have not commenced development of Luochuan mine.

42

The following map shows the locations of five coal mines of our subsidiaries in China.

Coal Mines in China

43

The following table sets forth information for five coal mines owned and operated by our subsidiaries as of December 31, 2021 and the annual production for the three years ended December 31, 2021:   

						Coal Production
						(in thousand tonnes)
		Amount of		Mining Permit/						Processing
		ownership and	Mining	Exploration						plants and
Mine	Location	Operator	method	Permit	Area (km2)	Stage	2019	2020	2021	facilities
Wangwa mine	Ningxia Autonomous Region, China	Owned and operated by Ningxia Energy, a 70.82% subsidiary of Chalco	Mining well	October 2021 – November 2046	23.97	Production	1,846.3	3,953.2	1,792.8	Coal preparation plant with capacity of 12 million tonnes/year
Wangwa No.2 mine	Ningxia Autonomous Region, China	Owned and operated by Ningxia Energy, a 70.82% subsidiary of Chalco	Mining well	October 2021 – June 2031	8.72	Production	2,978.6	2,913.6	2,977.2	Coal preparation plant with capacity of 12 million tonnes/year
Yindonggou mine	Ningxia Autonomous Region, China	Owned and operated by Ningxia Energy, a 70.82% subsidiary of Chalco	Mining well	July 2016 – July 2036	2.79	Production	2,958.1	2,254.6	1,580.8	Coal preparation plant with capacity of 12 million tonnes/year
Yinxingyijing mine	Ningxia Autonomous Region, China	Owned and operated by Ningxia Yinxing Coal Industry Co., Ltd., 50% subsidiary of Ningxia Energy	Mining well	February 2018 – February 2048	60.42	Production	3,008.2	2,081.0	1,890.5	Coal preparation plant with capacity of four million tonnes/year
Luochuan mine	Gansu Province, China	Owned and operated by Gansu Huayang, a 70% subsidiary of Chalco	Mining well	October 2020 – October 2025	260.13	Exploration	—	—	—	N/A
Total					356.03		10,791.2	11,202.4	8,241.3

In addition to the coal mines above, as of December 31, 2021, we held minority interests in certain other coal mines owned or operated by our joint ventures and associates, including Xuehugou Coal Industry Co., Ltd., Huasheng Wanjie Coal Co., Ltd., Guizhou Yuneng Mining Co., Ltd., Shanxi Jiexiu Xinyugou Coal Industry Co., Ltd., Qinghai Province Energy Development (Group) Co., Ltd., Shaanxi Chengcheng Dongdong Coal Co., Ltd., Guizhou Chalco Hengtaihe Mining Co., Ltd. (formerly known as Chalco Liupanshui Hengtaihe Mining Co., Ltd.) and Huozhou Coal Group Xingshengyuan Coal Co., Ltd. The coal mines owned or operated by these joint ventures and associates are individually and collectively immaterial to our business operations and financial condition. The mineral resources and mineral reserves of these coal mines are not available.

Our Mineral Resources and Reserves

Our estimates of mineral resources and mineral reserves have been prepared in accordance with the disclosure requirements of Regulation S-K 1300. As a result of the SEC’s revised disclosure requirements for mining registrants, we replaced our previous estimate of reserves with estimates of mineral resources and mineral reserves in accordance with Regulation S-K 1300.

With respect to our bauxite mines, we, through CINF Engineering Co., Ltd., engaged Mr. Shengfa Tu, a fellow of Australasian Institute of Mining and Metallurgy, as the qualified person as defined under Regulation S-K 1300. Mr. Tu is not our employee. He is an external consultant of CINF Engineering Co., Ltd., a wholly-owned subsidiary of China Aluminum International Engineering Corporation Limited, in which our controlling shareholder Chinalco owns 73.56% interests. The scientific and technical information concerning our mineral resources and mineral reserves of bauxite mines in this annual report has been reviewed and approved by Mr. Tu. In addition, with respect to Boffa mine, our sole individually material mining property, Mr. Tu has prepared the Technical Report Summary in accordance with Regulation S-K 1300 and Item 601(b)(96) of Regulation S-K, filed as Exhibit 96.1 to this annual report.

With respect to our coal mines, we engaged Mr. Wen Chen, a member of Geological Society of China, as the qualified person as defined under Regulation S-K 1300. Mr. Chen is not our employee. He is employed by Ningxia Coal Mine Geological Bureau, which is a non-profitable organization not affiliated with us. The scientific and technical information concerning our mineral resources and mineral reserves of coal mines in this annual report has been reviewed and approved by Mr. Chen.

For discussion of risks associated with our estimates of mineral resources and mineral reserves, please refer to “Item 3. Key Information – D. Risk Factors – Estimates of mineral reserves and mineral resources are uncertain and the volume and grade of minerals actually extracted may vary from our estimates.”

As used in this annual report, the terms “mineral resource,” “measured mineral resource,” “indicated mineral resource,” “inferred mineral resource,” “mineral reserve,” “proven mineral reserve” and “probable mineral reserve” are defined and used in accordance with Regulation S-K 1300. In addition, all disclosure of mineral resources and reserves in this annual report is only for the portion of the resources or reserves attributable to Chalco’s interest in the mining properties.

44

Summary of Mineral Resources

A “mineral resource” is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade, or quality and quantity that there are reasonable prospects for eventual economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed adjustifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled. A “measured mineral resource” is a resource for which the quantity and grade are estimated from detailed, closely spaced sampling, and geologic characterization that defines the size, shape, depth and mineral content to a high degree of confidence. An “indicated mineral resource” is a resource for which quantity and grade are estimated from information similar to that used for measured mineral resources where the samples are farther apart, and the geological characterization is adequate. An “inferred mineral resource” is a resource for which quantity and grade are estimated from information similar to that used for measured and indicated mineral resources, but with limited geological evidence and sampling. Inferred mineral resource grade and mineralization continuity have a lower degree of confidence. Accordingly, no assurance can be given that the estimated mineral resources not included in mineral reserves will become proven and probable mineral reserves. The measured, indicated, and inferred resource figures presented herein are estimates based on information available at the time of calculation and are exclusive of reserves.

The following table sets forth certain estimated details of the measured, indicated and inferred resources, exclusive of mineral reserves, for our bauxite mines as of December 31, 2021:

	Measured Resources				Indicated Resources				Measured and Indicated Resources				Inferred Resources
	Tonnage				Tonnage				Tonnage				Tonnage
	(in million	Al2O3	SiO2		(in million	Al2O3	SiO2		(in million	Al2O3	SiO2		(in million	Al2O3	SiO2
Mine	tonnes)	(%)	(%)	A/S(1)	tonnes)	(%)	(%)	A/S(12)	tonnes)	(%)	(%)	A/S(12)	tonnes)	(%)	(%)	A/S(1)
Pingguo mine	1.86	52.28	4.07	12.85	2.43	49.97	3.83	13.04	4.29	50.97	3.93	12.96	3.01	50.68	4.00	12.67
Guizhou mine	/	/	/	/	0.37	66.20	9.74	6.80	0.37	66.20	9.74	6.80	69.75	65.80	7.72	8.52
Zunyi mine	0.07	63.55	13.41	4.74	0.67	63.65	7.51	8.48	0.74	63.64	8.05	7.91	8.5	60.43	9.65	6.26
Nanchuan mine	/	/	/	/	6.35	62.51	11.17	5.59	6.35	62.51	11.17	5.59	1.14	63.71	14.50	4.39
Xuping mine	/	/	/	/	0.99	60.19	14.46	4.16	0.99	60.19	14.46	4.16	8.58	63.08	12.23	5.16
Sanmenxia mine	0.80	66.59	9.90	6.72	4.70	65.42	11.27	5.81	5.51	65.59	11.07	5.93	9.51	68.03	9.50	7.16
Jiaozuo mine	0.25	63.56	12.17	5.22	0.06	60.49	13.00	4.65	0.31	62.98	12.32	5.11	1.58	60.44	14.25	4.24
Zhengzhou area business department	0.19	67.98	9.27	7.34	2.37	66.17	9.69	6.83	2.56	66.31	9.66	6.87	12.47	64.35	12.09	5.32
Luoyang area business department	3.46	63.27	13.42	4.71	9.25	63.32	13.03	4.86	12.71	63.31	13.14	4.82	9.57	63.16	13.25	4.77
Sanmenxia area business department	2.34	64.76	12.21	5.30	6.43	64.15	12.50	5.13	8.77	64.31	12.42	5.18	11.02	64.11	12.46	5.15
Xiaoyi mine	/	/	/	/	0.79	64.72	12.39	5.22	0.79	64.72	12.39	5.22	5.99	64.00	12.82	4.99
Shanxi Other Mines	1.47	65.72	12.15	5.41	4.74	65.12	12.27	5.31	6.22	65.26	12.24	5.33	24.37	64.99	12.38	5.25
Yangquan mine	/	/	/	/	0.02	61.35	13.28	4.62	0.02	61.35	13.28	4.62	1.70	59.55	12.36	4.82
Huaxing mine	7.81	61.40	7.45	8.24	30.03	61.02	6.87	8.88	37.84	61.10	6.99	8.74	21.77	61.69	7.06	8.73
Boffa mine(2)	58.97	37.51	1.29	29.13	66.92	37.84	1.19	31.92	125.89	37.68	1.23	30.56	1,535.77	39.02	1.09	35.93
Total	77.22				136.12				213.36				1,724.73

(1) Refers to the ratio of average grade of Al₂O₃ to the average grade of SiO₂ of the reserves.

(2) Alumina for the Boffa mine is stated as available alumina (AAl₂O₃) and Silica is stated as reactive silica (RSiO₂). For details of Boffa mine, please refer to “– D. Property, Plants and Equipment – Boffa Mine.”

(3) Estimation of mineral resources of our bauxite mines other than Boffa mine is based on the following per tonne price, which is the five-year average sales price of bauxite from the respective mines between 2017 and 2021: RMB300-320 for Pingguo mine, RMB300-350 for Guizhou mine, Zunyi mine and Nanchuan mine, RMB400-450 for Yangquan mine, RMB450-500 for Xuping mine, Sanmenxia mine, Jiaozuo mine, Sanmenxia area business department and Luoyang area business department, RMB500-550 for Zhengzhou area business department, Xiaoyi mine, Shanxi Other Mines and Huaxing mine. Since each of these mines may contain multiple mining areas for which the qualified person used slightly different prices when estimating the mineral resources of different areas, the prices above are stated as a range. The point of reference selected by the qualified person is the point where bauxite is delivered to ore storage yard and available for use by alumina refineries.

45

The following table sets forth certain estimated details of the measured, indicated and inferred resources, exclusive of mineral reserves, for our four coal mines as of December 31, 2021:

									Measured and Indicated
	Measured Resources				Indicated Resources				Resources				Inferred Resources
		Heat Value	Coal ash			Heat Value	Coal ash			Heat Value	Coal ash			Heat Value	Coal ash
Mine(1)	Tonnage	(MJ/kg)	(%)		Tonnage	(MJ/kg)	(%)		Tonnage	(MJ/kg)	(%)		Tonnage	(MJ/kg)	(%)
	(in ten thousand tonnes)				(in ten thousand tonnes)				(in ten thousand tonnes)				(in ten thousand tonnes)
Wangwa mine	1,805.15	24.85	16.10	%	921.57	24.85	16.10	%	2,726.73	24.85	16.10	%	7,001.05	24.85	16.10	%
Wangwa No.2 mine	2,128.46	26.11	12.98	%	1,436.45	26.11	12.98	%	3,564.91	26.11	12.98	%	2,719.61	26.11	12.98	%
Yindonggou mine	462.04	24.50	18.52	%	83.13	24.50	18.52	%	545.18	24.50	18.52	%	1,197.23	24.50	18.52	%
Yinxingyijing mine	1,572.89	28.00	12.50	%	1,433.78	28.00	12.50	%	3,006.67	28.00	12.50	%	26,041.28	28.00	12.50	%
Total	5,968.54				3,874.93				9,843.49				36,959.17

(1) Measured, indicated and inferred resources for Luochuan mine are not available because it is still in exploration stage.

(2) Estimation of mineral resources in this table is based on RMB478, RMB478, RMB522 and RMB582 per tonne of coal for Wangwa mine, Wangwa No.2 mine, Yindonggou mine and Yinxingyijing mine, respectively. Such prices are the respective average selling price of coal extracted from these mines during 2021. The point of reference selected by the qualified person is the point where raw coal mined from the coal mines can be saleable product after being washed by the supporting coal preparation plant.

Summary of Mineral Reserves

A “mineral reserve” is an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted. The term “economically viable,” as used in the definition of reserve, means that the qualified person has analytically determined that extraction of the mineral reserve is economically viable under reasonable investment and market assumptions.

The term “proven reserves” means the economically mineable part of a measured mineral resource and can only result from conversion of a measured mineral resource. The term “probable reserves” means reserves for which quantity and grade are computed from information similar to that used for proven reserves, but the sites for sampling are farther apart or are otherwise less closely spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. Our proven and probable reserves include bauxite or coal attributable to our ownership or economic interest.

Proven and probable mineral reserves were determined from the application of relevant modifying factors to geological data, in order to establish an operational, economically viable mine plan. The proven and probable reserve figures presented herein are estimates based on information available at the time of calculation. No assurance can be given that the indicated levels of recovery of bauxite or coal will be realized. Reserve estimates may require revision based on actual production. Market fluctuations in the price of aluminum and coal, as well as increased production costs or reduced metallurgical recovery rates, could render certain proven and probable reserves containing higher cost uneconomic to exploit and might result in a reduction of reserves.

46

The following table sets forth details of proven and probable reserves for our bauxite mines as of December31, 2021:

	Proven Mineral Reserves				Probable Mineral Reserves				Total Mineral Reserves
	Tonnage				Tonnage				Tonnage
	(in million	Al2O3	SiO2		(in million	Al2O3	SiO2		(in million	Al2O3	SiO2
Mine	tonnes)	(%)	(%)	A/S(1)	tonnes)	(%)	(%)	A/S(1)	tonnes)	(%)	(%)	A/S(1)
Pingguo mine	17.50	52.14	4.56	11.45	29.02	51.95	5.44	9.56	46.52	52.02	5.11	10.19
Guizhou mine	6.85	62.44	9.32	6.70	26.24	66.56	8.02	8.30	33.09	65.70	8.29	7.93
Zunyi mine	1.97	58.73	10.27	5.72	3.27	62.10	9.91	6.27	5.24	60.84	10.04	6.06
Nanchuan mine	1.52	57.23	16.08	3.56	16.30	58.62	15.63	3.75	17.82	58.50	15.67	3.73
Xuping mine	0.11	65.21	13.32	4.89	3.24	64.24	12.60	5.10	3.36	64.28	12.62	5.09
Sanmenxia mine	20.09	62.22	13.03	4.77	3.90	61.23	15.19	4.03	23.99	62.06	13.38	4.64
Jiaozuo mine	0.25	63.56	12.17	5.22	0.06	60.49	13.00	4.65	0.31	62.98	12.32	5.11
Zhengzhou area business department	5.12	64.23	13.83	4.65	5.80	64.09	12.68	5.05	10.92	64.15	13.22	4.85
Luoyang area business department	1.80	62.93	14.10	4.46	0.93	62.57	14.71	4.25	2.73	62.80	14.31	4.39
Sanmenxia area business department	0.14	63.54	13.88	4.58	4.37	61.87	15.18	4.07	4.51	61.92	15.14	4.09
Xiaoyi mine	0.23	66.16	12.24	5.41	7.09	65.24	12.50	5.22	7.31	65.27	12.49	5.23
Shanxi Other Mines	3.82	64.39	13.22	4.87	10.40	62.48	13.64	4.58	14.22	62.99	13.53	4.66
Yangquan mine	/	/	/	/	1.02	58.36	13.94	4.19	1.02	58.36	13.94	4.19
Huaxing mine	0.47	58.07	10.68	5.44	1.50	58.51	10.57	5.54	1.97	58.40	10.59	5.51
Boffa mine(2)	49.45	41.71	1.07	39.13	62.24	41.74	1.35	31.03	111.69	41.73	1.22	34.16
Total	109.32				175.38				284.70

(1) Refers to the ratio of average grade of Al₂O₃ to the average grade of SiO₂ of the reserves.

(2) Alumina for the Boffa mine is stated as available alumina (AAl₂O₃) and Silica is stated as reactive silica (RSiO₂). For details of Boffa mine, please refer to “– D. Property, Plants and Equipment – Boffa Mine.”

(3) Estimation of mineral resources of our bauxite mines other than Boffa mine is based on the following per tonne price, which is the five-year average sales price of bauxite from the respective mines between 2017 and 2021: RMB300-320 for Pingguo mine, RMB300-350 for Guizhou mine, Zunyi mine and Nanchuan mine, RMB400-450 for Yangquan mine, RMB450-500 for Xuping mine, Sanmenxia mine, Jiaozuo mine, Sanmenxia area business department and Luoyang area business department, RMB500-550 for Zhengzhou area business department, Xiaoyi mine, Shanxi Other Mines and Huaxing mine. Since each of these mines may contain multiple mining areas for which the qualified person used slightly different prices when estimating the mineral resources of different areas, the prices above are stated as a range. The point of reference selected by the qualified person is the point where bauxite is delivered to ore storage yard and available for use by alumina refineries.

The following table sets forth details of proven and probable reserves for our four coal mines as of December 31, 2021:

	Proven Mineral Reserves				Probable Mineral Reserves				Total Mineral Reserves
		Heat Value	Coal ash			Heat Value	Coal ash			Heat Value	Coal ash
	Tonnage	(MJ/kg)	(%)		Tonnage	(MJ/kg)	(%)		Tonnage	(MJ/kg)	(%)
Mine(1)	(in ten thousand tonnes)				(in ten thousand tonnes)				(in ten thousand tonnes)
Wangwa mine	10,482.73	24.85	16.10	%	6,381.03	24.85	16.10	%	16,863.76	24.85	16.10	%
Wangwa No.2 mine	7,766.77	26.11	12.98	%	432.75	26.11	12.98	%	8,199.50	26.11	12.98	%
Yindonggou mine	2,618.23	24.50	18.52	%	471.10	24.50	18.52	%	3,089.33	24.50	18.52	%
Yinxingyijing mine	2,430.83	28.00	12.50	%	2,215.85	28.00	12.50	%	4,646.68	28.00	12.50	%
Total	23,298.56				9,500.73				32,799.27

(1) Proven and probable reserves for Luochuan mine are not available because it is still in the exploration stage.

47

(2) Estimation of mineral reserves in this table is based on RMB478, RMB478, RMB522 and RMB582 per tonne of coal for Wangwa mine, Wangwa No.2 mine, Yindonggou mine and Yinxingyijing mine, respectively. Such prices are the respective average selling price of coal extracted from these mines during 2021. The point of reference selected by the qualified person is the point where raw coal mined from the coal mines can be a saleable product after being washed by the supporting coal preparation plant.

Internal Controls over the Mineral Reserves and Mineral Resources Estimation Process

We have internal controls over the mineral reserves and mineral resources estimation processes that are able to reach reasonable and reliable estimates aligned with industry practice and reporting regulations, which includes (i) a quality control and quality assurance plan, and (ii) verification of analytical procedures.

With respect to quality control and quality assurance, we engage third-party professional technical firms to conduct the mineral exploration and mineral resources estimation, the results of which are evaluated by internal and external experts. The conversion of mineral resources into mineral reserves is determined by third-party professional consulting firms based on feasibility studies or pre-feasibility studies, or supported by mine production data. The estimates of mineral resources and mineral reserves by third-party professional firms will first be reviewed by Chalco’s internal experts, and then reviewed and confirmed by the qualified person to ensure the reliability of mineral reserves and mineral resources estimation results. The annual report and results of mineral reserve and resources estimation of coal mines are also filed with the Department of Natural Resources of the local government.

The verification of analytical procedures is entrusted to third-party qualified firms. The fundamental analysis of the samples is carried out by a certified laboratory. During the analysis, standard samples were used for quality control. At the same time, duplicate samples were taken according to the ratio of 7% to 10% by such laboratory. In each batch of analysis samples, 3% to 5% of the samples are taken and sent to another certified laboratory for external inspection and analysis, and standard samples are also used for quality control during external inspection and analysis.

These controls and other measures help to validate the reasonableness of the estimates of our mineral resources and mineral reserves. However, estimates could change due to a number of factors, including future changes in permitting requirements, geological conditions, ongoing mine planning, macroeconomic and industry conditions, and regulatory disclosure requirements. The industry risks to which estimates are subject include risks related to metal prices, metallurgical performance and geological modeling. Please refer to “Item 3. Key Information – D. Risk Factors – Estimates of mineral reserves and mineral resources are uncertain and the volume and grade of minerals actually extracted may vary from our estimates” for a discussion of risks inherent in our estimates of mineral resources and mineral reserves.

Mine Safety Disclosure

We have been in compliance with the PRC National Mining Safety Law and related rules and regulations in China. We closely supervise and routinely inspect mining conditions with continual implementation of safety measures and procedures at our own bauxite mines and safety trainings for our mining personnel. For our Boffa mine, we strictly abide by the mining convention with the Guinean government and Guinean laws and regulations relating to mining. We continuously screen, identify and control safety hazards and regularly organize safety trainings for our personnel. In 2021, we extracted approximately 16.0 million tonnes of bauxite from our domestic mines and approximately 12.3 million tonnes of bauxite from the Boffa mine. We did not experience any mining operation-related accidents that involved serious work injuries or death.

Supplemental Materials, Electricity and Fuel

The sales and marketing department at our headquarters coordinates and manages our supply chain for all our major raw materials in conjunction with the procurement center at each production facility, which manages the logistics and inventory of raw materials locally. We are able to purchase diesel, the main fuel used by our mining and manufacturing equipment, from the public markets, and we source our water from local rivers, lakes or underground sources.

Alumina

Electricity, coal, alkali (caustic soda or soda ash) and natural gas are the principal materials and energy used in our alumina production. Electricity is one of the principal cost components in our refining process. We generate electricity at a number of alumina refineries and meet our remaining electric power requirements through purchasing from regional power grids at government-mandated rates or directly from power generation enterprises. Most of our power supply agreements have a term of one year and are renewed by mutual agreement. Power prices in China can vary, sometimes substantially, from one region to another, based on demand and power production costs in the region. Power costs for our various alumina refineries vary accordingly.

48

Large quantities of coal are used as a reducing agent and fuel to produce steam and gas in the alumina refining process. See “– B. Business Overview – Our Mines” for details of coal mines of which we own majority or minority interests. By investing in coal mining enterprises and acquiring mining rights for coal deposits, we plan to partially offset our future energy costs.

Alkali is used as a supplemental material in alumina refining. The Bayer-sintering process and the Bayer-sintering combined process require soda ash while caustic soda is used in the Bayer process. Our alumina refineries use natural gas and coal gas as fuel to refine alumina. There is no governmental regulation of the prices of coal, alkali or fuel. We purchase these raw materials from external suppliers under negotiated supply contracts, which we believe are competitively priced. We have not experienced difficulty in obtaining these materials in sufficient quantity and at acceptable prices.

Primary Aluminum

Electricity, carbon anodes and cathodes are the principal materials and energy used in our smelting process. Smelting primary aluminum requires a substantial and continuous supply of electricity. The availability and price of electricity are key factors in our primary aluminum production. See “Item 5. Operating and Financial Review and Prospects - A. Operating Results - Overview - Factors Affecting Our Results of Operations - Manufacturing Costs.”

We generate electricity at four of our smelters to supply a portion of the electricity consumed by these smelters. We meet our remaining electric power requirements through purchasing directly from power generation enterprises. As of December 31, 2021, five of our smelters had direct purchase arrangements with power generation enterprises and the rest of our smelters were in the negotiation process for the renewal of direct purchase arrangements. In 2021, direct purchase transactions were organized by the local government. Starting from January 1, 2022, direct purchase transactions have been carried out based on the relevant rules and regulations in different regions. Because power prices in China vary from one region to another, power costs for our various smelters could vary substantially. The average electricity cost (including tax) of our smelters increased by 27% from 2020 to 2021.

Carbon anodes and cathodes are key raw materials in the smelting process. We are generally able to manufacture carbon anodes necessary for the operations of our smelters. In addition, our Qinghai branch possesses production capacity of carbon cathodes and is able to manufacture carbon cathodes products.

Sales and Marketing

We coordinate substantially all of our sales and marketing activities for our self-produced alumina products and some of our sales and marketing activities for our self-produced primary aluminum products through Chalco Trading Group. Our subsidiaries and branches sell some of our self-produced primary aluminum products directly to external customers. Our alumina refineries sell our self-produced chemical alumina products directly to external customers or indirectly through Chalco Trading Group for subsequent external trading. For all of our self-produced products that are sold either through Chalco Trading Group for subsequent external sale or directly to external customers, our subsidiaries and branches play an important role in providing after-sale services and strengthening our presence in the marketplace. Since late 2009, we have also been engaged substantially in the trading of non-ferrous metal products including alumina, primary aluminum, copper, zinc and lead, as well as coal products that we source from third-party suppliers through Chalco Trading Group, or previously Chalco Trading.

Alumina

We sell our self-produced alumina to external customers primarily through Chalco Trading Group, giving priority to customers with whom we have long-standing relationships and who have established a strong credit history, after reserving sufficient alumina for our forecasted primary aluminum production. In 2021, we supplied approximately 7.1 million tonnes of alumina produced at our alumina refineries to our smelters, which represented approximately 43.8% of our total alumina production, and sold the remainder to our customers. In addition, we also procure and sell outsourced alumina under long-term agreements or on the spot market through Chalco Trading Group. We sold approximately 1.9 million tonnes of outsourced alumina in 2021.

The sales prices of alumina that our alumina refineries sell internally to Chalco Trading Group are determined based on our budgeted sale prices, spot market prices and the prices of primary aluminum on SHFE. Chalco Trading Group coordinates the external negotiation and execution of sales contracts of our alumina products. Chalco Trading Group sells our self-produced alumina and alumina sourced from third-party suppliers to customers throughout China. Most of our major customers in the past three years have been domestic smelters. We primarily sourced alumina from third-party suppliers on the spot market, and we are normally required to pay the full price of the outsourced alumina before each delivery.

49

Chalco Trading Group sells our self-produced alumina and outsourced alumina under spot sales agreements and long-term sales agreements with terms ranging from one year to three years. Our long-term sales agreement for alumina normally sets forth the quantity of alumina to be sold by us in each month and each year, the price determination mechanism, payment method, place of delivery and delivery method. Places of delivery under our sales agreements are arranged to be where we could efficiently manage the transportation of alumina and help reduce logistics cost. Our customers are normally required to pay for their procurement before each delivery. As a result, the spot price of alumina and fluctuations of primary aluminum prices on the SHFE affect the alumina prices at which we sell.

Chalco Trading Group sets the price for the external sales of alumina products after taking into account the following factors:

● international and domestic supply-demand situation;

● CIF Chinese ports prices for alumina imports into China and other relevant import expenses;

● international and domestic alumina transportation costs;

● effects of the PRC government’s policies on raw materials required by our alumina refineries; and

● our short-term and mid-term projections for alumina prices.

Primary Aluminum

We sell all of our self-produced and outsourced primary aluminum to domestic customers. We expect China to remain our key market for primary aluminum for the foreseeable future. Customers of our primary aluminum products principally consist of aluminum fabricators and distributors that resell our primary aluminum products to aluminum fabricators or other purchasers.

To improve the efficiency of our distribution, we divide our China market into the following regions: southern China (including Guangdong and Fujian Provinces); eastern China (including Jiangsu and Zhejiang Provinces and Shanghai Municipality); southwestern China (including Sichuan Province and Chongqing Municipality); the Beijing-Tianjin-Tanggu area; and central China. In general, we satisfy each purchase order with products from our nearest smelter to minimize transportation costs.

Our primary aluminum smelting subsidiaries and branches sell a portion of our primary aluminum output directly to external customers. Each of our smelters is normally responsible for the sale of products to the customers from neighboring markets, negotiating the pricing and delivery terms based on market conditions.

Our primary aluminum smelting subsidiaries and branches also sell a portion of our primary aluminum output internally to Chalco Trading Group at prices based on the spot prices of primary aluminum on Yangtze or Nanchu. We establish pricing guidelines for Chalco Trading Group to conduct external domestic sales of our self-produced primary aluminum products, taking into account four main factors: the primary aluminum spot prices and futures price on the SHFE; spot prices in the regions of eastern China and southern China; our production costs and expected profit margins; and supply and demand. Chalco Trading Group then coordinates the external sales of primary aluminum. Chalco Trading Group sells our self-produced primary aluminum products to external customers through the following three channels:

● Contract sales. Most of our primary aluminum sales are made pursuant to contracts entered into directly with our long-standing customers. The terms for our sales contracts for primary aluminum are typically one year. We price our primary aluminum products based on the SHFE prices and spot market prices for primary aluminum.

● Sales on the SHFE. As part of our effort to manage market risk, we sell a portion of our primary aluminum products on the SHFE through futures contracts with terms ranging from one month to 12 months to hedge against declines in primary aluminum prices.

● Sales on the spot market. We also sell our primary aluminum products on the spot market at prices with reference to various factors, such as market spot prices and transportation costs.

50

In addition, we also procure and sell outsourced primary aluminum on the spot market or through short-term futures and options transactions. We determine our sales prices of the outsourced primary aluminum through negotiations with our customers, taking into consideration factors including our procurement prices and prevailing market conditions. We sold approximately 5.8 million tonnes of outsourced primary aluminum in 2021.

Chemical Alumina Products and Gallium

Chemical alumina products are derived from our alumina production. We adjust our production of these products based on market demand. Our alumina refineries sell our chemical alumina products directly to external customers or indirectly to external customers through Chalco Trading Group for subsequent external trading. We sell most of our chemical alumina products in China. Prices for our chemical alumina products are determined through negotiations with our customers, taking into consideration the market conditions.

In addition, in the process of refining bauxite into alumina, we produce gallium as a by-product. We adjusted our production of gallium based on market demand. Prices for our gallium were determined through negotiations with our customers, taking into consideration the market conditions.

Coal

Ningxia Energy sells a portion of its self-produced coal directly to external customers through short-term contracts at prices determined through negotiations with our customers, taking into consideration factors including our procurement prices and prevailing market conditions. Ningxia Energy consumes the rest of its self-produced coal at its own electric power plant.

In addition, we also procure and sell outsourced coal under long-term agreements or on the spot market through Chalco Trading Group. We sold approximately 2.0 million tonnes of outsourced coal in 2021.

Trading of Outsourced Non-ferrous Metal Products and Other Materials

Since late 2009, we have been actively engaged in the trading of alumina and primary aluminum sourced from third-party suppliers. Please see “– Alumina” and “– Primary Aluminum” for more details. Through Chalco Trading Group, we also sell other non-ferrous metal products such as copper, zinc and lead as well as coal products that we procure from our third-party suppliers to external customers on the spot market or under long-term sales agreements. Please see “– Coal.” In 2021, we sold approximately 0.8 million tonnes of outsourced electrolytic copper, copper concentrate and zinc. In addition, we also sell outsourced raw and ancillary materials such as iron ore, charred coal and cathode copper in bulk to customers such as steel manufacturers and copper processing companies on the spot market.

Chalco Trading Group has a team with trading expertise to conduct research on the markets of non-ferrous metal products and other materials. From time to time, we may enter into futures and options transactions to hedge against price fluctuations in the non-ferrous metal product market.

Delivery

We rely on rail shipping and trucks for the delivery of products within China.

Our alumina is transported by rail or trucks, and transportation costs are generally borne by our customers and excluded from our sales prices. For long-distance deliveries, we maintain spur lines connecting our plants to the national railway routes.

Our molten aluminum is delivered to our customers primarily by trucks. Other primary aluminum products are primarily transported by rail. Our coal products are transported both by trucks and by rail.

Rail shipping on the PRC national railway system is subject to government mandated pricing.

Principal Facilities

Our principal facilities include 22 principal production plants and our Zhengzhou Institute. Set forth below is a description of our principal production plants.

51

Guangxi Branch

Our Guangxi branch commenced operations in 1994 and is located in Guangxi Zhuang Autonomous Region in southwestern China, an area rich in bauxite reserves. Our Guangxi branch obtains bauxite delivered via highway from our Pingguo mine, one of our wholly-owned mines, located less than 17 kilometers from our Guangxi branch.

Our Pingguo mine contains large, easily exploitable bauxite reserves with high alumina-to-silica ratios. Our Guangxi branch is our only principal refinery that exclusively uses the Bayer process. With technology and production equipment imported from Europe, the Guangxi refinery features a high level of automation and energy efficiency. Since its inception, we have continually increased the designed production capacity at this branch by overcoming production bottlenecks and investing in capacity expansions. Guangxi branch had an annual alumina production capacity of approximately 2,210,000 tonnes as of December 31, 2021. In 2021, our Guangxi branch produced approximately 2,287,519 tonnes of alumina, along with approximately 184,623 tonnes of chemical alumina products.

Guizhou Branch

Our Guizhou branch commenced its smelting operations in 1966 and was subsequently expanded to include alumina refining operations in 1978. Our Guizhou branch used 160Ka and 230Ka pre-bake reduction pot-lines in its primary aluminum production. The smelter in our Guizhou branch has undergone technological innovations and overhauls since its inception. Since November 2017, we have been engaged in the gradual closing down of the 160Ka pre-bake reduction pot-lines and, subsequently, the closing down of the 230Ka pre-bake reduction pot-lines. As of January 2018, the production in our Guizhou branch had been fully shut down. In 2019, we disposed of the primary aluminum production facilities in our Guizhou branch. Our Guizhou branch did not have any annual primary aluminum production capacity as of December 31, 2021 and did not produce any primary aluminum in 2021. It was mainly engaged in bauxite mining and production of aluminum alloys in 2021. As of December 31, 2021, our Guizhou branch had an annual aluminum alloy production capacity of approximately 348,000 tonnes. In 2021, our Guizhou branch produced approximately 284,771 tonnes of aluminum alloy products.

Chalco Mining

Chalco Mining was incorporated as one of our subsidiaries in the PRC in 2007 and is currently our wholly-owned subsidiary. To optimize the allocation of our resources and further consolidate our operations, we transferred all of the assets and liabilities of our Henan branch to Chalco Mining in August 2017. Our Henan branch commenced its alumina refining operation in 1966 and primary aluminum smelting operation in 1967 (the latter of which was ceased in 2013) in Henan Province, a province rich in bauxite reserves. It was the first refinery in China to develop the Bayer-sintering combined process. Bauxite is delivered to Chalco Mining via railway and highway from our following mines: Zhengzhou area business department located in Zhengzhou, Luoyang area business department in Luoyang and Sanmenxia area business department in Mianchi. The alumina production line that we put into operation at Chalco Mining uses the ore-dressing Bayer process, which we developed to refine low alumina-to-silica ratio bauxite. Chalco Mining’s production facilities have been substantially upgraded with equipment imported from Germany and Denmark. The refinery has also benefited from its access to high alumina-to-silica ratio bauxite from certain of our mines and through purchases on the market. Chalco Mining had an annual alumina production capacity of approximately 2,410,000 tonnes as of December 31, 2021. In 2021, Chalco Mining produced approximately 1,362,618 tonnes of alumina and 35,577 tonnes of chemical alumina products.

Chalco Shandong

Chalco Shandong was incorporated as one of our subsidiaries in the PRC in 2015 and is currently our wholly-owned subsidiary. The predecessor of Chalco Shandong was our Shandong branch, which commenced operations in 1954. Chalco Shandong has the capacity to produce alumina and chemical alumina products. Its alumina refinery was China’s first production facility for alumina. It produces its alumina through the Bayer-sintering process and the Bayer process. Through technology renovation, Chalco Shandong has the capacity to produce high-quality alumina products used for the production of refined aluminum and high-purity aluminum. Chalco Shandong obtains bauxite supplies primarily from extractions of our Boffa mine in 2021. Chalco Shandong had an annual alumina production capacity of approximately 2,270,000 tonnes as of December 31, 2021. It produced approximately 1,682,765 tonnes of alumina in 2021.

In addition, Chalco Shandong produces a substantial amount of chemical alumina products. In 2021, it produced approximately 2,665,556 tonnes of chemical alumina products. It is the largest and most technologically advanced production facility for chemical alumina products in China with the ability to produce a wide variety of chemical alumina products.

52

Qinghai Branch

Located in Qinghai Province, our Qinghai branch is a stand-alone primary aluminum production facility. This branch commenced operations in 1987 and is one of the most technologically advanced primary aluminum smelters in China. It operates 180Ka and 210Ka automated pre-bake anode reduction pot-lines that were developed domestically. In addition, our Qinghai branch also possesses production capacity of carbon cathodes and is able to manufacture carbon cathodes products. Our Qinghai branch benefits from relatively low electricity costs in Qinghai Province due to the hydroelectric power stations in the region. The Qinghai branch sources alumina from Shanxi New Material, Chalco Shandong, Chalco Mining and Zhongzhou Aluminum and incurs higher transportation costs for both raw materials and its primary aluminum products than our other branches.

Our Qinghai branch had an annual primary aluminum production capacity of approximately 420,000 tonnes as of December 31, 2021. It produced approximately 403,685 tonnes of primary aluminum in 2021.

Guizhou Huaren

Established in May 2017 and located in Qingzhen, Guizhou Province, Guizhou Huaren is a stand-alone primary aluminum production facility that commenced full operation in September 2018. Guizhou Huaren had an annual primary aluminum production capacity of approximately 400,000 tonnes as of December 31, 2021. It produced approximately 437,223 tonnes of primary aluminum products in 2021.

Shanxi Zhongrun

Established in November 2015 and located in Lvliang, Shanxi Province, Shanxi Zhongrun specializes in producing primary aluminum products. The first batch of electrolytic cells of Shanxi Zhongrun was put into operation in May 2018. Shanxi Zhongrun was fully put into operation in December 2020. Shanxi Zhongrun had an annual primary aluminum production capacity of approximately 432,000 tonnes as of December 31, 2021. It produced approximately 483,719 tonnes of primary aluminum products in 2021.

Zhongzhou Aluminum

Located in Henan Province, Zhongzhou Aluminum is a stand-alone alumina plant, located near abundant bauxite, coal and water supplies. Zhongzhou Aluminum was incorporated as one of our subsidiaries in the PRC in 2015 and is currently our wholly-owned subsidiary. The predecessor of Zhongzhou Aluminum was our Zhongzhou branch. Zhongzhou Aluminum commenced operations in 1993 and is equipped with imported and self-developed technology and has undergone various improvements and upgrades, in particular to its Bayer-sintering process and Bayer process. Zhongzhou Aluminum obtains bauxite supplies partly from extractions of our mines, including Boffa mine, and partly from external suppliers in Henan Province and overseas.

Zhongzhou Aluminum had an annual alumina production capacity of approximately 3,050,000 tonnes as of December 31, 2021. Zhongzhou Aluminum produced approximately 2,058,274 tonnes of alumina and approximately 1,053,774 tonnes of chemical alumina products in 2021.

Chongqing Branch

Our Chongqing branch is located in Chongqing. Our Chongqing branch completed the construction of alumina production facilities in 2010 and its annual alumina production capacity was approximately 800,000 tonnes as of December 31, 2021. We have suspended production in our Chongqing branch since July 2014 due to the relatively significant decrease in the price of alumina as compared with the price of alumina during the construction period, large negative variation of mineral resources and the high costs of natural gas and other energy at the time of suspension. In 2018, we entered into agreements with a third party to lease the alumina production facilities of Chongqing branch and to cooperate on mine operations, respectively. In 2021, we continued to lease alumina production facilities to such third party.

Guangxi Huasheng

Established in June 2017 and located in Fangchenggang, Guangxi Province, Guangxi Huasheng is mainly engaged in producing alumina products and was put into production in the third quarter of 2020. Guangxi Huasheng had an annual alumina production capacity of approximately 2,000,000 tonnes as of December 31, 2021. Guangxi Huasheng produced approximately 2,140,058 tonnes of alumina in 2021.

53

Guizhou Huajin

Established in July 2014 and located in Qingzhen, Guizhou Province, Guizhou Huajin specializes in producing alumina products. Guizhou Huajin had an annual alumina production capacity of approximately 1,600,000 tonnes as of December 31, 2021. Guizhou Huajin produced approximately 1,630,706 tonnes of alumina in 2021.

Shanxi Huaxing

Located in Shanxi Province, Shanxi Huaxing is a stand-alone alumina plant which commenced trial production in October 2013. Shanxi Huaxing obtains bauxite supplies from our own mines delivered primarily via highway and is located near abundant coal and water supplies.

In December 2015, we transferred out 50% of our equity interests in Shanxi Huaxing, a then wholly-owned subsidiary of our Company, through the Shanghai United Assets and Equity Exchange. In December 2018, we acquired the 50% equity interests in Shanxi Huaxing through the Shanghai United Assets and Equity Exchange from Baotou Transportation Investment Group Co., Ltd. Upon completion of the acquisition, Shanxi Huaxing became our wholly-owned subsidiary. Please see “- A. History and Development of the Company - Transfer of Equity Interest in Shanxi Huaxing” for more details about the transfer of equity interest.

Shanxi Huaxing had an annual alumina production capacity of approximately 2,000,000 tonnes as of December 31, 2021. Shanxi Huaxing produced approximately 1,591,454 tonnes of alumina products in 2021.

Lanzhou Aluminum

Located in Lanzhou city in Gansu Province, Lanzhou Aluminum is a stand-alone primary aluminum plant. In April 2007, we acquired a primary aluminum plant in Lanzhou, which was divided into two parts in July 2007: our Lanzhou branch and Northwest Aluminum. In January 2019, we turned the Lanzhou branch into our wholly-owned subsidiary, Lanzhou Aluminum, in order to promote its business vitality. Lanzhou Aluminum owns a primary aluminum smelting plant with a designed annual primary aluminum production capacity of approximately 450,000 tonnes as of December 31, 2021. It produced approximately 415,196 tonnes of primary aluminum in 2021.

Shanxi New Material

Shanxi New Material is situated in Shanxi Province. In March 2003, we established the joint venture company, Shanxi Huaze, with Zhangze Electric Power to commence the construction of a primary aluminum production facility. In 2017, we contributed certain assets related to alumina production of our Shanxi branch to Shanxi Huaze. Upon completion of our asset contribution, our shareholding in Shanxi Huaze increased from 60% to 85.98% and Shanxi Huaze was renamed to Shanxi New Material. Shanxi New Material had an annual alumina production capacity of approximately 2,600,000 tonnes as of December 31, 2021 and produced approximately 1,569,663 tonnes of alumina and 69,684 tonnes of chemical alumina products in 2021. Its designed annual production capacity of primary aluminum was approximately 424,000 tonnes as of December 31, 2021 and it produced approximately 298,371 tonnes of primary aluminum in 2021. Please see “- A. History and Development of the Company - Merger and Reorganization of Shanxi Branch and Shanxi Huaze” for more details about the reorganization.

Zunyi Aluminum

Zunyi Aluminum is situated in Guizhou Province. In 2018, we merged Zunyi Alumina into Zunyi Aluminum. Upon the completion of the merger, our shareholding in Zunyi Aluminum increased from 62.1% to 67.445%. After the merger, Zunyi Aluminum had an annual alumina production capacity of approximately 1,000,000 tonnes as of December 31, 2021 and the aggregate production of Zunyi Aluminum was approximately 1,043,395 tonnes of alumina and 9,834 tonnes of chemical alumina products in 2021. Its post-merger designed annual production capacity of primary aluminum was approximately 375,000 tonnes as of December 31, 2021 and it produced approximately 398,030 tonnes of primary aluminum in 2021. Please see “- A. History and Development of the Company - Merger and Reorganization of Zunyi Alumina and Zunyi Aluminum” for more details about the merger.

54

Fushun Aluminum

Fushun Aluminum is situated in Liaoning Province and was a stand-alone primary aluminum plant. In March 2006, we entered into a share transfer agreement with Liaoning Fushun Aluminum Plant to acquire 100% of the equity interests in Fushun Aluminum for a consideration of RMB500 million. Fushun Aluminum’s primary business was the production of primary aluminum and carbon products. We stopped production of primary aluminum in Fushun Aluminum in October 2015 due to the relatively significant decrease in the price of primary aluminum and high costs of electricity at that time. In 2018, we disposed of the primary aluminum production facilities in Fushun Aluminum. Fushun Aluminum did not have any annual primary aluminum production capacity as of December 31, 2021 and did not produce any primary aluminum in 2021.

Fushun Aluminum had an annual anode carbon production capacity of approximately 530,000 tonnes as of December 31, 2021 and it produced approximately 331,437 tonnes of baked carbon anodes in 2021.

Shandong Huayu

Shandong Huayu is situated in Shandong Province and is a stand-alone primary aluminum plant. We currently hold 55% equity interest in Shandong Huayu. Since November 2018, we have gradually suspended production of aluminum at Shandong Huayu due to market environment and production restriction for environmental protection. In 2019, we halted its primary aluminum production and before that Shandong Huayu produced approximately 8,500 tonnes of primary aluminum in 2019. In October 2020, Shandong Huayu agreed to transfer its primary aluminum capacity quota of 135,000 tonnes to Yunnan Aluminum through judicial auction at a consideration of RMB538.66 million. Shandong Huayu had an annual primary aluminum production capacity of approximately 65,000 tonnes as of December 31, 2021. The supporting facilities and coal-fired generators of Shandong Huayu are being disposed of.

Gansu Hualu

Gansu Hualu is situated in Gansu Province and was a stand-alone primary aluminum plant. In August 2006, we entered into a share transfer agreement with Baiyin Nonferrous Metal (Group) Co., Ltd. (“Baiyin Nonferrous”) and Baiyin Ibis Aluminum Co., Ltd. (“Baiyin Ibis”). Baiyin Nonferrous contributed 127,000 tonnes of primary aluminum smelting and supporting facilities owned by Baiyin Ibis as capital contribution and holds a 49% equity interest in Gansu Hualu. We hold a 51% equity interest in Gansu Hualu. Since November 2015, the production of primary aluminum has been suspended. In 2019, most of the primary aluminum production facilities in Gansu Hualu were disposed and the rest were disposed in 2020. Gansu Hualu had no annual primary aluminum production capacity as of December 31, 2021 and did not produce any primary aluminum in 2021.

In addition, Gansu Hualu also possesses production capacity of carbon products. Its designed annual production capacity of anode carbon products was approximately 150,000 tonnes as of December 31, 2021 and it produced approximately 95,804 tonnes of anode carbon products in 2021.

Baotou Aluminum

Baotou Aluminum is located in the Inner Mongolia Autonomous Region and is a stand-alone primary aluminum plant. On December 28, 2007, through A Shares issuance and exchange for Baotou Aluminum shares, we acquired 100% of the equity interest of Baotou Aluminum. Baotou Aluminum is currently our wholly-owned subsidiary. In April 2015, Baotou Aluminum and Baotou Transportation Investment Group Co., Ltd. established Inner Mongolia Huayun. Inner Mongolia Huayun commenced operations in 2017. Together with the primary aluminum production facilities at Inner Mongolia Huayun, Baotou Aluminum had a consolidated annual primary aluminum production capacity of approximately 1,340,000 tonnes as of December 31, 2021 and a consolidated output of approximately 1,275,243 tonnes of primary aluminum in 2021.

Liancheng Branch

Our Liancheng branch is located in Gansu Province. In late May 2008, we acquired 100% of the equity interest in Liancheng Longxing Aluminum Company Limited from Chinalco on the China Beijing Equity Exchange and subsequently turned it into our Liancheng branch which specializes in producing primary aluminum. We have implemented a flexible production arrangement for certain primary aluminum production facilities in our Liancheng branch since November 2018 as a result of high electricity costs. Our Liancheng branch had an annual primary aluminum production capacity of approximately 550,000 tonnes as of December 31, 2021. It produced approximately 151,271 tonnes of primary aluminum in 2021.

55

Ningxia Energy

Ningxia Energy is an integrated power generation company with coal mines located in Ningxia Autonomous Region. Its principal business includes conventional coal-fire power generation and renewable energy generation. Ningxia Energy was established in June 2003. In January 2013, we acquired an aggregate of 70.82% of the equity interest in Ningxia Energy. Ningxia Energy had a total installed capacity of 4,459.1 MW as of December 31, 2021. It also operates coal mines located in the Ningxia Autonomous Region. Please see “- B. Business Overview - Our Mines.” In 2021, Ningxia Energy produced approximately 934.8 million tonnes of coal and approximately 14.8 billion kWh of electricity.

Zhengzhou Institute

The Zhengzhou Institute, located in Zhengzhou, Henan Province, was incorporated as our subsidiaries in 2015. Its predecessor was established in August 1965 and has served as the center for our research and development efforts. The Zhengzhou Institute specializes in the research and development of technologies for primary aluminum smelting, alumina refining and the development of new products of chemical alumina. Zhengzhou Institute is the only professional research institute in China dedicated to the research and development of aluminum smelting technologies and has played a key role in bringing about technological innovations in China’s aluminum industry. The Zhengzhou Institute was approved by the Ministry of Science and Technology of the PRC in 2003 to establish the National Research Center of Aluminum Refinery Technologies and Engineering. As of December 31, 2021, the Zhengzhou Institute had a limited production capacity for chemical alumina products, which it uses in connection with its research and development efforts.

Xinghua Technology

We acquired a 66% equity interest in Xinghua Technology in December 2016. Located in Shanxi Province, Xinghua Technology is an alumina plant with an annual alumina production capacity of approximately 900,000 tonnes as of December 31, 2021. It produced approximately 962,210 tonnes of alumina and approximately 15,207 tonnes of chemical alumina in 2021.

Competition

Competition from Domestic Competitors

Alumina

In 2021, we supplied approximately 43.8% of our total production of alumina to our own smelters and sold substantially all of the remaining self-produced alumina to our domestic customers. Our competitors mainly include other domestic and international alumina producers that conduct sales in China. In 2021, our alumina production (with chemical alumina products included) represented approximately 23.6% of total domestic production in China.

We are a leading enterprise in the non-ferrous metal industry in China. As of December 31, 2021, 39 alumina producers in China (including Chalco) each had annual production capacity of 500,000 tonnes or above, which collectively represented approximately 96.5% of the total alumina production capacity in China. As of the same date, among these 39 alumina producers, 24 alumina producers (including Chalco) each had annual production capacity of one million tonnes or above, which collectively represented approximately 81.4% of the total alumina production capacity in China. In order to improve the efficiency and competitiveness of the Chinese alumina industry as well as to protect the environment, MIIT published the Standard Conditions for Aluminum Industry in July 2013 and issued a new version in March 2020, which provides stringent standards for the existing alumina enterprises. Although we face competition from other domestic and international refineries, we have several advantages over such competitors, including:

● we have access to a substantial and stable supply of bauxite;

● we are experienced in alumina production and our production technologies are specifically adapted to the particular chemical composition of bauxite found in China;

● we have strong capabilities in technology research and hold certain proprietary technologies and patents; and

● we have a substantial workforce that has extensive experience in production and management.

56

Primary Aluminum

We derived all of our primary aluminum revenues from domestic sales in 2021. Our competitors include other domestic and international primary aluminum producers that conduct sales in China. In 2021, our primary aluminum production represented approximately 10.1% of total domestic production in China.

We are a leading enterprise in the non-ferrous metal industry in China. As of December 31, 2021, 34 primary aluminum producers in China (including Chalco) each had annual production capacity of 500,000 tonnes or above, which collectively represented approximately 62.5% of the total primary aluminum production capacity in China. As of the same date, among these 34 primary aluminum producers, seven primary aluminum producers (including Chalco) each had annual production capacity of one million tonnes or above, which collectively represented approximately 21.1% of the total primary aluminum production capacity in China. The PRC government encourages consolidation in the Chinese primary aluminum industry to create larger, more efficient producers that are better positioned to implement measures to reduce emissions. Moreover, according to the current Standard Conditions for Aluminum Industry and other administrative regulations, aluminum smelting enterprises must ensure the availability of resources, energy and water resources, and are encouraged to merge with hydropower, coal power and other power enterprises through reorganization. Alumina and electrolytic aluminum enterprises are required to comply with environmental laws, regulations and policies, and establish, implement and maintain an environmental management system.

Although we face competition from other domestic and international smelters, we have several advantages over such competitors, including:

● Scale of production. With nine primary aluminum smelters, we can achieve significant economies of scale. In addition, our scale of production enables us to achieve high production volumes to fill large customer orders and maintain a large customer base. Through our national distribution network, we are able to make timely deliveries to customers from our local warehouses.

● Technology. We believe we have a more sophisticated technological innovation system and stronger innovation capability than most of our domestic competitors. In terms of technological support and research and development capabilities, we are equipped with the most advanced research and development institute within the aluminum industry in China and enjoy advantages over other domestic smelters in technology advancement.

● Vertical integration. As a leading integrated alumina and primary aluminum producer in China, we are able to supply alumina internally to our primary aluminum plants. As a result, we save on transportation, warehousing and related costs. In addition, because we operate our own alumina refineries, we are able to assure a stable supply of alumina for our primary aluminum smelting operations.

● Quality. We have maintained and will continue to improve on the high quality standards for our primary aluminum, which has satisfied national and industrial standards and customers’ need.

The primary aluminum produced by most of our smelters satisfies the quality standards of the LME.

Competition from International Competitors

The tariff rate for alumina and primary aluminum imports remained zero in 2021. In 2021, China had a net import of approximately 3.21 million tonnes of alumina (with chemical alumina products included), a decrease from a net import of 3.65 million tonnes in 2020, primarily attributable to the fact that the supply of alumina in the international market decreased in 2021 and we imported less alumina compared to 2020. China had a net import of approximately 1.57 million tonnes of primary aluminum in 2021, compared to a net export of approximately 1.06 million tonnes of primary aluminum in 2020, primarily because the production curtailment policy in Yunnan has affected the production of the facilities in Yunnan and resulted in increased prices of domestic primary aluminum. We expect to continue to face competition from international suppliers of alumina and primary aluminum which are large international companies.

57

Research and Development

Our research and development efforts over the years have facilitated the expansion of our production capacity and reduced our unit costs. We have successfully commercialized our previous research and development results in various technologies. In 2021, we completed 263 technological projects, including 244 research and development projects undertaken independently by our branches or subsidiaries, seven special key science and technology projects and 12 science and technology application projects. In addition, we filed a total of 203 patent applications in 2021.

As of December 31, 2021, we owned 1,486 patents, which were primarily related to technologies and processes, equipment and new products. Once granted, a patent in China for an invention is valid for 20 years and for a utility model or a design 10 years from the date of the patent application. As of December 31, 2021, we owned 25 trademarks, each of which had a term of 10 years.

We do not regard any single patent, license, or trademark to be material to our sales and operations as a whole. We are not involved in any material intellectual property disputes.

Environmental Protection

Our operations are subject to PRC national and local environmental laws and regulations, including laws and regulations governing pollutant emissions, waste generation, treatment and disposal of hazardous materials, land reclamation and environmental issues associated with mining.

The pollutants discharged from our alumina refining process include red mud, waste water and gas emissions and particulates. Our primary aluminum production process generates fluorides, sulphur dioxide and particulates. It is illegal to release these pollutants untreated. The discharge of these pollutants after treatment must comply with national and local discharge limits.

Each of our alumina refineries, primary aluminum smelters and other production plants has its own waste treatment facilities onsite or has developed other methods to dispose of industrial waste in compliance with applicable environmental laws and regulations. Each of our production plants has established its environmental management system. All of our alumina refineries, primary aluminum smelters and carbon production plants in production passed the ISO14001 accreditations.

We have increased our energy efficiency by implementing new production techniques and technologies, upgrading our production facilities, optimizing our production process and enhancing our logistics and operations management. In 2021, we saved energy equivalent to 299,292 tonnes of standard coal as a result of implementing new production techniques and technologies, upgrading our production facilities, optimizing our production process and enhancing our logistics and operations management. We have established the industrial waste water recycling system. All of our aluminum smelting plants have achieved “zero discharge” of industrial waste water and 100% of the industrial waste water is reused for production after treatment.

In addition, we have focused on sustainable development of mine sites and achieved significant progress in mine reclamation. We reclaimed 12.8 thousand hectares of land throughout the year 2021, representing a cumulative reclamation rate of over 100% as of December 31, 2021.

Our total expenditures for maintaining compliance with environmental laws and regulations were RMB914 million, RMB1,171 million and RMB1,384 million for 2019, 2020 and 2021, respectively. In 2021, we did not have any major environmental pollution incidents.

Insurance

We maintain insurance coverage for our fixed assets such as plant, machinery, equipment, office facilities and transportation vehicles against accidents or natural disasters such as typhoons, hurricanes, floods, landslides and lightning strikes. However, there are certain types of losses, such as losses from war, acts of terrorism and nuclear radiation, for which we cannot obtain insurance at a reasonable cost or at all.

We are covered under the work-related injury insurance required by the relevant local government labor departments, and we have procured additional business accidental insurance for our employees. More extensive insurance is either unavailable in China or would impose a cost on our operations that would reduce our competitiveness.

58

Our insurance premiums were RMB42.9 million, RMB38.6 million and RMB45.6 million in 2019, 2020 and 2021, respectively.

Seasonality

Our business in general is not subject to seasonality. Separately, our bauxite output in the Boffa mine may be subject to seasonal fluctuations due to the rainy season in Guinea.

Cybersecurity

With respect to our internal internet policies on cybersecurity, we have established an information safety management system and issued internal regulations on cybersecurity, internal hardware and data safety systems and we are gradually implementing measures relating to the office environment information safety management, information system access control, protection from any malicious software, and internal review and audit of information safety risks, in order to prevent loss of information due to cybersecurity incidents, network outages or hardware incidents. In 2021, we did not experience any material cybersecurity incidents or related losses.

Regulatory Overview

Producers of alumina and primary aluminum are subject to national industrial policies and relevant laws and regulations in areas of environmental protection, import and export, land use, foreign investment regulation and taxation. We are also subject to regulations relating to activities such as mining.

We are principally subject to governmental supervision and regulation by five agencies of the PRC government:

● the NDRC, which sets and implements the major policies concerning China’s economic and social development, approves investments exceeding certain amounts, coordinates and improves the reform of the economic system;

● the Ministry of Natural Resources of China, which has the authority to grant land use rights and mining right permits;

● the MIIT, which formulates industrial policies and investment guidelines for all industries, including the aluminum industry;

● The Ministry of Ecology and Environment of China, which is responsible for supervision and administration of environmental protection in China; and

● the CSRC, the securities regulatory commission of China.

The following is a brief summary of the principal laws, regulations, policies and administrative directives to which we are subject.

Requirements for Capital Investments

Any capital markets financing activities by an enterprise or company incorporated in the PRC such as those to finance capital projects, are subject to approval by the CSRC and/or other relevant authorities in China, regardless of whether the funds are raised in China or on the international capital markets. An issuer incorporated in the PRC must obtain prior approval from the CSRC for issuance of equity securities or equity-linked securities. Offering of corporate bonds in the PRC is also subject to supervision of the CSRC. Offering of bonds by a PRC-incorporated company outside the PRC shall be filed with NDRC. For all overseas financing activities by an enterprise or company incorporated in the PRC, the issuer must register with and obtain prior approval from the administrative authorities of foreign exchange. Foreign investment in the exploring and mining of alumina and primary aluminum is permitted by the PRC government.

59

Standard Conditions for Aluminum Industry

The Standard Conditions for Aluminum Industry was issued by MIIT on July 18, 2013 and a new version was issued on February 28, 2020 to replace the 2013 version, which became effective on March 30, 2020. The new Standard Conditions for Aluminum Industry only applies to existing bauxite mining, alumina and primary aluminum enterprises and indicates that such standards do not constitute administrative approval or mandatory requirement. It provides that bauxite mining, alumina and primary aluminum production must comply with the state and local industry policies and overall plans on the mining resources and development of aluminum industry, as well as laws, regulations and policies related to the environmental protection, energy conservation, mining and production safety. According to the new Standard Conditions for Aluminum Industry, aluminum smelting enterprises must ensure the availability of resources, energy and water resources, and are encouraged to merge with hydropower, coal power and other power enterprises through reorganization. It further encourages that alumina enterprises use intelligent systems and equipment in their operations to achieve energy-conserving and environment-protective purposes. The new Standard Conditions for Aluminum Industry further set out guidelines and standards for enterprises in the aluminum industry regarding product quality, facilities, energy consumption, resources consumption, environmental protection, production safety and occupational disease prevention.

Under the Standard Conditions for Aluminum Industry, the MIIT shall, in accordance with the applicable regulatory standards, review the applicants and disclose the names of applicants that meet the regulatory conditions. The MIIT promulgated on April 4, 2014, January 4, 2015 and February 14, 2016, respectively, the first, the second and the third lists of enterprises that meet the Standard Conditions for Aluminum Industry of 2013. Most of our production branches and subsidiaries have met the Standard Conditions for Aluminum Industry of 2013 version and are included on these lists. According to the current Standard Conditions for Aluminum Industry, enterprises that would like to be named in the list under this new Standard Conditions for Aluminum Industry need to resubmit application for the MIIT’s review. The MIIT promulgated the first list of enterprises that meet the Standard Conditions for Aluminum Industry of 2020 version on January 5, 2021, which includes three of our production branches and subsidiaries. We are actively taking rectification measures to comply with the new Standard Conditions for Aluminum Industry and will participate in the subsequent applications.

Pricing

The PRC government does not impose any limitations with respect to the pricing of alumina, primary aluminum and related products. Thus, alumina and primary aluminum producers are free to set prices for their products. All the raw materials, supplemental materials and other supplies that we purchase are based on market prices. Freight transportation on the national railway system is subject to government mandated pricing.

Electricity Supply and Price

The National Energy Administration is responsible for the supervision and administration of the power industry in China. The NDRC and local governments regulate electricity pricing.

The Electric Power Law of China and related rules and regulations govern construction, generation, supply and consumption of electric power. Currently, China’s state-owned power companies, through their respective local subsidiaries, operate all the regional power grids in China from which we obtain a part of our electricity requirements. In October 2007, the PRC government issued “Notice on Further Solutions of the Difference in Electricity Rates,” according to which the preferential electricity prices originally enjoyed by Chinese primary aluminum enterprises have been gradually abolished. In December 2007, the PRC government issued “Notice of Eliminating Preferential Electricity Rate for High Energy Consuming Enterprises and Related Matters,” which further eliminated the preferential electricity price arrangement enjoyed by Chinese primary aluminum enterprises. In December 2013, the NDRC and MIIT issued the “Circular on the Policies for Tiered Pricing of Electricity Used by Electrolytic Aluminum Enterprises”, which became effective on January 1, 2014, to impose tiers of electricity prices on primary aluminum smelters. In March 2015, new policies and reforms relating to electricity generation, retail, usage, and other related sectors were introduced. Under “Several Opinions of the CPC Central Committee and the State Council on Further Deepening the Reform of the Electric Power System,” a series of reforms relating to electricity pricing, distribution and retail segments, electricity trading, distributed generation, and other aspects has been put forward. In November 2015, NDRC and the National Energy Administration of the PRC jointly issued further supplemental measures, including “Implementation Opinions on Promoting Transmission-Distribution Price Reform,” “Implementation Opinions on Promoting Power Market Construction,” “Implementation Opinions on Establishing Power Trading Institutions and Their Normative Operation,” “Implementation Opinions on Orderly Releasing Plans of Power Generation and Power Utilization,” “Implementation Opinions on Promoting Power-Sales Side Reform,” and “Guidance Opinions on Reinforcing and Regulating Supervision and Management of Coal-Fired Self-Generation Power Plants,” which set out further requirements and implementation steps in relation to the reform of electric power systems. Towards the end of 2016, NDRC promulgated “Measures of Electricity Pricing for Transmission-Distribution Grid at the Provincial Level,” which established a regulatory framework of electricity transmission and distribution pricing.

60

On August 26, 2021, NDRC further issued “Circular for Improvement of the Policies for Tiered Pricing of Electricity Used by Electrolytic Aluminum Enterprises,” which came into effect on January 1, 2022. It provides that if the comprehensive alternating current consumption of molten aluminum is not higher than 13,650 kWh per ton, the electricity price will not be increased. If power consumption exceeds 13,650 kWh per ton, the electricity price will be increased by RMB0.01 per kWh for every additional 20 kWh. The grading standard will be lowered to 13,450 kWh in 2023 and further to 13,300 kWh in 2025, in each case excluding power consumed in the desulfurization process. In addition, it prohibits implementation of any preferential electricity price policies in the electrolytic aluminum industry.

On October 11, 2021, NDRC issued “Notice on Further Deepening the Market Reform of the Feed-in Tariff for Coal-fired Power Generation, which requires the orderly liberalization of the feed-in tariff for all coal-fired power generation and the expansion of the fluctuation range of the market trading tariff, resulting in a significant increase in our cost of electricity. In order to reduce the impact of electricity price increase, we have been actively participating in market trading with power generation enterprises with cost advantages, while carrying out energy saving and consumption reduction at the same time.

Regulations Concerning Imports and Exports of Alumina and Primary Aluminum

Import taxes on alumina and primary aluminum have been eliminated. The export tariff on certain primary aluminum products has been 15% since August 1, 2007.

Environmental Protection Laws and Regulations

The Ministry of Ecology and Environment of China is responsible for supervision and administration of environmental protection in China. It formulates national environmental quality and discharge standards and monitors China’s environmental system. Bureau of Ecology and Environment at the municipal level or above is responsible for environmental protection within its jurisdiction.

The Law on Environment Impact Assessment and relevant regulations require each enterprise to file an environmental impact report with the relevant Bureau of Ecology and Environment for approval before undertaking the construction of a new production facility or any major expansion or renovation of an existing production facility. New facilities built pursuant to this approval are not permitted to operate until the relevant environmental bureau has performed an inspection and concluded that the facilities are in compliance with environmental standards.

The Environmental Protection Law requires any facility that produces pollutants or other hazards to incorporate environmental protection measures in its operations and establish an environmental protection responsibility system. Such system includes adoption of effective measures to control and properly dispose of waste gases, waste water, waste residue, dust or other waste materials. Any entity that discharges pollution must register with the relevant environmental protection authority. Regulations on the Administration of Pollutant Discharge Permits became effective on March 1, 2021, pursuant to which enterprises that discharge pollutants need to obtain permits from relevant environmental authorities in accordance with the regulations.

Penalties for breaches of the Environmental Protection Law include warning, payment of damages and imposition of fines. Any entity undertaking a construction project that fails to install pollution prevention and control facilities in compliance with environmental standards for a construction project may be ordered to suspend production or operations or to cease operations and may be fined. Criminal liability may be imposed for a material violation of environmental laws and regulations that causes any significant loss of property or personal injuries or death.

On December 25, 2016, the PRC government promulgated the Environmental Protection Tax Law, which became effective from January 1, 2018 and was amended on October 26, 2018. The Environmental Protection Tax Law imposes environmental protection tax to enterprises, entities, producers or operators that discharge taxable pollutants into air, water or lands. Taxable pollutants include air pollutants, water pollutants, solid wastes and noises. The environmental protection tax is collected by the tax authority and levied in accordance with a table attached to the Environmental Protection Tax Law. However, emission of taxable pollutants into the centralized sewage and domestic waste treatment facilities, or storage or disposal of solid wastes in facilities or places that meet the national or local environmental protection standard, by enterprises, entities, producers or operators, is not deemed as direct emission of pollutants into the environment and is exempted from the environmental protection tax for such pollutants.

61

In April 2020, the PRC government promulgated the amended Law on Prevention and Control of Environmental Pollution Caused by Solid Waste. Effective on September 1, 2020, the amended law imposes stricter responsibilities on the entities that generate industrial solid waste for environmental pollution caused by industrial solid waste. For example, under the revised version, if an entity that generates industrial solid waste engages a third-party contractor to deliver, use or dispose such industrial solid waste, it shall verify the qualification of such third-party contractor and enter into an agreement with such third party on requirements for the environment pollution prevention, failing which the entity will be jointly liable for any damages to the environment caused by the third-party contractor in relation to such arrangement. In conjunction with the amendment of the Law on Prevention and Control of Environmental Pollution Caused by Solid Waste, the National Catalogue of Hazardous Wastes was revised in November 2020, which amended and reclassified some hazardous wastes.

Mineral Resources Laws and Regulations

All mineral resources in China are owned by the state under the current Mineral Resources Law. Exploration, exploitation and mining operations must comply with the relevant provisions of the Mineral Resources Law and are under the supervision of the Ministry of Natural Resources. Exploration and exploitation of mineral resources are also subject to examination and approval by the Ministry of Natural Resources or relevant local authorities. Upon approval, the relevant administrative authorities, which are responsible for supervision and inspection of mining exploitation in their jurisdiction, will issue an exploration permit or mining permit. The holders of mining rights are required to file with the relevant administrative authorities annually.

The PRC government permits mine operators of collectively owned mines to exploit mineral resources in designated areas and individuals to mine scattered mineral resources. Such mine operators and individuals are subject to government regulation. Mining activities by individuals are restricted. Individuals are not permitted to exploit mineral reserves allocated for exploitation by a mining enterprise or company, or specified minerals prescribed by the state for protective mining. Indiscriminate mining that damages mineral resources is prohibited.

If mining activities result in damage to arable land, grassland or afforested area, the mining operator must take measures to return the land to an arable state within the prescribed time frame. Any entity or individual which fails to fulfil its remediation obligations may be fined and denied application for land use rights for new land by the relevant land and natural resources authorities.

It is unlawful for an entity or individual to conduct mining operations in areas designated for other legal mining operators. A mining operator whose exploitation causes harm to others in terms of production or in terms of living standards is liable for compensation and is required to take necessary remedial measures. When a mine is closed, a mine closure report and information concerning the mining facilities, hidden dangers, remediation and environmental protection must be submitted for examination and approval in accordance with the relevant PRC law and regulations.

Mineral products that have been illegally extracted and the related income derived from such activities may be confiscated and may result in fines, revocation of the mining permit and, in serious circumstances, criminal liability.

Energy Conservation Law

The amended Energy Conservation Law came into effect on October 26, 2018. It sets out the general principles for reducing energy waste and improving efficiency of energy consumption. It urges the adjustment of industry structure and replacement of high energy consumption projects with new energy or renewable energy resources. It provides that an energy conservation assessment and review system shall apply to new investment projects and where a project does not meet the mandatory energy conservation standards, the project cannot be constructed. If a project that does not meet the mandatory energy conservation standards has been completed, it cannot be put into use.

In March 2014, the MIIT issued a regulation, the “Opinion on Implementing Supervision of Industrial Energy Conservation,” which lists the primary aluminum smelting as one of the high energy consumption operations that will be strictly monitored. In December 2014, the MIIT issued the Guidance for National Industrial Efficiency, which sets forth industrial efficiency standards for producers of major products in industries that involve high energy consumption, which included primary aluminum and alumina products.

The State Council issued the Working Guidance for Carbon Dioxide Peaking and Carbon Neutrality in Full and Faithful Implementation of the New Development Philosophy on September 22, 2021. It sets China’s main objective for energy consumption per unit of GDP and carbon dioxide (CO₂) emissions per unit of GDP for 2025, 2030 and 2060. It predicts that by 2060, China will reach carbon neutrality.

62

Regulations Concerning Electrolytic Aluminum Industry

In June 2016, the General Office of the State Council promulgated “Guiding Opinions on Creating a Favorable Market Environment and Promoting the Non-Ferrous Metals Industry to Adjust Structure, Advance Transformation and Increase Efficiency,” under which the construction of new electrolytic aluminum projects and the reconstruction or expansion of existing electrolytic aluminum projects would be approved only if such construction, reconstruction or expansion would introduce new electrolytic aluminum production capacity in an amount equal to or smaller than the amount of existing electrolytic aluminum production capacity to be replaced by such construction, reconstruction or expansion.

In April 2017, NDRC, MIIT, the Ministry of Land and Resources (now known as the Ministry of Natural Resources) and the Ministry of Environmental Protection (now known as the Ministry of Ecology and Environment) jointly issued the “Notice Regarding the Plan on Special Action for Clean-up and Rectification of Projects in Violation of Laws and Regulations in the Electrolytic Aluminum Industry,” which sets forth a comprehensive plan to inspect electrolytic aluminum projects and rectify violations of applicable laws or regulations revealed in the inspection.

On January 1, 2018, MITT issued the “Notice Regarding Electrolytic Aluminum Enterprises to Realize Capacity Replacement by Acquisition, Merger and Restructure,” which requires electrolytic aluminum enterprises to achieve capacity replacement by acquisition, merger or capacity transferring and exchange of capacity quotas with its group companies.

Tax Laws and Regulation

In March 2007, the PRC government promulgated the Enterprise Income Tax Law which became effective from January 1, 2008 and was revised in 2018. The Enterprise Income Tax Law imposes a single income tax rate of 25% on both domestic and foreign invested enterprises. Pursuant to the Enterprise Income Tax Law, important high- and new-tech enterprises that are necessary to be supported by the state are subject to a reduced enterprise income tax rate of 15%. Certain branches and subsidiaries of us were granted tax concessions including preferential tax rates of 15%. On December 6, 2007, the PRC government promulgated the Enterprise Income Tax Law Implementation Rules which also became effective on January 1, 2008 and was later revised in 2019.

In March 2016, the MOF and the SAT jointly promulgated “Circular on Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax in Lieu of Business Tax,” pursuant to which we are allowed to deduct input tax from output tax according to the amount set forth in the special value-added tax invoices obtained from our purchases of services, intangible assets or real estate. On April 4, 2018, the MOF and the SAT issued the Circular on Adjusting Value-added Tax Rates, which became effective on May 1, 2018. Pursuant to this circular, for sale or import of goods, the previous applicable value-added tax rates of 17% and 11% were adjusted to 16% and 10%, respectively.

On March 20, 2019, the MOF, the SAT and the General Administration of Customs jointly issued the Announcement on Policies for Deepening Reform of Value-added Tax, which became effective on April 1, 2019. Pursuant to this announcement, for sales or import of goods by a general taxpayer that were previously subject to value added tax at the rate of 16%, the applicable tax rate has been adjusted to 13%, and for those previously subject to value added tax at the rate of 10%, the applicable tax rate has been adjusted to 9%.

63

C.Organizational Structure

Set out below is a chart illustrating our corporate structure as of March 31, 2022:

64

The following table sets forth further information of our principal subsidiaries as of December 31, 2021:

	Percentage of ownership interest
Company(1)	attributable to the Company		Principal activities
Baotou Aluminum Co., Ltd.	100.00	%	Manufacture and distribution of primary aluminum, aluminum alloy and related fabricated products and carbon products
Chalco Hong Kong Ltd.	100.00	%	Overseas investments and alumina import and export activities, and mining and distribution of bauxite
China Aluminum International Trading Co., Ltd.	100.00	%	Trading, import and export activities
Chalco Mining Co., Ltd.	100.00	%	Manufacture, acquisition and distribution of bauxite mines, limestone ore, manufacturing and distribution of alumina
Chinalco Shanxi Jiaokou Xinghua Technology Ltd.(2)	66.00	%	Manufacture and distribution of alumina
Chalco Shanghai Company Limited	100.00	%	Trading and engineering project management and leasing
Chalco Shanxi New Material Co., Ltd.	85.98	%	Manufacture and distribution of alumina, primary aluminum and anode carbon products and electricity generation and supply
Zunyi Aluminum Co., Ltd.	67.45	%	Manufacture and distribution of primary aluminum and alumina
Chalco Energy Co., Ltd.	100.00	%	Thermoelectric supply and investment management
China Aluminum Ningxia Energy Group Co., Ltd.	70.82	%	Thermal power, wind power and solar power generation, coal mining, and power-related equipment manufacturing
Guizhou Huajin Aluminum Co., Ltd.	60.00	%	Manufacture and distribution of alumina
Chalco Zhengzhou Research Institute of Non-ferrous Metal Co., Ltd.	100.00	%	Research and development services
Chalco Shandong Co., Ltd.	100.00	%	Manufacture and distribution of alumina
Chalco Zhongzhou Aluminum Co., Ltd.	100.00	%	Manufacture and distribution of alumina
Chalco Aluminum Logistics Group Corporation Co., Ltd.	100.00	%	Logistics and transportation
Shanxi Huaxing Aluminum Co., Ltd.(3)	100.00	%	Manufacture and distribution of alumina
Shanxi China Huarun Co., Ltd.	40.00	%	Manufacture and distribution of primary aluminum
Guizhou Huaren New Material Co., Ltd.	40.00	%	Manufacture and distribution of primary aluminum
China Aluminum International Trading Group Co., Ltd.	100.00	%	Trading, importing and exporting of non-ferrous metal products
Chalco Materials Co., Ltd.	100.00	%	Procurement of materials including raw materials and fuels

(1) Chalco Hong Kong Ltd. is incorporated in Hong Kong. All other principal subsidiaries are incorporated in the PRC.

(2) We directly hold 33% shares and indirectly hold 33% shares, through Chalco Shandong Co., Ltd.

(3) We directly hold 60% shares and indirectly hold 40% shares, through Chalco Hong Kong Ltd.

D.Property, Plants and Equipment

Bauxite Mines and Coal Mines

For summary disclosure of our bauxite mines and coal mines, please refer to “– B. Business Overview – Our Mines.”

Boffa Mine

In accordance with the requirements of Regulation S-K 1300, we consider our Boffa mine in Guinea as the sole mining property that is material to our business. We have engaged Mr. Shengfa Tu as the qualified person for our bauxite mines. Mr. Tu has prepared the Technical Report Summary for our Boffa mine in compliance with Regulation S-K 1300 and Item 601(b)(96) of Regulation S-K, filed as Exhibit 96.1 to this annual report.

The information that follows relating to our Boffa mine is derived, for the most part, from the Technical Report Summary. Portions of the following information are based on assumptions, qualifications, and procedures that are not fully described herein. Reference should be made to the full text of the Technical Report Summary.

65

Location, Infrastructure and Facilities

The following map sets forth details of the area surrounding our Boffa mine in Guinea:

The Boffa mine is located eight kilometers north east of Boffa, the capital of Boffa Prefecture in Guinea. The linear distance between Boffa mine and Conakry, the capital of Guinea, is approximately 86 kilometers and the linear distance between the southwest corner of Boffa mine and the Atlantic Ocean is 25 kilometers. Conakry is connected to the city Boffa by the N3 road, which is a tarmac road with a distance of approximately 150 kilometers and a width of approximately six meters. The southern part of the Boffa mine is connected to the N3 road by a hasty road with a distance of approximately five kilometers. The Boffa mine consists of Boffa north area and Boffa south area, which covers an area of 653.55 km² and 594.61 km², respectively.

There are two main railways in Guinea. One railway links Conakry and the Fria smelter east of Boffa. The other railway runs from the CBG mine near Sangaredi to the port of Kamsar and has a larger transport capacity.

Guinea has two major ports. The first is the port of Conakry, adjacent to Conakry. The port handles container shipments and exportation of alumina and bauxite. The second port is Kamsar CBG, which is primarily used to export bauxite and has two smaller terminals for other bulk cargoes.

The Boffa mine is open pit, equipped with 2500SM open pit mining machines. We have facilities such as mining industrial sites, raw ore storage yards, low-grade ore storage yards, open-pit mining machines, belt conveyor systems, bridges, inland terminals, electric power stations and a temporary dump site. It has transportation facilities that have access to local roads and a belt conveyor system. Our mining facilities in the Boffa mine are connected to the electric power stations, which are powered by heavy oil fuel. Most of the facilities started to operate since Boffa mine was put into operation in April 2020. The quality of groundwater in the Boffa mine area meets the requirements for drinking, and the production and domestic water in the mine area is extracted groundwater. We believe all of our equipment in the Boffa mine is in good physical condition and suitable for our operations. The total book value of Boffa mine’s fixed assets is RMB1.698 billion as of December 31, 2021.

66

History, Mining Rights and Operations

From August 2005 to May 2006, 10 exploration leases were granted to BHP Billiton in Guinea, which cover Boffa. In 2008 and 2011, BHP Billiton applied to the Guinea Government to reduce the size of the mine covered by the leases. In 2012, BHP Billiton submitted “Boffa Santou Houda Project Close Out Report” to the Guinea Government and handed the exploration leases back to the Guinea Government.

On October 31, 2016, Chalco signed cooperation framework agreements with the Guinea Government and Guinean State Mining Company for the development of the Boffa mine. On June 8, 2018, Chalco Hong Kong and Chalco Guinea Company S.A., a wholly-owned subsidiary of Chalco Hong Kong, entered into a mining convention with the Guinean government, pursuant to which Chalco Hong Kong agreed to provide investment funds while the Guinean government agreed to provide mining licenses and rights to transport mining products for the development and operation of the Boffa Project. On July 9, 2018, the president of Guinea signed a decree to grant both Boffa north area and Boffa south area a mining permit, effective from July 2018 to July 2033. For more details of the history of Boffa mine, please refer to “Item 4. Information on the Company – A. History and Development of the Company – Boffa Project.”

Upon expiration of the current 15-year period, our mining permit for the Boffa mine is renewable for additional periods, each of which would also be 15 years except that the last renewal period would be subject to the depletion timing of the Boffa mine. We will not need to pay additional consideration for each renewal of the mining permit. The Boffa Project commenced construction in September 2018 and was completed and put into operation in April 2020. We must pay a royalty of US$0.208 per tonne based on the volume of bauxite extracted from the Boffa mine.

Chalco Guinea Company S.A. has 620 employees. From then through the end of 2021, we extracted approximately 20.4 million tonnes of bauxite from the Boffa mine. The annual bauxite output capacity is expected to increase to 15 million tonnes in 2022.

As of the date of this annual report, we have not been found any violation or subject to any fine for our mining operations at the Boffa mine.

Mineral Resources and Mineral Reserves

The following table sets forth the summary of mineral resources, exclusive of mineral reserves, for the Boffa mine as of December 31, 2021:

	Amount
	(in million	AAl2O3	RSiO2		Cut-off			Metallurgical
	tonnes)	(%)	(%)	A/S	grades			recovery(1)
Measured mineral resources	58.97	37.51	1.29	29.13	AAl2O3	35	%
Indicated mineral resources	66.92	37.84	1.19	31.92	AAl2O3	35	%	85%
Measured + Indicated mineral resources	125.89	37.68	1.23	30.56	AAl2O3	35	%
Inferred mineral resources	1,535.77	39.02	1.09	35.93	AAl2O3	35	%

(1) The metallurgical recovery of bauxite refers to dissolution rate.

(2) AAl₂O₃ means available aluminum and RSiO₂ means reactive silica.

(3) The resources include stockpiled ore or ore to be stockpiled in the local area.

(4) Estimation of mineral resources in this table is based on US$22.02 per wet tonne of bauxite, which is the loading price in Guinea, calculated based on the FOB price of US$32.5 per wet tonne and deduction of cost of wharf, inland waterway and platform transship. The corresponding CIF price of bauxite arriving in China is $53.16 per dry tonne. This price is close to the five-year average CIF price of Guinea bauxite imported by China from 2017 to 2021. Mineral resources are estimated at AAl₂O₃≥35% cut off grade and at a minimum mining thickness of 1 meter. The point of reference selected by the qualified person is the point where bauxite is delivered to wharf yard and available for use by alumina refineries. For further information on assumptions used in preparing the estimates, please refer to Chapter 11 of the Technical Report Summary.

67

The following table sets forth the summary of mineral reserves for the Boffa mine as of December 31, 2021:

	Amount
	(in million	AAl2O3	RSiO2		Cut-off			Metallurgical
	tonnes)	(%)	(%)	A/S	grades			recovery(1)
Proven mineral reserves	49.45	41.71	1.07	39.13	AAl2O3	39	%
Probable mineral reserves	62.24	41.74	1.35	31.03	AAl2O3	39	%	85%
Total mineral reserves	111.69	41.73	1.22	34.16	AAl2O3	39	%

(1) The metallurgical recovery of bauxite refers to dissolution rate.

(2) AAl₂O₃ means available aluminum and RSiO₂ means reactive silica.

(3) Estimation of mineral resources in this table is based on US$22.02 per wet tonne of bauxite, which is the loading price in Guinea, calculated based on the FOB price of US$32.5 per wet tonne and deduction of cost of wharf, inland waterway and platform transship. The corresponding CIF price of bauxite arriving in China is $53.16 per dry tonne. This price is close to the five-year average CIF price of Guinea bauxite imported by China from 2017 to 2021. Mineral reserves are estimated at AAl₂O₃≥39% cut off grade and at a minimum mining thickness of 1 meter. The point of reference selected by the qualified person is the point where bauxite is delivered to wharf yard and available for use by alumina refineries. For further information on assumptions used in preparing the estimates, please refer to Chapter 12 of the Technical Report Summary.

In this annual report on Form 20-F, we adopt the disclosure requirements of Regulation S-K 1300 for the first time. We adopted the disclosure requirements of United States Securities and Exchange Commission Industry Guide 7, or Industry Guide 7, in the annual report on Form 20-F for the fiscal year ended December 31, 2020, or FY2020 20-F. Industry Guide 7 did not allow the reporting of mineral resources and included different rules for disclosing mineral reserves. As disclosed in FY2020 20-F, neither proven nor probable reserves have been established in accordance with Industry Guide 7 as of the date of FY2020 20-F. Accordingly, a comparison of the Boffa mine’s mineral resources and reserves as of December 31, 2021 against the mineral resources and reserves as of December31, 2020 is not available.

Land

Chinalco leases to us 417 pieces or parcels of land, located in 10 provinces, covering an aggregate area of approximately 49.93 million square meters for any purpose related to our operations and businesses. Currently, all leases for our properties are valid and have not expired. The leased land mainly consists of:

● 40 pieces of allocated land with an area of approximately 5.3 million square meters. Chinalco has obtained authorization from the relevant administrative authorities to manage and lease the land use rights for such land; and

● 377 pieces of land with an area of approximately 44.7 million square meters. Chinalco has paid the land premiums and obtained land use rights certificates.

The land is leased for the following terms:

● allocated land: 50 years commencing from July 1, 2001 (except for land use rights of mines operated by us, whose leased terms shall end on the expiration date of the mining rights or at the end of the actual mine life, whichever is earlier);

● granted land: until expiration of the relevant land use right permits; and

● for both allocated or granted land: normal commercial terms that stipulate, among other conditions, the terms of use, monthly or annual rental amounts payable in Renminbi and a six-month notification provision for termination of any lease agreement.

Buildings

Our principal executive offices, which we lease from Chinalco, are located at No. 62 North Xizhimen Street, Haidian District, Beijing, People’s Republic of China, 100082.

68

Pursuant to the reorganization in connection with our initial public offering in 2001, Chinalco transferred to us, among other operating assets, ownership of the buildings and properties for the operation of our core businesses. Chinalco retained its remaining buildings and properties for its operations. The buildings transferred to us comprise 4,631 buildings with an aggregate gross area of approximately 4.2 million square meters. These buildings may be sold or transferred only with the consent of Chinalco and in accordance with applicable land transfer procedures. Chinalco has undertaken to provide its consent and the necessary assistance to affect land grant procedures to ensure that our buildings can be legally transferred or sold.

We and Chinalco also lease to each other a number of other buildings and properties for ancillary uses, which comprise mainly buildings for offices, dormitory, canteen and storage purposes. As of the date of this annual report, we leased to Chinalco buildings with an aggregate gross area of approximately 146,228 square meters, while Chinalco leased to us buildings with an aggregate gross area of approximately 174,969 square meters. In December 2021, we and China Aluminum Investment and Development Co., Ltd., a wholly-owned subsidiary of Chinalco, renewed a tenancy agreement pursuant to which we would lease from Chinalco the office premises at certain floors of No. 62 North Xizhimen Street, Haidian District, Beijing, PRC, with an aggregate gross floor area of 22,303 square meters. This agreement will expire on December 31, 2024.

Our Expansion

Our expansion projects in 2021 primarily include:

● The 2,000,000 tonne bauxite project of Guangxi branch: we expect to invest a total amount of approximately RMB545 million in this project. By the end of 2021, an aggregate of RMB164 million of capital expenditure had been incurred. The project is expected to be completed in August 2022.

Item 4A. Unresolved Staff Comments

None.

Item 5.Operating and Financial Review and Prospects

The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and selected historical financial data, in each case together with the accompanying notes included elsewhere in this annual report.

This section contains certain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of our future performance or results and our actual results could materially differ from those disclosed in the forward-looking statements. In evaluating our business, you should carefully consider the information provided in “Item 3. Key Information – D. Risk Factors.”

As the business combinations under common control incurred in the years ended December 31, 2019, 2020 and 2021, the comparative financial data for the years ended December 31, 2018, 2019 and 2020 are revised to reflect the business combinations under common control. Unless otherwise indicated in this section, our financial data for the years ended December 31, 2019 and 2020 are presented based on those revised amounts. Please see Note 39 to our audited consolidated financial statements.

A.Operating Results

Overview

We are a leading enterprise in the non-ferrous metal industry in China. We are engaged principally in alumina refining, primary aluminum smelting, and trading of non-ferrous metal products, coal products and other products. In addition, we are engaged in coal mining and power generation. The remainder of our revenues was derived from research and development activities and other products and services. We organize and manage our operations according to the following key segments:

● Our alumina segment, which consists of the mining and purchasing of bauxite and other raw materials, and production and sale of alumina as well as chemical alumina. Alumina accounted for approximately 93.1% of the total production volume for this segment in 2021. Chemical alumina products are used in the production of chemical, pharmaceutical, ceramic and construction materials. In the process of refining bauxite into alumina, we produce gallium as a by-product, which is a rare, high-value metal with applications in the electronics and telecommunication industries.

69

● Our primary aluminum segment, which consists of the procurement of alumina, other raw materials, supplemental materials and electrical power, the production and sale of primary aluminum and aluminum-related products, such as carbon products, aluminum alloy products and other aluminum products. Our principal primary aluminum products are ingots, molten aluminum and aluminum alloys, which accounted for approximately 18.6%, 44.1% and 37.3%, respectively, of our total production volume of primary aluminum in 2021. Our standard 20 kilogram remelt ingots are used for general aluminum fabrication in the construction, electricity, electronics, transportation, packaging, machinery and durable goods industries. We internally produce substantially all the carbon products used at our smelters and sell our remaining carbon products to external customers.

● Our trading segment, which mainly consists of the trading of alumina, primary aluminum, aluminum fabrication products, other non-ferrous metal products, and crude fuels such as coal products, as well as supplemental materials and logistics and transport services to our internal manufacturing plants and external customers. We established our trading business under Chalco Trading as a separate segment in July 2010 as a result of our operational structural adjustment. Since 2014, we have established Chalco Materials, Chalco Logistics and Chalco Trading Group to continuously promote and deepen development of our trading business, jointly constituting our trading segment. Established in 2018, Chalco Trading Group has undertaken the businesses that used to be operated by Chalco Trading.

● Our energy segment, which consists of the research and development, production and operation of energy products, including coal mining and conventional coal-fire power generation as well as renewable energy generation such as wind power and solar power. We are also engaged in new energy equipment production. We established our energy segment in January 2013 as a result of our acquisition of Ningxia Energy in line with our development strategy to partially offset our future energy costs. In 2021, we supplied the majority of the electricity we generated for our own production use, supplied a portion of the coal output to our own electric power plant and sold the remaining portion to external customers. Ningxia Energy supplied the electricity it generated mainly to the state grid in China.

● Our corporate and other operating segment, which consists of corporate and other aluminum-related research, development, and our other activities.

Our consolidated revenue increased by 45.0% from RMB185,990.6 million for the year ended December 31, 2020 to RMB269,748.2 million for the year ended December 31, 2021, primarily due to the year-on-year increase in the prices of alumina and electrolytic aluminum. Our net profit increased significantly from RMB1,599.2 million for the year ended December 31, 2020 to RMB7,789.0 million for the year ended December 31, 2021, primarily because our gross profit increased significantly from RMB12,316.3 million in 2020 to RMB26,478.3 million in 2021.

Factors Affecting Our Results of Operations

We believe that the following factors, which impact our various revenue and expense items (as described below), have had, and will continue to have, a significant effect on the development of our business, financial position and results of operation.

Economic Condition of China and the World

As the major aluminum product market is globalized, the demand for and prices of our products are highly correlated with the general economic condition of China and the world and the performance of the major aluminum and related product markets. In recent years, China’s economy continued to experience growth despite the negative effects of the global financial crisis beginning in the second half of 2008 and economic recession in 2009, as well as general market volatility and changing macroeconomic conditions. However, as China is in the process of transforming its development model, optimizing its economic structure and changing its growth drivers, the growth of China’s economy has slowed down since 2014, with GDP growth from 2014 through 2019 ranging from 6.1% to 6.9%. Furthermore, the outbreak and global spread of the COVID-19 in 2020 and 2021 has adversely affected the global economy and China’s economy and financial market in general. As a result, the compound annual GDP growth rate of China was 5.1% in 2020 and 2021. Please refer to “Item 3. Key Information – D. Risk Factors – Our business may be materially and adversely affected by the COVID-19 pandemic” for further details of the impact of the outbreak of COVID-19.

70

The global output of alumina (with chemical alumina products included) in 2021 increased by approximately 4.2% from 2020 to approximately 138.66 million tonnes. The global alumina consumption (with chemical alumina products included) in 2021 increased approximately by 3.6% from 2020 to approximately 137.61 million tonnes. In 2021, the domestic output of alumina (with chemical alumina products included) increased approximately by 5.9% from 2020 to approximately 75.20 million tonnes and the domestic consumption for alumina (with chemical alumina products included) increased by approximately 4.3% from 2020 to approximately 77.99 million tonnes.

The global output of primary aluminum in 2021 increased by approximately 3.8% from 2020 to approximately 67.78 million tonnes. The global consumption of primary aluminum in 2021 increased by approximately 9.1% from 2020 to approximately 69.15 million tonnes. In 2021, the domestic output of primary aluminum decreased by approximately 4.3% from 2020 to approximately 38.90 million tonnes and the domestic consumption of primary aluminum increased by approximately 5.7% from 2020 to approximately 40.55 million tonnes.

Mix and Pricing of Our Products

We are engaged principally in alumina refining, primary aluminum smelting and sales of these products and trading of non-ferrous metal products and other products. In addition, we are engaged in coal mining and power generation. We coordinate substantially all of our sales and marketing activities for our self-produced alumina products and some of our sales and marketing activities for our self-produced primary aluminum products through Chalco Trading Group, taking into account the spot market prices and SHFE prices. In 2021, revenues generated from alumina, primary aluminum, trading and energy segments (after elimination of inter-segment sales) accounted for 6.9%, 23.7%, 66.4% and 2.8%, respectively, of our consolidated total revenues after elimination of inter-segment sales. We apply different policies to price different products. For information on our pricing of different products, please see the section headed “Item 4. Information of the Company – B. Business Overview – Sales and Marketing.”

The sales prices of alumina that our alumina refineries sell internally to Chalco Trading Group are determined based on our budgeted sale prices, spot market prices and the prices of primary aluminum on SHFE. Chalco Trading Group coordinates the external negotiation and execution of sales contracts of our alumina products. The alumina prices in both the domestic and international markets increased in 2021 when compared to that of 2020. The increase in the alumina price in the international market was attributable to the gradual recovery of the demand of alumina after the COVID-19 outbreak in 2020 and the globally strained supply chain due to reduced production capacity. In 2021, the spot price of alumina in the international market reached a high of approximately US$483 per tonne and bottomed out at approximately US$269 per tonne. The average spot price of alumina in the international market was approximately US$330 per tonne, representing an increase of 21.5% from 2020. The spot price of alumina in the domestic market reached a high of RMB4,108 per tonne and bottomed out at RMB2,324 per tonne. The average spot price of alumina in the domestic market was approximately RMB2,799 per tonne, representing an increase of 19.8% from 2020. The increase of the alumina price in the domestic market was primarily attributable to the maintenance of the high price of electrolytic aluminum that drove increased price of alumina, the decrease in supply of alumina in the domestic market due to government inspection of environment and government control of energy and consumption, declining imports of alumina due to a decrease in supply of alumina in the international market, and an increase in prices of raw materials for alumina. Our average selling price of alumina increased by 13.4% from RMB2,465 per tonne in 2020 to RMB2,785 per tonne in 2021.

Like most primary aluminum producers in China, we price our primary aluminum products by reference to the primary aluminum spot prices and futures price on the SHFE. In 2021, the primary aluminum prices in the international market generally increased due to the ease of global liquidity and the gradual recovery of the demand of alumina after the COVID-19 outbreak in 2020. The change of primary aluminum prices in the domestic market in 2021 was attributable to the ease of global liquidity, the unmet demand of primary aluminum due to government control of energy and consumption, electricity power rationing, benefits from the policy of “carbon dioxide peaking and carbon neutrality” and increase in prices of raw materials for primary aluminum. In 2021, three-month aluminum futures prices reached a high of US$3,229 per tonne and a low of US$1,945 per tonne on LME; and a high of RMB24,820 per tonne and a low of RMB14,640 per tonne on SHFE. In 2021, the average price of spot aluminum and three-month aluminum futures at LME were approximately US$2,480 per tonne and US$2,485 per tonne, respectively, representing an increase of 45.5% and 43.3% from that of 2020, respectively. The average three-month aluminum futures prices at SHFE increased by 37.3% from RMB13,807 per tonne in 2020 to RMB18,898 per tonne in 2021 while the average spot prices of primary aluminum at SHFE increased by 34.2% from RMB14,112 per tonne in 2020 to RMB18,953 per tonne in 2021. Our average selling price of primary aluminum increased by 34.8% from RMB14,142 per tonne in 2020 to RMB19,099 per tonne in 2021.

71

Price Volatility of Non-ferrous Metal and Coal Products

Since late 2009, as a result of the implementation of our operational structural adjustment, we have been engaged substantially in the trading of outsourced non-ferrous metal products to increase our profit. In 2012, we began to engage in the trading of significant amounts of outsourced coal products to diversify our product portfolio. Although the profit margin of sales of outsourced products is typically lower than that of our self-produced products, we generated substantial revenues and profit from the trading of outsourced products during the past few years due to our significant trading volumes. Our revenue generated from external sales of products purchased from external sources in 2021 was approximately RMB151,105.6 million, representing approximately 84.3% of total revenue from external sales in our trading segment. From time to time, we may enter into futures and option transactions in addition to the simple buy-low-sell-high trading model to hedge against price fluctuations in the non-ferrous metal and coal products market. However, short-term price volatility of these products remains a key factor affecting our operating results, as we need to make the correct prediction concerning the price trends of these products on the markets to ensure substantial revenues through large trading volume. If the market price trend does not match our prediction, we may be forced to sell trading products at low prices or to purchase trading products at high prices, which may adversely affect gross margins and profitability.

Manufacturing Costs

Our cost of revenues consists primarily of the costs of raw materials, overhead cost and electric power cost. Our principal raw material is bauxite. For the years ended December 31, 2019, 2020 and 2021, bauxite supplied by our mines accounted for 37.6%, 46.4% and 63.5%, respectively, of our total bauxite used in the production of alumina. The unit cost of bauxite produced by us is generally lower than the unit cost of bauxite procured from external suppliers. In 2021, the average purchase price of bauxite per tonne from our other suppliers decreased by approximately 6.2% to RMB386.83 while the average cost of bauxite per tonne from our own mines increased by approximately 6.3% to RMB299.03 compared to 2020. In addition, our average purchase price per unit tonne of thermal coal in 2021 increased by approximately 52.4% compared to 2020. As a result, our average cost of alumina per tonne in 2021 increased by approximately 2.5% from that in 2020.

Primary aluminum is one of our major aluminum products and is produced by smelting operations. Smelting operations require a substantial and continuous supply of electricity. Electricity cost is the most significant component of our primary aluminum production cost and accounted for approximately 37.0% of our unit production cost for primary aluminum in 2021. The availability and price of electricity are key considerations in our primary aluminum operations. Interruptions of electricity supply can result in lengthy production shutdowns, increased costs associated with restarting production and waste of production in progress, and prolonged interruptions can cause damage to, or the destruction of, production equipment and facilities. Our average annual electricity price per kWh (including tax) remained relatively stable from 2019 to 2020 and increased by 27.0% from 2020 to 2021.

Given our high proportion of fixed costs, we must generate sufficient sales to absorb our fixed costs to maintain or increase our operating margins. Our acquisitions and production expansion in recent years have significantly increased our costs that are relatively fixed in nature, such as leases and depreciation of property, plant and equipment and employee benefit expenses. If we are able to maintain satisfactory facility utilization rates and productivity, our production capacity expansion will enable us to reduce our unit costs through economies of scale and recover associated increased costs through higher output. In 2021, we continued to focus on lowering production costs and increasing production efficiency through reducing raw material consumption by improving technology and internal management.

Availability and Costs of Financing

We require a significant amount of capital to fund our operations. For example, we need substantial amounts of funds for expanding our operations, purchasing and maintaining equipment and procuring commodities. We have in the past funded our capital expenditures primarily with bank loans and the issuance of medium-term notes and bonds and long-term bonds. The availability of financing is subject to various factors, including our credit history and the prevailing credit policy adopted by the PRC government. Over the years, we have maintained good relationships with the commercial banks in China, which enables us to access bank financing at relatively low costs. Any change of lending policies adopted by the PRC government in the future may, among other things, affect our ability to obtain financing and may in turn adversely affect our operating results.

Our finance costs decreased by 10.8% from 2020 to 2021, primarily because we reduced the scale of our interest-bearing debts and the unit cost of financing decreased in 2021. If we are unable to secure sufficient external funding when required, we may not be able to fund our working capital requirements and necessary capital expenditures, which could adversely affect our business, financial performance and prospects.

72

In addition, our borrowing costs and access to debt financing depend significantly on our credit ratings. These ratings, including long-term corporate credit ratings and financing bond credit ratings, are assigned by rating agencies, which may lower or withdraw their ratings. Any change in our credit ratings or average interest rate could have negative implications, which may increase our finance costs and affect our financial results.

Regulatory Environment

The PRC government continues to shape the structure and development of the aluminum industry through industry guidelines for energy conservation, safety, environmental and quality. The central and local PRC government will give more support to entities that meet the standards in such industry guidelines. If the PRC government changes its current industry guidelines or the interpretation of those industry guidelines, we may face pressure on profit margins and constraints on our ability to expand our business operations.

Selected Statement of Operation Items

Revenue

Our revenue is primarily generated from sales of alumina, primary aluminum, other non-ferrous metal products and coal products. In addition, we are engaged in coal mining and power generation. The remainder of our revenues was derived from research and development activities and other products and services.

Cost of Sales

Our cost of sales consists primarily of the purchase of inventories in relation to trading activities, cost of raw materials, consumables and electric power used in manufacturing, certain fixed cost and employee benefit expenses. For the years ended December 31, 2019, 2020 and 2021, our cost of sales was RMB179,284.0 million, RMB173,674.2 million and RMB243,269.9 million, respectively, and accounted for 94.3%, 93.4% and 90.2%, respectively, of the total consolidated revenues for those periods.

Operating Expenses

Selling and Distribution Expenses. Our selling and distribution expenses consist primarily of transportation and loading expenses which are indirectly related to product sales and employee benefit expenses for employees in selling and distribution department. Selling and distribution expenses accounted for 7.7%, 4.3% and 2.7% of our total operating expenses for the years ended December 31, 2019, 2020 and 2021, respectively.

General and Administrative Expenses. Our general and administrative expenses consist primarily of employee benefit expenses for directors and officers and employees in the administrative department and, to a lesser extent, taxes other than income tax expenses, depreciation of non-production property, plant and equipment, termination benefit expenses, travelling and entertainment, legal and other professional fees, amortization of right-of-use assets, utilities and office supplies, insurance expense, repairs and maintenance expenses, auditors’ remuneration, amortization of intangible assets, and others. General and administrative expenses accounted for 68.6%, 56.9% and 44.9% of our total operating expenses for the years ended December 31, 2019, 2020 and 2021, respectively. Employee benefit expenses, including salaries and bonus, housing fund, staff welfare and other expenses, employment expense in relation to early retirement schemes and termination benefit, comprise a significant component of our general and administrative expenses, accounting for 46.3%, 41.2% and 43.0% of our total general and administrative expenses for the years ended December 31, 2019, 2020 and 2021, respectively.

Research and Development Expenses. Our research and development expenses accounted for 16.2%, 19.6% and 20.4% of our total operating expenses for the years ended December 31, 2019, 2020 and 2021, respectively.

Impairment Loss on Property, Plant and Equipment. Our impairment loss on property, plant and equipment accounted for 4.5%, 5.7% and 20.1% of our total operating expenses for the years ended December 31, 2019, 2020 and 2021, respectively. The increase in impairment loss on property, plant and equipment in 2021 was primarily because some of our assets are not in operation, temporarily idle or not operated with full capacity due to production plan adjustments, the increase in cost of mining resulting from environmental protection requirements and the increase in operating cost including rents.

Impairment Losses on Financial Assets. Our impairment losses on financial assets accounted for 11.9% of our total operating expenses for the year ended December 31, 2021.

73

Impairment Losses on Investments in Joint Ventures. We did not incur any impairment losses on investments in joint ventures for the year ended December 31, 2021.

Other Income

Our other income consists primarily of tax rebates and grants on industrial development support from the government. For the year ended December 31, 2021, our other income was RMB148.4 million and accounted for approximately 0.1% of the total consolidated revenues.

Other Losses, net

Our net other losses consisted primarily of losses on disposal of property, plant and equipment and losses from closing out hedging futures. For the year ended December 31, 2021, our net other losses were RMB1,623.5 million and accounted for approximately 0.6% of the total consolidated revenues.

Finance Income

Our finance income consists primarily of interest income. For the year ended December 31, 2021, our finance income was RMB276.0 million and accounted for approximately 0.1% of the total consolidated revenues.

Finance Costs

Our financing costs consist primarily of interest expense on our borrowings and bonds, interest on lease liability and amortization of unrecognized finance expenses. Interest rates on loans related to capital expenditures and working capital set by banks generally follow guidelines issued by the PBOC. The PBOC regulates the interest rates for commercial loans charged by state-owned banks from time to time as part of the PRC government’s efforts to regulate the PRC economy. In 2021, we incurred interest expense (net of capitalized interest) of RMB3,520.5 million on our borrowings.

Share of Profits and Losses of Joint Ventures

Our share of profits and losses of joint ventures is the profit attributable to us from our joint ventures, based on our equity interests in such joint ventures. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

Share of Profits and Losses of Associates

Our share of profits and losses of associates is the profit attributable to us from our associates, based on our equity interests in such associates. An associate is an entity over which we have significant influence but not control.

74

Consolidated Results of Operations

The following table sets forth certain income and expense items as a percentage of our revenues from our consolidated statements of comprehensive income for the periods indicated:

	Year Ended December 31,
	2019		2020		2021
	(Restated)		(Restated)
	RMB	(%)	RMB	(%)	RMB	US$	(%)
	(in millions, except percentage)
Revenue	190,215.4	100.0	185,990.6	100.0	269,748.2	42,329.4	100.0
Cost of Sales	(179,284.0)	(94.3)	(173,674.2)	(93.4)	(243,269.9)	(38,174.4)	(90.2)
Gross Profit	10,931.4	5.7	12,316.4	6.6	26,478.3	4,155.0	9.8
Selling and distribution expenses	(447.4)	(0.2)	(315.7)	(0.2)	(314.9)	(49.4)	(0.1)
General and administrative expenses	(3,972.1)	(2.1)	(4,157.7)	(2.2)	(5,204.2)	(816.7)	(1.9)
Research and development expenses	(940.8)	(0.5)	(1,434.1)	(0.8)	(2,362.2)	(370.7)	(0.9)
Impairment loss on property, plant and equipment	(259.4)	(0.1)	(416.8)	(0.2)	(2,328.1)	(365.3)	(0.9)
Impairment losses on financial assets	(171.0)	(0.1)	(979.2)	(0.5)	(1,384.9)	(217.3)	(0.5)
Impairment losses on investments in joint ventures	—	—	—	—	—	—	—
Other income	84.6	<0.1	139.6	0.1	148.4	23.3	0.1
Other (losses)/gains, net	981.7	0.5	903.9	0.5	(1,623.5)	(254.8)	(0.6)
Operating profit	6,207.1	3.3	6,056.4	3.3	13,408.9	2,104.1	5.0
Finance Income	261.2	0.1	227.2	0.1	276.0	43.3	0.1
Finance cost	(4,921.5)	(2.6)	(4,420.5)	(2.4)	(3,942.8)	(618.7)	(1.5)
Share of profits and losses of joint ventures	270.1	0.1	180.5	0.1	164.1	25.8	0.1
Share of profits and losses of associates	48.8	<0.1	145.7	0.1	272.6	42.8	0.1
Profit before income tax	1,865.6	1.0	2,189.3	1.2	10,178.8	1,597.3	3.8
Income tax benefit/(expense)	(631.5)	(0.3)	(590.0)	(0.3)	(2,389.8)	(375.0)	(0.9)
Profit for the year	1,234.1	0.6	1,599.2	0.9	7,789.0	1,222.3	2.9

No customer individually accounted for more than 10% of our total revenue for the year ended December 31, 2021. Sales to Chinalco and its subsidiaries, joint ventures, associates and other related parties accounted for approximately 13.0%, 17.3% and 11.8% of consolidated revenues for the years ended December 31, 2019, 2020 and 2021, respectively. For information on related party transactions, see “Item 7. Major Shareholders and Related Party Transactions – B. Related Party Transactions” and Note 36 to our audited consolidated financial statements.

Year Ended December 31, 2021 Compared with Year Ended December 31, 2020

Revenue

Our revenue increased by 45.0% from RMB185,990.6 million for the year ended December 31, 2020 to RMB269,748.2 million for the year ended December 31, 2021, primarily due to the year-on-year increase in the prices of alumina and electrolytic aluminum.

Cost of Sales

Our cost of sales increased by 40.1% from RMB173,674.2 million for the year ended December 31, 2020 to RMB243,269.9 million for the year ended December 31, 2021, primarily due to the impact of higher prices of raw fuel materials.

Selling and Distribution Expenses

Our selling and distribution expenses were RMB314.9 million for the year ended December 31, 2021, which remained stable compared to RMB315.7 million for the year ended December 31, 2020.

75

General and Administrative Expenses

Our general and administrative expenses increased by 25.2% from RMB4,157.7 million for the year ended December 31, 2020 to RMB5,204.2 million for the year ended December 31, 2021, primarily due to the increase in staff costs as a result of the phase-out of COVID-19 pandemic social insurance premium relief policy introduced in 2020 and the increase in expenses as a result of expanded operation of our Boffa mine in Guinea and the ancillary alumina plants of Guangxi Huasheng.

Research and Development Expenses

Our research and development expenses increased by 64.7% from RMB1,434.1 million for the year ended December 31, 2020 to RMB2,362.2 million for the year ended December 31, 2021, primarily due to the increase in investment in optimizing the product process, improving the added value of aluminum processing products and developing the mid-to-high-end products.

Other Income

Other income increased by 6.3% from RMB139.6 million for the year ended December 31, 2020 to RMB148.4 million for the year ended December 31, 2021, primarily due to the increase in the government grants recognized as other income.

Other (Losses)/Gains, Net

Our net other losses amounted to RMB1,623.5 million for the year ended December 31, 2021, compared to our net other gains of RMB903.9 million for the year ended December 31, 2020, primarily because we incurred losses of RMB604.7 million and RMB650.7 million from closing out hedging futures and disposal of idle production lines, respectively, during 2021.

Finance Income

Our finance income increased by 21.5% from RMB227.2 million for the year ended December 31, 2020 to RMB276.0 million for the year ended December 31, 2021, primarily due to increase in gains from short-term wealth management products.

Finance Costs

Our finance costs decreased by 10.8% from RMB4,420.5 million for the year ended December 31, 2020 to RMB3,942.8 million for the year ended December 31, 2021, primarily because we reduced the scale of our interest-bearing debts and the unit cost of financing decreased in 2021.

Share of Profits and Losses of Joint Ventures

Our profit in our share of profits and losses of joint venture decreased by 9.1% from RMB180.5 million for the year ended December 31, 2020 to RMB164.1 million for the year ended December 31, 2021. This was primarily attributable to the decrease in the profitability of a coal joint venture and an electricity generation joint venture.

Share of Profits and Losses of Associates

Our profit in our share of profits and losses of associates increased by 87.0% from RMB145.7 million for the year ended December 31, 2020 to RMB272.6 million for the year ended December 31, 2021. This was primarily due to the increase in the profitability of our two electrolytic aluminum associates.

Income Tax

Our income tax expense increased significantly from RMB590.0 million for the year ended December 31, 2020 to RMB2,389.8 million for the year ended December 31, mainly due to our significant year-on-year increase in pre-tax corporate profits.

Results of Operations

As a result of the foregoing, our net profit increased significantly from RMB1,599.2 million for the year ended December 31, 2020 to RMB7,789.0 million for the year ended December 31, 2021.

76

Year Ended December 31, 2020 Compared with Year Ended December 31, 2019

Revenue

Our revenue decreased by 2.2% from RMB190,215.4 million for the year ended December 31, 2019 to RMB185,990.6 million for the year ended December 31, 2020, primarily due to the decrease in our trading business.

Cost of Sales

Our cost of sales decreased by 3.1% from RMB179,284.0 million for the year ended December 31, 2019 to RMB173,674.2 million for the year ended December 31, 2020, primarily due to the decrease in our trading business.

Selling and Distribution Expenses

Our selling and distribution expenses decreased by 29.4% from RMB447.4 million for the year ended December 31, 2019 to RMB315.7 million for the year ended December 31, 2020, primarily due to the decrease in our domestic transportation expenses of products.

General and Administrative Expenses

Our general and administrative expenses increased by 4.7% from RMB3,972.1 million for the year ended December 31, 2019 to RMB4,157.7 million for the year ended December 31, 2020, primarily due to the increase in the land use tax.

Research and Development Expenses

Our research and development expenses increased by 52.4% from RMB940.8 million for the year ended December 31, 2019 to RMB1,434.1 million for the year ended December 31, 2020, primarily due to the increase in investment in optimizing the electrolytic process of primary aluminum, improving the added value of aluminum fabrication products and developing the mid-to-high-end products.

Other Income

Other income increased by 64.9% from RMB84.6 million for the year ended December 31, 2019 to RMB139.6 million for the year ended December 31, 2020, primarily due to the increases in the government grants recorded under other income.

Other Gains, Net

Our net other gains decreased by 7.9% from RMB981.7 million for the year ended December 31, 2019 to RMB903.9 million for the year ended December 31, 2020, primarily because we had gains on disposal of certain subsidiaries, associates and business in 2019 while we did not have such disposals in 2020.

Finance Income

Our finance income decreased by 13.0% from RMB261.2 million for the year ended December 31, 2019 to RMB227.2 million for the year ended December 31, 2020, primarily due to the decrease in interest income resulting from the decrease in the wealth management products held by us.

Finance Costs

Our finance costs decreased by 10.2% from RMB4,921.5 million for the year ended December 31, 2019 to RMB4,420.5 million for the year ended December 31, 2020, primarily because we reduced the scale of our interest-bearing debts and utilized financings with lower interest rates.

77

Share of Profits and Losses of Joint Ventures

Our profit in our share of profits and losses of joint venture decreased by 33.2% from RMB270.1 million for the year ended December 31, 2019 to RMB180.5 million for the year ended December 31, 2020. This was primarily attributable to the decrease in the profitability of one of our joint ventures, which is an alumina refinery, as a result of the decrease in the alumina price in 2020.

Share of Profits and Losses of Associates

Our profit in our share of profits and losses of associates increased significantly from RMB48.8 million for the year ended December 31, 2019 to RMB145.7 million for the year ended December 31, 2020. This was primarily because we had new associates in December 2019 and the profits of such associates increased in 2020 due to the increase in the primary aluminum price.

Income Tax

Our income tax expense decreased by 6.6% from RMB631.5 million for the year ended December 31, 2019 to RMB590.0 million for the year ended December 31, 2020. This was mainly the adjustment on temporary differences for comprehensive tax rate in accordance with the latest preferential tax policies for the development of the western region.

Results of Operations

As a result of the foregoing, our net profit increased by 29.6% from RMB1,234.1 million for the year ended December 31, 2019 to RMB1,599.2 million for the year ended December 31, 2020.

Discussion of Segment Operations

We account for our operations on a segmental basis; that is, separately preparing the accounting for our alumina, primary aluminum, trading, energy and corporate and other operating segments. Unless otherwise indicated, also included in these segments are other revenues derived from activities such as supplying electricity, gas, heat and water to our affiliates, selling scrap and other materials and providing services including transportation and research and development to third parties. For additional information relating to our business segments and segment presentation, see Note 5 to our consolidated financial statements.

78

The following table sets forth a breakdown of our revenues by segment and the contribution of external sales and inter-segment sales for the periods indicated:

	Year Ended December 31,
	2019	2020
	(Restated)	(Restated)	2021	2021	2021	2021
	RMB	RMB	RMB	US$	%	%
	(in millions, except percentage)
Revenue
Alumina:
External sales	14,326.6	12,941.6	18,564.2	2,913.1	5.2	6.9
Inter-segment sales	29,605.2	29,436.9	37,981.6	5,960.1	10.6
Total	43,931.8	42,378.4	56,545.8	8,873.2	15.8
Primary aluminum:
External sales	37,394.6	40,430.6	63,987.1	10,041.0	17.9	23.7
Inter-segment sales	11,694.4	11,458.6	8,657.1	1,358.5	2.4
Total	49,089.0	51,889.2	72,644.2	11,399.5	20.3
Trading
External sales	131,058.5	125,334.2	179,160.2	28,114.1	50.5	66.4
Inter-segment sales	27,877.2	30,058.1	41,287.7	6,479.0	11.5
Total	158,935.7	155,392.3	220,447.9	34,593.1	61.6
Energy
External sales	7,109.8	6,940.4	7,674.6	1,204.3	2.1	2.8
Inter-segment sales	236.1	243.8	240.6	37.8	0.1
Total	7,345.9	7,184.2	7,915.2	1,242.1	2.2
Corporate and others
External sales	325.9	343.8	362.0	56.8	0.1	0.1
Inter-segment sales	167.1	105.8	121.7	19.1	<0.1
Total	493.0	449.6	483.7	75.9	0.1
Total Revenues before inter-segment eliminations	259,795.4	257,293.7	358,036.8	56,183.8	100
Eliminations of inter-segment sales	(69,580.0)	(71,303.2)	(88,288.6)	(13,854.4)	(24.7)
Consolidated total revenues	190,215.4	185,990.5	269,748.2	42,329.4	75.3	100.0

79

The following table sets forth segment results before income tax by segment for the periods indicated:

	Year Ended December 31,
	2019	2020	2021	2021
	RMB	RMB	RMB	US$
	(in millions)
Alumina:
Revenues	43,931.8	42,378.4	56,545.8	8,873.3
Cost and expenses(1)	(43,340.3)	(40,943.3)	(52,496.7)	(8,237.9)
Segment results(2)	591.5	1,435.1	4,049.1	635.4
Primary aluminum:
Revenues	49,089.0	51,889.2	72,644.2	11,399.5
Cost and expenses(1)	(48,401.8)	(49,866.0)	(65,242.2)	(10,238.0)
Segment results(2)	687.2	2,023.2	7,402.0	1,161.5
Trading:
Revenues	158,935.7	155,392.3	220,447.9	34,593.1
Cost and expenses(1)	(157,977.7)	(154,810.2)	(219,217.1)	(34,399.9)
Segment results(2)	958.0	582.1	1,230.8	193.2
Energy:
Revenues	7,345.9	7,184.2	7,915.2	1,242.1
Cost and expenses(1)	(6,942.4)	(7,261.4)	(8,150.0)	(1,278.9)
Segment results(2)	403.5	(77.2)	(234.8)	(36.8)
Corporate and others
Revenues	493.0	449.6	483.7	75.9
Cost and expenses(1)	(1,480.7)	(2,154.80)	(2,333.5)	(366.2)
Segment results(2)	(987.7)	(1,705.2)	(1,849.8)	(290.3)
Elimination(3)	213.1	(68.8)	(418.5)	(65.7)
Total profit before income tax	1,865.6	2,189.2	10,178.8	1,597.3

(1) Consist of cost of sales, operating expenses, other income, other gains, finance income, finance costs and others attributable to each segment.

(2) Segment results refer to profit before income tax.

(3) Elimination refers to the aggregate inter-segment eliminations of segment results of each segment.

Year Ended December 31, 2021 Compared with Year Ended December 31, 2020

Alumina Segment

Revenues. Total revenue generated by the alumina segment increased by 33.4% from RMB42,378.4 million for the year ended December 31, 2020 to RMB56,545.8 million for the year ended December 31, 2021, primarily due to an increase by 11% in production volume as a result of the expanded operation of our Boffa mine in Guinea and the ancillary alumina plants of Guangxi Huasheng in 2021, as well as a year-on-year increase by 18% in the price of alumina.

Revenue from external sales of the alumina segment increased by 43.4% from RMB12,941.6 million for the year ended December 31, 2020 to RMB18,564.2 million for the year ended December 31, 2021, primarily due to an increase by 19% in the average external selling prices for our self-produced alumina and an increase by 18% in the volume of external sales of the alumina in 2021 as compared to that in 2020.

Revenue from inter-segment sales of the alumina segment increased by 29.0% from RMB29,436.9 million for the year ended December 31, 2020 to RMB37,981.6 million for the year ended December 31, 2021, primarily due to an increase by 15% in the internal selling price of our self-produced alumina and an increase by 6% in the volume of internal sales of the alumina.

80

Cost and expenses. The total cost and expenses for our alumina segment increased by 28.2% from RMB40,943.3 million for the year ended December 31, 2020 to RMB52,496.7 million for the year ended December 31, 2021, primarily due to increase in costs as a result of (i) an increase by 3% in the prices of raw materials, (ii) an increase by 12% in production volume of alumina as a result of operation of Guangxi Huasheng, which is in line with an increase by 64% in production volume of bauxite as a result of expanded operation of our Boffa mine in Guinea, and (iii) a significant increase in loss on disposal of assets and impairment loss in 2021 as compared to that in 2020.

Segment results. The segment profit for our alumina segment increased significantly from RMB1,435.1 million for the year ended December 31, 2020 to RMB4,049.1 million for the year ended December 31, 2021, primarily due to the increase in production volume and gross profit as a result of the expanded operation of our Boffa mine in Guinea and the ancillary alumina plants of Guangxi Huasheng, as well as the year-on-year increase in the gross profit of our alumina products.

Primary Aluminum Segment

Revenues. Total revenue generated by the primary aluminum segment increased by 40.0% from RMB51,889.1 million for the year ended December 31, 2020 to RMB72,644.2 million for the year ended December 31, 2021, primarily due to the year-on-year increase in the price of primary aluminum.

Revenue from external sales of the primary aluminum segment increased by 58.2% from RMB40,440.6 million for the year ended December 31, 2020 to RMB63,987.1 million for the year ended December 31, 2021, primarily due to an increase by 34.8% in the average external selling prices for our self-produced primary aluminum and an increase by 2.7% in the volume of external sales of primary aluminum in 2021 as compared to that in 2020.

Revenue from inter-segment sales of primary aluminum segment decreased by 24.4% from RMB11,458.5 million for the year ended December 31, 2020 to RMB8,657.1 million for the year ended December 31, 2021, primarily due to a decrease by 36% in the volume of our self-produced primary aluminum supplied with our own smelters in 2021 as compared to that in 2020.

Cost and expenses. The total cost and expenses for our primary aluminum segment increased by 30.8% from RMB49,865.9 million for the year ended December 31, 2020 to RMB65,242.2 million for the year ended December 31, 2021, primarily due to an increase by 21% in the price of alumina, the main raw material of primary aluminum, and an increase by 25% in the price of electricity.

Segment results. We had a segment profit of RMB7,402.0 million for the year ended December 31, 2021, increasing significantly from a segment profit of RMB2,023.2 million for the year ended December 31, 2020. This was mainly due to the year-on-year increase in the gross profit of our primary aluminum products.

Trading Segment

Revenues. Total revenue generated by the trading segment increased by 41.9% from RMB155,392.4 million for the year ended December 31, 2020 to RMB220,447.9 million for the year ended December 31, 2021, primarily due to an increase by 20% and 35% in the average selling prices for alumina and primary aluminum, respectively, an increase by 43% in the average external selling prices for copper and an increase by 49% in the volume of external sales of copper in 2021 as compared to that in 2020.

Revenue from external sales of the trading segment increased by 42.9% from RMB125,334.2 million for the year ended December 31, 2020 to RMB179,160.2 million for the year ended December 31, 2021, primarily due to an increase by 35% and 6% in the average external selling prices and the volume of external sales of primary aluminum, respectively and an increase by 43% and 49% in the average external selling prices and the volume of external sales of copper, respectively, in 2021 as compared to that in 2020.

Revenue from internal sales of the trading segment increased by 37.4% from RMB30,058.1 million for the year ended December 31, 2020 to RMB41,287.7 million for the year ended December 31, 2021, primarily due to an increase by 19% in the internal selling price for our alumina, and an increase by 79% in the revenue of internal sales of raw materials and fuel in 2021 as compared to that in 2020.

81

Cost and expenses. The total cost and expenses for our trading segment increased by 41.6% from RMB154,810.3 million for the year ended December 31, 2020 to RMB219,217.1 million for the year ended December 31, 2021, primarily due to an increase by 20% and 35% in the average procurement cost of alumina and primary aluminum, respectively, and increased procurement cost corresponding to an increase by 43% and 49% in the average external selling prices and the volume of external sales of copper, respectively, in 2021 as compared to that in 2020.

Segment results. Our segment profit increased significantly from RMB582.1 million for the year ended December 31, 2020 to RMB1,230.8 million for the year ended December 31, 2021. This was mainly due to the year-on-year increase in the gross profit of our alumina and primary aluminum products.

Energy Segment

Revenues. Total revenue generated by the energy segment increased by 10.2% from RMB7,184.2 million for the year ended December 31, 2020 to RMB7,915.2 million for the year ended December 31, 2021, primarily due to the year-on-year increase in coal price.

Revenue from external sales of the energy segment increased by 10.6% from RMB6,940.4 million for the year ended December 31, 2020 to RMB7,674.6 million for the year ended December 31, 2021, primarily due to the year-on-year increase in coal price.

Revenue from internal sales of the energy segment was RMB240.6 million for the year ended December 31, 2021, which remained stable compared to RMB243.8 million for the year ended December 31, 2020.

Cost and expenses. The total cost and expenses for our energy segment increased by 8.1% from RMB7,107.0 million for the year ended December 31, 2020 to RMB7,680.4 million for the year ended December 31, 2021, primarily due to an increase in the procurement costs for certain thermal power companies resulting from increased price of coal.

Segment results. Our segment loss increased significantly from RMB77.2 million for the year ended December 31, 2020 to RMB234.8 million for the year ended December 31, 2021, primarily attributable to the losses of our non-controlling thermal power companies.

Corporate and Other Operating Segment

Revenues. Revenue from the corporate and other operating segment increased by 7.6% from RMB449.6 million for the year ended December 31, 2020 to RMB483.7 million for the year ended December 31, 2021, primarily due to the expanded business of Zhengzhou Institute in this segment.

Segment results. We recorded a segment loss of RMB1,849.8 million for the year ended December 31, 2021, representing an increase of 8.5% from a segment loss of RMB1,705.2 million for the year ended December 31, 2020. This was mainly attributable to the loss of RMB307.1 million resulting from hedging business in 2021 compared to that in 2020.

Year Ended December 31, 2020 Compared with Year Ended December 31, 2019

Alumina Segment

Revenues. Total revenue generated by the alumina segment decreased by 3.5% from RMB43,931.8 million for the year ended December 31, 2019 to RMB42,378.4 million for the year ended December 31, 2020, primarily due to the year-on-year decrease in the price of alumina.

Revenue from external sales of the alumina segment decreased by 9.7% from RMB14,326.6 million for the year ended December 31, 2019 to RMB12,941.6 million for the year ended December 31, 2020, primarily due to the year-on-year decrease in the price of alumina.

Revenue from inter-segment sales of the alumina segment slightly decreased by 0.6% from RMB29,605.3 million for the year ended December 31, 2019 to RMB29,436.9 million for the year ended December 31, 2020, primarily due to a decrease by 10.2% in the internal sale price of our self-produced alumina in 2020 as compared to that in 2019, partially offset by an increase by 3.4% in the volume of our self-produced alumina supplied with our own smelters in 2020 as compared to that in 2019.

82

Cost and expenses. The total cost and expenses for our alumina segment decreased by 5.5% from RMB43,340.3 million for the year ended December 31, 2019 to RMB40,943.3 million for the year ended December 31, 2020, primarily due to the decrease in the cost of alkali used in the alumina refining.

Segment results. The segment profit for our alumina segment increased significantly from RMB591.5 million for the year ended December 31, 2019 to RMB1,435.1 million for the year ended December 31, 2020, primarily due to the decrease in the cost of alkali used in the alumina refining.

Primary Aluminum Segment

Revenues. Total revenue generated by the primary aluminum segment increased by 5.7% from RMB49,089.0 million for the year ended December 31, 2019 to RMB51,889.1 million for the year ended December 31, 2020, primarily due to the increase in the price of primary aluminum.

Revenue from external sales of the primary aluminum segment increased by 8.1% from RMB37,394.6 million for the year ended December 31, 2019 to RMB40,430.6 million for the year ended December 31, 2020, primarily due to an increase by 2.2% in the average external selling prices for our self-produced primary aluminum and the increase by 35.5% in the sales volume of carbon anodes in 2020, as compared to those in 2019.

Revenue from inter-segment sales of primary aluminum segment decreased by 2.0% from RMB11,694.4 million for the year ended December 31, 2019 to RMB11,458.5 million for the year ended December 31, 2020, remaining relatively stable.

Cost and expenses. The total cost and expenses for our primary aluminum segment increased by 3.0% from RMB48,401.8 million for the year ended December 31, 2019 to RMB49,865.9 million for the year ended December 31, 2020, primarily due to the decrease by approximately RMB260 million in the gains derived from disposal of capacity quotas of primary aluminum in 2020 and the increase by 35.5% in the sales volume of carbon anodes in 2020, as compared to that in 2019.

Segment results. We had a segment profit of RMB2,023.2 million for the year ended December 31, 2020, increasing significantly from a segment profit of RMB687.2 million for the year ended December 31, 2019. This was mainly due to the increase in the price of primary aluminum.

Trading Segment

Revenues. Total revenue generated by the trading segment decreased by 2.2% from RMB158,935.7 million for the year ended December 31, 2019 to RMB155,392.4 million for the year ended December 31, 2020, primarily due to the decrease by 70.3% in revenue from external trading of zinc ingots and the decrease by 51.7% in revenue from external trading of coking coal in 2020, as compared to those in 2019, partially offset by the increase by 15.1% in revenue from external trading of aluminum ingots in 2020, as compared to that in 2019.

Revenue from external sales of the trading segment decreased by 4.4% from RMB131,058.5 million for the year ended December 31, 2019 to RMB125,334.2 million for the year ended December 31, 2020, primarily due to the decrease by 70.3% in revenue from external trading of zinc ingots and the decrease by 51.7% in revenue from external trading of coking coal in 2020, as compared to those in 2019, partially offset by the increase by 15.1% in revenue from external trading of aluminum ingots in 2020, as compared to that in 2019.

Revenue from internal sales of the trading segment increased by 7.8% from RMB27,877.2 million for the year ended December 31, 2019 to RMB30,058.1 million for the year ended December 31, 2020, primarily due to the increase in the internal trading of alumina and bauxite.

Cost and expenses. The total cost and expenses for our trading segment decreased by 2.0% from RMB157,977.7 million for the year ended December 31, 2019 to RMB154,810.3 million for the year ended December 31, 2020, primarily due to the decrease by 70.7% in the cost for trading of zinc ingots and the decrease by 58.4% in the cost for trading of coking coal in 2020, as compared to those in 2019, partially offset by the increase by 16.2% in the cost for trading of aluminum ingots in 2020, as compared to that in 2019.

83

Segment results. Our segment profit decreased by 39.2% from RMB958.0 million for the year ended December 31, 2019 to RMB582.1 million for the year ended December 31, 2020. This was mainly due to the decrease in the import volume of coking coal as affected by the COVID-19 pandemic.

Energy Segment

Revenues. Total revenue generated by the energy segment decreased by 2.2% from RMB7,346.0 million for the year ended December 31, 2019 to RMB7,184.2 million for the year ended December 31, 2020, primarily due to the decrease in coal prices.

Revenue from external sales of the energy segment decreased by 2.4% from RMB7,109.8 million for the year ended December 31, 2019 to RMB6,940.4 million for the year ended December 31, 2020, primarily due to the decrease in coal prices.

Revenue from internal sales of the energy segment increased from RMB236.1 million for the year ended December 31, 2019 to RMB243.8 million for the year ended December 31, 2020, remaining relatively stable.

Cost and expenses. The total cost and expenses for our energy segment increased by 2.4% from RMB6,942.5 million for the year ended December 31, 2019 to RMB7,107.0 million for the year ended December 31, 2020, primarily because we had gains on disposal of associates while we did not have such disposal in 2020.

Segment results. We recorded a segment loss of RMB77.2 million for the year ended December 31, 2020, whereas we had a segment profit of RMB403.5 million for the year ended December 31, 2019. This was primarily due to the decrease in the price of the coal during the year. In addition, we had gains on disposal of associates in 2019 while we did not have such disposal in 2020.

Corporate and Other Operating Segment

Revenues. Revenue from the corporate and other operating segment decreased by 8.8% from RMB492.9 million for the year ended December 31, 2019 to RMB449.6 million for the year ended December 31, 2020, primarily due to the decrease in business of an engineering company in this segment.

Segment results. We recorded a segment loss of RMB1,705.2 million for the year ended December 31, 2020, representing an increase of 72.6% from a segment loss of RMB987.7 million for the year ended December 31, 2019. This was mainly because we had gains from our investment in Yunnan Aluminum and Yixin Aluminum in 2019 and we made provision for impairment losses of certain long aging receivables in 2020.

B.Liquidity and Capital Resources

Historically, our primary sources of funding have been cash generated from operating activities, prepayments and deposits from customers, bank and other loans and proceeds from equity or notes and bonds offerings. Our primary uses of funds have been working capital for production, capital expenditures and repayments of short-term, medium-term and long-term borrowings.

As of December 31, 2021, our current assets amounted to RMB48,714.0 million, representing an increase of 5.3% from RMB46,268.6 million as of December 31, 2020, primarily due to the increase in monetary funds resulting from the increase in cash inflows from operations. As of December 31, 2021, our restricted cash and time deposits and cash and cash equivalents balance amounted to RMB19,178.0 million, representing an increase of 78.8% from RMB10,727,5 million as of December 31, 2020. As of December 31, 2021, our trade and notes receivable amounted to RMB6,904.9 million, representing a decrease of 25.9% from RMB9,313.6 million as of December 31, 2020.

As of December 31, 2021, our current liabilities amounted to RMB52,180.8 million, representing a decrease of 16.7% from RMB62,633.0 million as of December 31, 2020. This is mainly due to our efforts to optimize the maturity profile of the liabilities and minimize the scale of short-term interest-bearing loans and borrowings.

As of December 31, 2021, our net current liabilities amounted to RMB3,466.7 million, representing a decrease of 78.8% from RMB16,364.4 million as of December 31, 2020. As of December 31, 2021, our current ratio (current assets/current liabilities) was 0.93, compared with 0.74 as of December 31, 2020. Our quick ratio ((current assets – inventories – prepayments)/current liabilities) was 0.56 as of December 31, 2021, compared with 0.41 as of December 31, 2020.

84

We have considered our available sources of funds as follows:

● Our expected net cash inflows from operating activities in 2022;

● As of December 31, 2021, we had total banking facilities of approximately RMB128,100 million, of which RMB36,056 million had been utilized and unutilized banking facilities amounted to RMB92,044 million as of December 31, 2021, among which, banking facilities of approximately RMB25,530 million will remain unexpired over the 12 months from December 31, 2021. We are confident that all banking facilities can be renewed upon their expiration based on our past experience with banks and our good credit standing;

● Bond facilities registered with National Association of Financial Market Institutional Investors but not utilized; and

● Other available sources of financing from banks and other financial institutions based on our good credit history.

We believe that we have adequate resources to continue in operational existence for the foreseeable future not less than 12 months from December 31, 2021. The Board therefore continues to adopt the going concern basis in preparing our financial statements included in this annual report.

Cash Flows and Working Capital

The following table sets forth a condensed summary of our statement of cash flows for the periods indicated:

	Year Ended December 31,
	2019	2020	2021	2021
	(Restated)	(Restated)
	RMB	RMB	RMB	US$
	(in millions)
Net cash flows generated from operating activities	12,505.9	14,907.5	28,230.4	4,430.0
Net cash flows (used in)/generated from investing activities	(13,395.8)	1,932.8	744.3	116.8
Net cash flows used in financing activities	(10,474.0)	(15,773.4)	(18,478.3)	(2,899.6)
Net increase/(decrease) in cash and cash equivalents	(11,364.0)	1,066.9	9,007.8	1,413.5

Net Cash Flows Generated from Operating Activities

For the year ended December 31, 2021, we had net cash generated from operating activities of RMB28,230.4 million, which was primarily attributable to our profit before income tax of RMB10,178.8 million, adjusted for non-cash and non-operating items of RMB18,062.8 million, inflows of RMB2,273.9 million for changes in working capital and outflows of income tax of RMB2,285.1 million. The positive adjustment for non-cash and non-operating items primarily consisted of depreciation of property, plant and equipment of RMB7,375.6 million, finance cost of RMB3,846.1 million and impairment losses on property, plant and equipment of RMB2,328.1 million. The inflows from changes in working capital primarily consisted of (i) an increase in trade and notes payables of RMB1,318.5 million, (ii) an increase in other payables and accrued liabilities of RMB1,702.8 million and (iii) a decrease in inventories of RMB727.4 million, and partially offset by an increase in trade and notes receivables of RMB1,295.0 million.

For the year ended December 31, 2020, we had net cash generated from operating activities of RMB14,907.5 million, which was primarily attributable to our profit before income tax of RMB2,189.3 million, adjusted for non-cash and non-operating items of RMB14,593.7 million, outflows of RMB1,070.3 million for changes in working capital and outflows of income tax of RMB805.2 million. The positive adjustment for non-cash and non-operating items primarily consisted of depreciation of property, plant and equipment of RMB7,161.5 million, finance cost of RMB4,420.4 million and impairment loss of inventory of RMB1,321.4 million. The outflows from changes in working capital primarily consisted of (i) an increase in trade and notes receivables of RMB4,524.8 million and (ii) an increase in inventories of RMB1,667.6 million, and partially offset by (i) an increase in trade and notes payables of RMB3,004.9 million and (ii) an increase in other payables and accrued liabilities of RMB1,884.3 million.

85

For the year ended December 31, 2019, we had net cash generated from operating activities of RMB12,505.8 million, which was primarily attributable to our profit before income tax of RMB1,865.6 million, adjusted for non-cash and non-operating items of RMB13,739.7 million, outflows of RMB2,544.8 million for changes in working capital and outflows of income tax of RMB554.6 million. The positive adjustment for non-cash and non-operating items primarily consisted of depreciation of property, plant and equipment of RMB7,106.8 million, finance cost of RMB4,921.5 million, impairment loss of inventory of RMB1,163.3 million and depreciation of right-of-use assets of RMB1,075.8 million. The outflows from changes in working capital consisted primarily of (i) a decrease in trade and notes payables of RMB1,400.3 million and (ii) an increase in trade and notes receivables of RMB1,173.4 million, and partially offset by (i) a decrease in restricted cash of RMB859.5 million and (ii) a decrease in other non-current assets of RMB547.9 million.

Net Cash Flows (Used in)/Generated from Investing Activities

We recorded net cash flows used in investing activities of RMB744.3 million for the year ended December 31, 2021 while we recorded net cash flows generated from investing activities of RMB1,932.8 million for the year ended December 31, 2020, primarily due to the increased purchase of structural deposits, losses on futures margin and decreased proceeds from disposal of assets.

We recorded net cash flows used in investing activities of RMB13,395.8 million for the year ended December 31, 2019. The net cash flows generated from investing activities in 2020 were primarily due to the decrease in the financial products held by us and the decrease in our investment in project construction.

Net Cash Flows Used in Financing Activities

The net cash flows used in financing activities increased by 17.1% from RMB15,773.4 million for the year ended December 31, 2020 to RMB18,478.3 million for the year ended December 31, 2021, primarily due to the increase in our net debt repayment in 2021. Our net cash used in financing activities for the year ended December 31, 2021, consisted primarily of repayments of short-term and long-term loans of RMB40,560.0 million, repayments of bonds and notes of RMB21,537.4 million and repayment of senior perpetual securities of RMB5,386.3 million, partially offset by drawdown of short-term and long-term loans of RMB29,542.5 million and proceeds from issuance of short-term bonds and medium-term notes (net of issuance costs) of RMB24,845.1 million.

The net cash flows used in financing activities increased by 50.6% from RMB10,474.0 million for the year ended December 31, 2019 to RMB15,773.4 million for the year ended December 31, 2020, primarily due to the year-on-year increase in net repayment of debts by the Company during the year. Our net cash used in financing activities for the year ended December 31, 2020, consisted primarily of repayments of short-term and long-term loans of RMB43,111.5 million, repayments of bonds and notes of RMB30,638.8 million and repayment of gold leasing arrangements of RMB6,921.9 million, partially offset by drawdown of short-term and long-term loans of RMB46,021.4 million and proceeds from issuance of short-term bonds and medium-term notes (net of issuance costs) of RMB25,900.0 million.

86

Loans and Borrowings

During the past years, we engaged in debt financing to fund our operations and business expansion. As of December 31, 2020 and 2021, our gearing ratio (net debts/total capital attributable to owners of the parent as defined in Note 37.3 to our audited consolidated financial statements) was approximately 67% and 63%, respectively.

	As of December 31,
	2020	2021	2021
	(Restated)
	RMB	RMB	US$
	(in millions)
Short-term loans and borrowings
Short-term bank and other loans	20,738.0	9,219.3	1,446.7
Short-term bonds, unsecured	2,411.3	5,440.4	853.7
Current portion of lease liabilities	828.3	987.7	155.0
Current portion of medium-term notes	7,100.7	2,999.6	470.7
Current portion of long-term bank and other loans	3,629.0	5,859.1	919.4
Sub-total	34,707.3	24,506.1	3,845.5
Long-term loans and borrowings
Lease liabilities	7,086.2	12,594.5	1,976.4
Long-term bank and other loans	43,014.6	42,125.2	6,610.4
Medium-term notes and bonds and long-term bonds and private placement notes	18,975.4	19,222.6	3,016.4
Less:
Current portion of lease liabilities	(828.3)	(987.7)	(155.0)
Current portion of medium-term notes and long-term bonds	(7,100.7)	(2,999.6)	(470.7)
Current portion of long-term bank and other loans	(3,629.0)	(5,859.1)	(919.4)
Sub-total	57,518.2	64,095.9	10,058.1
Total borrowings	92,225.5	88,602.0	13,903.6
Less: Bank balances and cash	10,727.5	19,178.0	3,009.4
Net	81,498.0	69,424.0	10,894.2

Bank and Other Loans

The weighted average annual interest rate of short-term bank and other loans for the year end December 31, 2021 was 3.03%. Our short-term bank and other loans will mature within one year.

The weighted average annual interest rate of long-term bank and other loans for the years ended December 31, 2021 was 4.55%. The following table sets forth the aggregate maturities of our outstanding long-term bank and other loans as of December 31, 2021. The following table sets forth the amounts of the contractual undiscounted cash flows:

	As of December 31, 2021
	RMB	US$
	(in millions)
Within 1 year	5,859.1	919.4
Between 1 and 2 years	11,837.7	1,857.6
Between 2 and 5 years	9,771.4	1,533.3
Over 5 years	14,657.0	2,300.0
Total	42,125.2	6,610.3

As of December 31, 2021, we had secured long-term and short-term loans of RMB11,521.3 million, guaranteed long-term loans of RMB3,132.5 million, and unsecured long-term and short-term loans of RMB36,690.7 million. Among these secured loans, long-term loans and borrowings amounting to RMB9,484 million (current portion of RMB1,525 million and non-current portion of RMB7,959 million) were secured by the contractual right to charge users for electricity generated in the future. In addition, we also pledged various assets primarily including property, plant and equipment to secure our loans.

As of December 31, 2021, we had foreign currency denominated loans with a principal amount of RMB11 million in Japanese Yen and RMB1,333 million in U.S. dollars.

87

Notes and Bonds

As of December 31, 2021, we had no outstanding long-term bonds.

The following table sets forth the face value, maturity, effective interest rate and outstanding amount of our outstanding medium-term notes and bonds as of December 31, 2021:

		Effective		December 31,
	Face value/maturity	interest rate		2021
	(RMB in thousands, except for the face values of Hong Kong meidum-term bonds)
2019 Medium-term notes	2,000,000/2024	4.31	%	1,989,090
2020 Medium-term notes	900,000/2023	3.04	%	898,866
2021 Medium-term notes	1,000,000/2024	3.21	%	997,028
2018 Medium-term bonds	900,000/2023	5.06	%	899,323
2018 Medium-term bonds	1,600,000/2023	4.57	%	1,597,988
2019 Medium-term bonds	2,000,000/2022	3.84	%	1,999,809
2019 Medium-term bonds	2,000,000/2029	4.57	%	1,997,440
2019 Medium-term bonds	1,000,000/2022	3.52	%	999,790
2020 Medium-term bonds	500,000/2025	3.31	%	499,876
2020 Medium-term bonds	1,000,000/2023	3.07	%	999,787
2021 Hong Kong Medium-term bonds	500,000US$/2024	1.74	%	3,173,180
2021 Hong Kong Medium-term bonds	500,000US$/2026	2.24	%	3,170,409
Total				19,222,586

The following table sets forth face value, maturity, effective interest rate and outstanding amount of our outstanding short-term bonds as of December 31, 2021:

		Effective		December 31,
	Face value /maturity	interest rate		2021
	(RMB in thousands)
short-term bonds	400,000/2022	2.70	%	406,036
short-term bonds	2,000,000/2022	2.59	%	2,022,571
short-term bonds	1,000,000/2022	2.55	%	1,006,240
short-term bonds	2,000,000/2022	2.80	%	2,005,567
Total				5,440,414

Senior Perpetual Capital Securities

Please refer to “Item 4. Information on the Company – A. History and Development of the Company – Senior Perpetual Capital Securities Offering” for further details.

Restriction on Cash Dividends

Our PRC subsidiaries are required to set aside a certain amount of their retained profits each year, if any, to fund certain statutory reserves and these reserves may not be distributed as cash dividends. In addition, when our subsidiaries incur debts on their own behalf, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. Our directors are of the view that we will continue to be able to meet our borrowing payment obligations as they fall due from cash generated from our operating activities.

88

Capital Expenditures and Capital Commitments

The following table sets forth our capital expenditures for the years ended 2019, 2020 and 2021, and the capital expenditures of each segment as a percentage of our total capital expenditures for the periods indicated:

	Year Ended December 31
	2019		2020		2021
	RMB	%	RMB	%	RMB	%
	(in millions, except percentage)
Alumina	6,699.4	56.9	2,319.4	50.1	2,218.2	47.7
Primary aluminum	3,330.7	28.3	1,072.6	23.2	1,118.7	24.0
Trading	134.7	1.1	329.4	7.1	17.6	0.4
Energy	1,449.6	12.3	881.8	19.1	948.8	20.4
Corporate and others	166.0	1.4	25.4	0.5	349.5	7.5
Total	11,780.4	100.0	4,628.6	100.0	4,652.8	100.0

In 2021, we spent approximately RMB4,652.8 million of our capital expenditures (excluding equity interest investments) primarily in investments in construction, transformation and upgrading of projects, energy saving and consumption reduction, environmental governance, resources acquisition and technological research and development. Our total capital expenditures increased slightly from 2020 to 2021.

We expect our estimated capital expenditures in 2022 to be a total of approximately RMB6.8 billion, primarily for infrastructure and technology upgrading.

As of December 31, 2021, our Group’s contractual but not provided capital commitment to fixed assets investment amounted to RMB1,375.4 million.

As of December 31, 2021, our commitments to make capital contribution to our associates and joint ventures amounted to RMB441.8 million, comprised of the capital contributions of RMB400 million to Chinalco Overseas Development Co., Ltd., RMB8 million to Loudi Zhongyu New Materials Co., Ltd., RMB28 million to Shanxi Qinlv Taiyue New Materials Co., Ltd. and RMB6 million to Chinalco Tendering Company Limited, respectively.

We expect to use primarily operating cash flow in meeting such commitments with the shortfall to be satisfied by proceeds of bank loans, short-term and medium-term bonds and medium-term notes.

Off-Balance-Sheet Arrangements

There are no off-balance sheet arrangements material to investors that have or are reasonably likely to have a current or future effect on our financial condition, our changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Material Cash Requirements

Our material cash requirements as of December 31, 2021 and any subsequent interim period primarily include our capital expenditures, lease liabilities, loans and interest payables, financial liabilities at fair value through profit or loss, financial liabilities included in other payables and accrued liabilities, excluding accrued interest, financial liabilities included in other non-current liabilities and trade and notes payables.

Our lease liabilities primarily relate to consideration for certain properties leased by us from Chinalco for the period commencing January 1, 2022.

Our loans and interest payables primarily consist of long-term bank and other loans, medium-term notes and bonds, short-term bonds and short-term bank and other loans.

The trade and notes payables are non-interest bearing and are normally settled within one year.

89

We intend to fund our existing and future material cash requirements with our existing cash and cash equivalents, bank loans, the issuance of medium-term notes and bonds and long-term bonds and other financing alternatives. We will continue to make cash commitments, including capital expenditures, to support the growth of our business.

The following table summarizes our contractual obligations and commercial commitments for the periods indicated as of December 31, 2021:

	Payment due by period
	Total	Within 1 year	1 to 2 years	2 to 5 years	Thereafter
	(RMB in millions)
Lease liabilities, including current portion	22,806.0	1,590.2	1,473.7	4,347.7	15,394.4
Long-term bank and other loans, including current portion	42,125.2	5,859.1	11,837.7	9,771.4	14,657.0
Medium-term notes and bonds, including current portion	19,275.7	3,000.0	4,400.0	9,875.7	2,000.0
Short-term bonds	5,400.0	5,400.0	—	—	—
Short-term bank and other loans	9,219.3	9,219.3	—	—	—
Interest payables for loans and borrowings	10,390.6	2,620.9	2,147.8	3,941.5	1,680.4
Financial liabilities at fair value through profit or loss	68.9	68.9	—	—	—
Financial liabilities included in other payables and accrued liabilities, excluding accrued interest	6,497.8	6,497.8	—	—	—
Financial liabilities included in other non-current liabilities	1,469.3	234.9	202.2	147.0	885.2
Trade and notes payables	15,505.4	15,505.4	—	—	—
Subtotal	132,758.2	49,996.5	20,061.4	28,083.3	34,617.0
Capital commitments on property, plant and equipment	1,375.4	N/A	N/A	N/A	N/A
Commitments for capital contribution	441.8	N/A	N/A	N/A	N/A
Total	134,575.4

Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2021.

C.Research and Development

For the years ended December 31, 2019, 2020 and 2021, we have had a department responsible for organizing and coordinating the research and development efforts of the Company, and the Zhengzhou Institute, the only professional research institute in China dedicated to the research and development of aluminum smelting technologies, has been responsible for taking the lead in the research and development of important and key technologies for our operations and providing technology services for our plants. The technology centers at our plants focus on providing solutions for specific issues of each plant and applying our developed technologies. Each of the plants also has opportunities to participate in operational testing and pilot industrialization relating to research and development of important and key technologies. We also collaborate with universities and other research institutions in China on some of our complicated projects.

D.Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2021 to December 31, 2021, that are reasonably likely to have a material effect on our revenue, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

90

E.Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with IFRS as issued by the International Accounting Standards Board, which requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the accounting policies. The areas in our financial reporting involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 3 to our consolidated financial statements. We have established procedures and processes to facilitate the making of such judgments in the preparation of our consolidated financial statements. Management has used the best information available but actual performance may differ from our management’s estimates and future changes in key variables could change future reported amounts in our consolidated financial statements.

Property, Plant and Equipment

Property, plant and equipment, other than construction in progress (“CIP”), are stated at cost less accumulated depreciation and any impairment losses. When an item of property, plant and equipment is classified as held for sale or when it is part of a disposal group classified as held for sale, it is not depreciated and is accounted for in accordance with IFRS 5. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

We calculate depreciation using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives as follows:

Buildings and infrastructure	8‑45 years
Machinery	3‑30 years
Transportation facilities	6‑10 years
Office and other equipment	3‑10 years

We reviewed and adjusted the assets’ depreciation method, residual values and useful lives, if appropriate, at least at each financial year end.

Construction in progress (“CIP”) represents buildings under construction, which is stated at cost less any impairment losses, and is not depreciated. Cost comprises the direct costs of construction and capitalized borrowing costs on related borrowed funds during the period of construction. CIP is reclassified to the appropriate categories of property, plant and equipment when completed and ready for use.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.

Goodwill

Goodwill is measured as described in Note 2.3 to our consolidated financial statements. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortized but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which goodwill is monitored for internal management purposes, being the operating segments.

91

Intangible assets - mining rights and mineral exploration rights

Our mineral exploration rights and mining rights relate to coal, bauxite and other mines.

(i)Recognition

Except for mineral exploration rights and mining rights acquired in a business combination, mineral exploration rights and mining rights are initially recorded at the cost which includes the acquisition consideration, qualifying exploration and other direct costs. The mineral exploration rights are stated at cost less any impairment, and the mining rights are stated at cost less any amortization and impairment.

(ii)Reclassification

Mineral exploration rights are converted to mining rights when obtain mining rights certification, or technical feasibility and commercial viability of extracting a mineral resource are demonstrable, and are subject to amortization when commercial production has commenced.

We assess the stage of each mine under construction to determine when a mine moves into the production stage. The criteria used to assess the start date are determined based on the unique nature of each mine construction project. We consider various relevant criteria, such as completion of a reasonable period of testing of the mine and equipment, ability to produce in saleable form (within specifications) and ability to sustain ongoing production to assess when a mine is substantially complete and ready for its intended use.

(iii)Amortization

Mining rights other than coal mining rights are amortized on a straight-line basis over a shorter period of the mining right valid period and expected mining life. Estimated mineable periods of the majority of the mining rights range from 3 to 30 years.

Coal mining rights are amortized on a unit-of-production basis over the economically recoverable reserves evaluated based on the reserves estimated in accordance with the standards of the mine concerned.

(iv)Impairment

An impairment review is performed when there are indicators that the carrying amount of the mineral exploration rights and mining rights may exceed their recoverable amounts. To the extent that this occurs, the excess is fully provided as an impairment loss.

Leases

Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.

Contracts may contain both lease and non-lease components. We allocate the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for leases of real estate for which we are a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

● fixed payments (including in-substance fixed payments), less any lease incentives receivable;

92

● variable lease payments that are based on an index or a rate, initially measured using the index or rate as of the commencement date;

● amounts expected to be payable by us under residual value guarantees;

● the exercise price of a purchase option if we are reasonably certain to exercise that option, and

● payments of penalties for terminating the lease, if the lease term reflects us exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, we:

● where possible, use recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received;

● use a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group, which does not have recent third-party financing, and,

● make adjustments specific to the lease, such as term, country, currency and security.

If a readily observable amortizing loan rate is available to the individual lessee (through recent financing or market data) which has a similar payment profile to the lease, then our entities use that rate as a starting point to determine the incremental borrowing rate.

We are exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

● the amount of the initial measurement of lease liability;

● any lease payments made at or before the commencement date less any lease incentives received;

● any initial direct costs, and

● restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis as follows:

Buildings	2–20 years
Machinery	2–10 years
Land use rights	10–50 years

93

If we are reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. While we revalue our land and buildings that are presented within property, plant and equipment, we have chosen not to do so for the right-of-use buildings held by us.

Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. We apply the short-term lease recognition exemption to our short-term leases of machinery and equipment (that is those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). We also apply the recognition exemption for leases of low-value assets to leases of office equipment that are considered to be of low value (i.e. below RMB30,000).

Rental income is recognized on a time proportion basis over the lease terms. Variable lease payments that do not depend on an index or a rate are recognized as income in the accounting period in which they are incurred.

Impairment of financial assets

We recognize an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that we expect to receive, discounted at an approximation of the original effective interest rate. The impact of COVID-19 on GDP and other key indicators have been considered when determining the severity and likelihood of downside economic scenarios that are used to estimate ECL under IFRS 9 in 2021.

Impairment of non-financial assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

Inventories

Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realizable value. Cost comprises direct materials, direct labor and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Current and deferred income tax

The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where we and our subsidiaries and associates operate and generate taxable income. Our management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. We measure our tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.

94

Deferred income tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred tax assets are recognized only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of investments in foreign operations where we are able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognized when control of goods or services is transferred to the customers at an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which we will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

When the contract contains a financing component which provides the customer with a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between us and the customer at contract inception. When the contract contains a financing component which provides us a significant financial benefit for more than one year, revenue recognized under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in IFRS 15.

(a)Sale of industrial products

Revenue from the sale of industrial products (including sales of scrap and other materials) is recognized at the point in time when control of the asset is transferred to the customer, generally on delivery of the industrial products. Revenue from electricity is recognized upon transmission of electricity based on the confirmation from the power grid.

95

(b)Rendering of services

We provide transportation and other service and the revenue from services is recognized over time, using an input method to measure progress towards complete satisfaction of the service, because the customer simultaneously receives and consumes the benefits provided by the Group.

New IFRS Pronouncements

For a detailed discussion of new accounting pronouncements, please see Notes 2.1.4 and 2.1.5 to our audited consolidated financial statements.

Item 6.Directors, Senior Management and Employees

A.Directors and Senior Management

Directors

The seventh session of our Board currently consists of nine directors, including four executive directors, two non-executive directors and three independent non-executive directors. In accordance with our Articles of Association, our affairs are managed by our Board. The business address of each of our directors is No. 62 North Xizhimen Street, Hai Dian District, Beijing, People’s Republic of China, 100082.

We follow our home country practice in relation to the composition of our Board in reliance on the exemption provided under Section 303A.00 of the NYSE Corporate Governance Rules available to foreign private issuers. Our home country practice does not require a majority of directors of a listed company to be independent directors. As such, the majority of our directors are not independent within the meaning of NYSE Corporate Governance Rules.

The table and discussion below set forth information concerning our directors who served on our Board during the year ended December 31, 2021, and up to date of this annual report.

Name	Age	Positions with the Company
Executive Directors(1)
Liu Jianping(2)	54	Executive Director and Chairman of the Board
Zhu Runzhou	57	Executive Director and President
Ou Xiaowu(3)	57	Executive Director and Secretary of the Discipline Inspection Committee
Jiang Tao(4)	47	Executive Director and Vice President
Non-executive Directors(5)
Zhang Jilong(6)	58	Non-executive Director
Ao Hong(7)	60	Non-executive Director (resigned)
Wang Jun	56	Non-executive Director
Independent Non-executive Directors(8)
Qiu Guanzhou(9)	73	Independent Non-executive Director
Yu Jinsong(9)	68	Independent Non-executive Director
Chan Yuen Sau Kelly(9)	51	Independent Non-executive Director
Chen Lijie(10)	67	Independent Non-executive Director (expired)
Hu Shihai(10)	67	Independent Non-executive Director (expired)
Lie-A-Cheong Tai Chong, David(10)	62	Independent Non-executive Director (expired)

(1) As of the date of this annual report, we had four executive directors.

(2) On June 29, 2021, Mr. Liu Jianping was elected as executive director of the seventh session of the Board at the 2020 annual general meeting of the Company. On the same day, Mr. Liu Jianping was elected as the chairman of the seventh session of the Board.

(3) On June 29, 2021, Mr. Ou Xiaowu was elected as executive director of the seventh session of the Board at the 2020 annual general meeting of the Company.

(4) On June 29, 2021, Mr. Jiang Tao was elected as executive director of the seventh session of the Board at the 2020 annual general meeting of the Company. On August 24, 2021, the appointment of Mr. Jiang Tao as the vice president of the Company was approved at the 22nd meeting of the seventh session of the Board.

(5) As of the date of this annual report, we had two non-executive directors.

96

(6) On June 29, 2021, Mr. Zhang Jilong was elected as non-executive director of the seventh session of the Board at the 2020 annual general meeting of the Company.

(7) On June 7, 2021, Mr. Ao Hong proposed to resign as a non-executive director of the Company and from all other positions in each of the special committees under the Board, with effect upon the election of a new non-executive director at the 2020 annual general meeting of the Company on June 29, 2021.

(8) As of the date of this annual report, we had three independent non-executive directors.

(9) On June 29, 2021, Mr. Qiu Guanzhou, Mr. Yu Jinsong and Ms. Chan Yuen Sau Kelly were elected as independent non-executive directors of the seventh session of the Board at the 2020 annual general meeting of the Company.

(10) Ms. Chen Lijie, Mr. Hu Shihai and Mr. Lie-A-Cheong Tai Chong, David, reached the maximum term for consecutive appointment and no longer served as the independent nonexecutive directors and all other positions in each of the special committees under the Board upon election of new independent non-executive directors at the 2020 annual general meeting of the Company.

Executive Director

Liu Jianping, aged 54, is currently the chairman and an executive director of the Company. Mr. Liu also serves as the director and deputy secretary of the Communist Party Committee of Chinalco. Mr. Liu graduated from Renmin University of China with a master’s degree in economics majoring in commodities. Mr. Liu has extensive experience in human resources and corporate management, etc. He successively worked in the department of restructuring, laws and regulations of National Food and Strategic Reserve Administration, the department of personnel of National Food and Strategic Reserve Administration, the department of personnel, the organization department of the CPC Central Committee and the First Bureau of Management of Enterprise Leaders of the State-owned Assets Supervision and Administration Commission of China Grain Reserve Group Ltd. Company. He successively served as the deputy head and head of the department of personnel (bureau of retired veteran cadres) of Chinalco, the head of the human resources department (veteran cadre work department) of Chinalco, the general manager of the human resource department of the Company, the assistant to the general manager of Chinalco, a member of the Communist Party Committee, deputy general manager and general manager of copper business department of Chinalco, the chairman and president of China Copper Co., Ltd., the chairman of Yunnan Copper (Group) Co., Ltd., and the deputy general manager, a member of the Communist Party Committee and the safety director of Chinalco.

Zhu Runzhou, aged 57, is currently an executive director and president of the Company. Mr. Zhu graduated from Wuhan University, majoring in software engineering, with a master’s degree in engineering. He is a professor-level senior engineer. Mr. Zhu successively served as the deputy chief engineer of Gansu Jingyuan Power Plant, the chairman of Baiyin Huadian Water Supply Co., Ltd., head of Guodian Guizhou Kaili Power Plant, director of the preparatory office of the technical transformation program of Guodian in Duyun City, deputy general manager of Guodian Guizhou Branch, deputy general manager of Guodian Yunnan Branch and general manager of Guodian Power Xuanwei Power Generation Co., Ltd., general manager of Guodian Guangxi Branch, deputy general manager of the energy management department of the Company and deputy general manager of Chalco Energy, a director, general manager and chairman of Ningxia Energy, and the general manager of Chalco Xinjiang Aluminum Power Co., Ltd, and an executive director and vice president of the Company.

Ou Xiaowu, aged 57, is currently an executive director and the secretary of the Party Committee and secretary of the Discipline Inspection Committee of the Company. Mr. Ou graduated from Xiamen University with a bachelor’s degree in economics majoring in planning and statistics and is a senior auditor. Mr. Ou has extensive experience in auditing and financial management. He successively served as the deputy head and head of 2nd division and head of 1st division of the audit department in China Nonferrous Metals Industry Corporation, the deputy head of the finance department and audit department of China Copper Lead Zinc Group Corporation, the deputy general manager of Guizhou Branch of Aluminum Corporation of China Limited, the deputy head and head of the finance department (audit department) and chief financial officer of the copper business department of Chinalco, a director and chief financial officer of China Copper Co., Ltd., the general manager of the finance department and audit department of the Company, and a deputy chief auditor and general manager of the audit department of Chinalco. Mr. Ou also served as a supervisor of China Copper Co., Ltd. and China Aluminum Group High-end Manufacturing Co., Ltd., the chairman of the supervisory committee of Qinghai Yellow River Hydropower Renewable Aluminum Co., Ltd., and a supervisor of Chalco Energy Co., Ltd. and a supervisor of the Company. Currently, Mr. Ou serves as a supervisor of China Aluminum International Engineering Corporation Limited and the chairman of the supervisory committee of Qinghai Yellow River Hydropower Renewable Aluminum Co., Ltd.

97

Jiang Tao, aged 47, is currently an executive director and the vice president of the Company. Mr. Jiang graduated from Northeastern University with a doctor’s degree in engineering majoring in nonferrous metals metallurgy, and is an excellent senior engineer. Mr. Jiang has extensive experience in corporate management and production skills. He successively served as the deputy manager of the department of production and operation, deputy head of Second Alumina Plant, deputy head and head of Alumina Plant, assistant to the general manager and head of Second Alumina Plant of Chalco Shandong, the standing member of the Party Committee of Shandong Aluminum Co., Ltd and deputy general manager of Chalco Shandong, the deputy secretary of the Party Committee of Shandong Aluminum Co., Ltd and the director and general manager of Chalco Shandong and director and the general manager of Chalco Shandong, the secretary of the Party Committee and executive director of Zhongzhou Aluminum, and the executive director of Zhongzhou Aluminum Plant.

Non-Executive Directors

Zhang Jilong, aged 58, is currently a non-executive director of the Company. Mr. Zhang graduated from Central South University with a doctor’s degree in engineering majoring in mining engineering, and is an excellent senior engineer. Mr. Zhang has extensive experience in scientific and technological research and development, and corporate management, etc. He successively served as the deputy head of breakthrough and development division of the science and technology development of China Nonferrous Metals Industry Corporation, the deputy head and head of science and technology division of department of planning and development of the State Bureau of Nonferrous Metal Industry, the head of science and technology division of the department of production skills of Chinalco, the deputy general manager of science and technology research and product development center and the manager of comprehensive department of the Company, the deputy head and head of science and technology department (military office) of Chinalco and the deputy manager of science and technology research center and product development center of the Company, the head of the department of science and technology management of Chinalco and the deputy dean of Chinalco Research Institute of Science and Technology, the general manager of science and technology management division of the Company, the general manager, secretary of the Party Committee and chairman of Xinan Aluminum (Group) Co., Ltd., the general manager of aluminum processing department of Chinalco, the director of Chinalco Ruimin Co., Ltd. and the general manager of aluminum processing division of Chinalco.

Wang Jun, aged 56, is currently a non-executive director of the Company. Graduated from Huazhong Institute of Engineering with a degree of industrial and civil construction, he is an engineer. He has extensive experience in financial and corporate management. Mr. Wang formerly served as the engineer in the engineering department of Babcock & Wilcox Beijing Company Ltd., deputy manager of the real estate development department of China Yanxing Company, senior deputy manager of equity management department, and senior manager of the business management department, senior manager, deputy general manager, general manager of custody and settlement department in China Cinda Asset Management Co., Ltd. and general manager of the equity management department of China Cinda Asset Management Co. Ltd. Mr. Wang currently serves as the business director of China Cinda Asset Management Co., Ltd. and also serves as a director of China Nuclear Engineering Corporation Limited.

Independent Non-Executive Directors

Qiu Guanzhou, aged 73, is currently an independent non-executive director of the Company. Mr. Qiu is an academician of Chinese Academy of Engineering, currently serving as a professor and tutor of doctoral students in Central South University. Mr. Qiu graduated from Central South University of Technology majoring in mineral processing engineering with a doctoral degree and is a famous mineral engineer. Mr. Qiu previously served as the vice-principal of Central South University of Technology (Central South University). Mr. Qiu has dedicated himself to the research of processing and utilizing low-grade, complex and refractory metallic mineral resources in China for a long time, and has obtained significant achievements in flotation separation of fine and sulphide minerals and direct reduction of iron ore, especially the outstanding contributions made in the aspect of biohydrometallurgy in low-grade sulphide ore. He was awarded as a national science and technology expert with outstanding contributions. Mr. Qiu has published many science papers and treatises, and obtained several national technological inventions and scientific and technological advancement awards. He served as the academic leader of the innovative research group under the National Natural Science Foundation of China in 2003. In 2004 and 2009, he consecutively served as the chief scientist for biometallurgy project of the National 973 Project twice. He was the president of the 19th International Biohydrometallurgy Symposium in 2011 and was elected as the vice president of International Biohydrometallurgy Society. Currently, Mr. Qiu also serves as the independent director of Lomon Billions Group Co., Ltd., the independent director of Guangdong Hongda Blasting Co., Ltd. and the executive director and manager of Hunan Bio Lab Technology Co., Ltd.

98

Yu Jinsong, aged 68, is currently an independent non-executive director of the Company. Mr. Yu is a doctor of law, currently a professor and tutor of doctoral students at Renmin University of China, and the head of the Institute of International Law (academic part-time job). Mr. Yu focuses on research about international economic law, particularly international investment law and transnational corporation law. He has published dozens of academic papers in multiple major academic journals and several academic works, and obtained multiple national and provincial awards for achievements in teaching and research. Mr. Yu has successively served as an arbitrator of China International Economic and Trade Arbitration Commission, a mediator and arbitrator (2004-2016) of the International Centre for Settlement of Investment Disputes of the World Bank, a vice chairman of the Chinese Society of International Law and a counselor of the International Law Advisory Committee of Ministry of Foreign Affairs. Currently, Mr. Yu also serves as an independent director of Zhongshan Broad-Ocean Motor Co., Ltd. and Zhejiang Zhongxin Fluoride Chemicals Co., Ltd.

Chan Yuen Sau Kelly, aged 51, is currently an independent non-executive director of the Company and a Justice of the Peace. Ms. Chan is a fellow of the Association of Chartered Certified Accountants (ACCA), the Hong Kong Institute of Certified Public Accountants (HKICPA), and the Hong Kong Institute of Directors (HKIoD). She is also a Bachelor of Accounting (Honours) of City University of Hong Kong. Ms. Chan has nearly three decades of working experience in finance and accounting and practical experience in fields such as corporate governance, risk management, business process reorganization, auditing, etc. Ms. Chan has successively served as a manager of auditing and management consultancy at Deloitte & Touche, the financial and administrative head in Hong Kong and Macau of Heineken, and the chief financial officer of Moet Hennessy Diageo. Ms. Chan currently serves as the managing director of Peony Consulting Services Company, the Program Director of Asia Chief Financial Officer Council of The Conference Board, the immediate past president of Association of Women Accountants (Hong Kong), the chairperson of TR at CUHK Ltd. and Employees’ Compensation Insurance Levies Management Board, a member of the Air Transport Licensing Authority, a member of the board of The Chinese University of Hong Kong, a member of the Education Commission, a member of the Harbourfront Commission and a member of the Quality Education Fund Steering Committee. Currently, Ms. Chan also serves as an independent non-executive director of Morimatsu International Holdings Company Limited.

Supervisors

Our supervisors are elected to represent our employees and shareholders and serve a term of three years or until the election of their respective successors, whichever is earlier. Our supervisors currently comprise Mr. Ye Guohua, Ms. Shan Shulan, Ms. Lin Ni, Mr. Yue Xuguang and Ms. Xu Shuxiang.

The table and discussion below set forth certain information concerning our supervisors who served on our supervisory committee during the year ended December 31, 2021, and up to the date of this annual report.

Name(1)	Age	Positions with the Company
Ye Guohua	53	Chairman of Supervisory Committee
Shan Shulan	50	Supervisor
Yue Xuguang	58	Supervisor
Lin Ni(2)	48	Supervisor
Guan Xiaoguang(3)	51	Supervisor (resigned)
Xu Shuxiang(4)	44	Supervisor

(1) As of the date of this annual report, we had five supervisors.

(2) On June 29, 2021, Ms. Lin Ni was elected as a shareholder representative supervisor of the Company at the 2020 annual general meeting of the Company.

(3) On March 18, 2022, Mr. Guan Xiaoguang resigned as a supervisor of the Company.

(4) On March 18, 2022, Ms. Xu Shuxiang was elected as an employee representative supervisor of the Company at the seventh session of the Supervisory Committee of the Company.

99

Ye Guohua, aged 53, is currently the chairman of the Supervisory Committee of the Company and served as the chief accountant and a member of the Communist Party Committee of Chinalco. Mr. Ye graduated from Shanghai University of Finance and Economics, majoring in accounting, with a bachelor’s degree in economics and is a senior accountant. Mr. Ye has extensive experience in financial management and accounting. He has successively served as the director of accounting department of the refinery of Shanghai Gaoqiao Petrochemical Company, the deputy chief accountant and head of accounting department of Sinopec Shanghai Gaoqiao Branch, the chief financial officer, executive director, a member of the Party Committee, deputy general manager of Sinopec Shanghai Petrochemical Company Limited, the director of accounting department of China Petroleum & Chemical Group Corporation, the chairman of Century Bright International Investment Company, the chairman of Sinopec Insurance Limited, the vice chairman of Taiping & Sinopec Financial Leasing Co., Ltd., a director of Sinopec Finance Co., Ltd., and a director of Sinopec Oilfield Service Corporation. Mr. Ye currently is also the chairman of Chinalco High-end Manufacturing Co., Ltd.

Shan Shulan, aged 50, is currently a supervisor of the Company and serves as the general manager of the Finance Property Department of Chinalco. Ms. Shan graduated from Beijing Institute of Light Industry, majoring in industrial corporate management, with a bachelor degree in engineering. She is a certified public accountant and statistician. Ms. Shan has extensive experience in accounting, finance management and other fields. She has successively served as an economic analyst at the economic research office of Beijing Glass Instruments Plant, the financial manager of Beijing CEMFIL Glass Fiber Co. Ltd. under Saint-Gobain in China, the financial manager for Beijing region of Carrefour (China) Co., Ltd., the financial manager for China region of Baker Hughes Centrilift, the financial manager for China region of Microsoft Research Asia (China), and the business director and deputy head of budget division and the head of budget assessment division of the finance department of Chinalco. Ms. Shan also currently serves as the director of Chinalco Capital Holdings Co., Ltd., the director of Chinalco Finance Co., Ltd. and the supervisor of Chinalco Research Institute of Science and Technology Co., Ltd.

Yue Xuguang, aged 58, is currently a supervisor of the Company. Mr. Yue graduated from Kunming Institute of Technology with a bachelor degree in engineering majoring in mineral census and exploration. He is a senior economist. He has rich experience in human resources management. Mr. Yue has successively served as the deputy head of the coordination division of the labor insurance bureau and the head of the labor management division of the personnel and education department of China Nonferrous Metals Industry Corporation, the deputy head of the general division of the personnel office of the State Bureau of Nonferrous Metal Industry (enjoying the head-level treatment), the deputy head of the personnel department of Chinalco, the head of the labor division of the personnel department of Chinalco, the manager of the remuneration management division of the human resources department of the Company, the head of the general division of the general office of Chinalco, the manager of the general division of the capital operating department of the Company, the deputy general manager and general manager of the human resources department of the Company, the deputy head (departmental head level) of the human resources department (veteran cadre work department) of Chinalco, the secretary of the party committee and deputy general manager of Chinalco Asset Operation and Management Co., Ltd. and the general manager of the human resources department of the Company.

Lin Ni, aged 48, is currently a supervisor of the Company and also serves as the deputy general manager (in charge) of the audit department of Chinalco. Ms. Lin graduated from Shandong Economics University with a bachelor degree in economics majoring in international accounting. She is a senior auditor. Ms. Lin has extensive experience in the fields of auditing and accounting. She has successively served as the head of the 2nd division and the 1st division of the audit department of Chinalco, the deputy head of the audit department of Chinalco and the deputy general manager of the audit department of Chinalco. Ms. Lin currently also serves as the supervisor of Chinalco Asset Operation and Management Co., Ltd.

Xu Shuxiang, aged 44, is currently a supervisor of the Company and a senior business manager of the operation optimization division of the production quality department of the Company. Ms. Xu graduated from Northeastern University with a master’s degree in engineering majoring in non-ferrous metallurgy and has extensive experience in metal smelting, energy conservation management, safety and environmental protection management, etc. Ms. Xu has successively served as the business head of the assets operation department of Chinalco, the business head of the general division of the enterprise management department (safety and environmental protection department) of Chinalco, the business head of the general division of the safety and environmental protection health department of Chinalco, the business manager of the general division of the safety and environmental protection health department of the Company, the senior business manager of the energy conservation management division of the safety and environmental protection health department of Chinalco, the deputy manager of the safety and environmental protection health division of the enterprise management department of the Company and the senior business manager of the general division of the enterprise management department of the Company.

100

Senior Management

The table and discussion below set forth certain information concerning other members of senior management during the year ended December 31, 2021, and up to the date of this annual report.

Name	Age	Positionse with the Company
Wu Maosen	58	Vice President
Ge Xiaolei (1)	56	Chief Financial Officer and Secretary to the Board

(1) On March 22, 2022, the appointment of Mr. Ge Xiaolei as the chief financial officer and the secretary to the Board was approved at the 26th meeting of the seventh session of the Board.

Wu Maosen, aged 58, is currently a vice president of the Company. Mr. Wu graduated from Dalian Railway College with a bachelor’s degree in engineering, majoring in welding technology and equipment. He is a senior engineer with excellent performance. Mr. Wu has extensive experience in corporate management. He has successively served as the deputy head of the alumina branch, the deputy head of the overhauling branch and the director of the transport department of Shanxi Aluminum Plant, the assistant to the general manager of our Shanxi branch, the deputy commander-in-chief of the engineering and construction command department of Chalco Shanxi, a deputy general manager of Shanxi Huaze, the deputy head and head of Shanxi Aluminum Plant, a director and a general manager and the secretary of the Party Committee of Qinghai Huanghe Hydropower Regeneration Aluminum Co., Ltd., the secretary of the Party Committee, an executive director and general manager of Chalco Asset Operation and Management Company and successively served as an executive director of Chalco Shanghai, an executive director and the general manager of Chalco Industrial Development Co., Ltd., the chairman of the board of Huaxi Aluminum, the chairman of the board and the general manager of Chalco Investment and Development Co., Ltd., the deputy team- leader of the team aiming at making up deficits and shaking off dilemma, transforming and upgrading of our Shanxi branch and Shanxi Aluminum Plant and the chairman and an executive director of the board of Chinalco Research Institute of Science and Technology Co., Ltd.

Ge Xiaolei, aged 56, is currently the chief financial officer and the secretary to the Board (company secretary) of the Company. Mr. Ge graduated from Nanjing University majoring in economic management, and subsequently obtained a master’s degree in business administration from the University of Texas in the United States. He is a senior economist. Mr. Ge has extensive experience in financial management and corporate management. He has successively served as the deputy head of the planning division and deputy head of the finance division of Zhongzhou Aluminum Plant, the deputy chief accountant and manager of the finance department of the Company’s Zhongzhou Branch, the chief financial officer of Qinghai Yellow River Hydropower Renewable Aluminum Co., Ltd., the deputy general manager of Chinalco Finance Co., Ltd. and the director and general manager of Chinalco Finance Lease Co., Ltd., the general manager of Chinalco Finance Co., Ltd., a director of Chinalco Finance Lease Co., Ltd. and a director of Agricultural Bank Huili Fund Management Co., Ltd., the secretary of the party committee and chairman of Chinalco Capital Holdings Co., Ltd., the chairman of Chinalco Finance Co., Ltd. and a director of Agricultural Bank Huili Fund Management Co., Ltd.

B.Compensation

Executive Compensation

Executive directors are entitled to a director’s fee, performance bonuses and welfare benefits provided under the relevant PRC laws and regulations. Non-executive directors are entitled only to a director’s fees. In 2021, the aggregate amount of cash compensation paid by us to our directors, supervisors and other members of senior management for services performed in connection with their respective capacities above was approximately RMB3.8 million, RMB1.7 million and RMB1.9 million, respectively. Our executive directors and supervisors who are employees also receive compensation in forms including allowances, subsidies and medical care, maternity, unemployment, occupational injury and other benefits. None of the service contracts of our directors provide benefits to our directors upon their termination.

101

Details of the emoluments paid to our directors and supervisors during the year ended December 31, 2021 are as follows:

Name of Directors and Supervisors	Fees	Salary	Bonus	Pension	Total
	RMB(ʼ000)	RMB(ʼ000)	RMB(ʼ000)	RMB(ʼ000)	RMB(ʼ000)
Directors
Executive Directors
Liu Jianping(1)	—	—	—	—	—
Zhu Runzhou	—	1,176	—	93	1,269
Ou Xiaowu(2)	—	973	—	93	1,066
Jiang Tao(3)	—	837	—	77	914
Non-Executive Directors
Zhang Jilong(4)	—	—	—	—	—
Ao Hong(5)	—	—	—	—	—
Wang Jun(6)	—	—	—	—	—
Independent Non-Executive Directors
Qiu Guanzhou(7)	98	—	—	—	98
Yu Jinsong(7)	98	—	—	—	98
Chan Yuen Sau Kelly(7)	98	—	—	—	98
Lie-A-Cheong Tai Chong, David(8)	95	—	—	—	95
Chen Lijie(8)	95	—	—	—	95
Hu Shihai(8)	95	—	—	—	95
Subtotal	579	2,986	—	263	3,828
Supervisors
Ye Guohua	—	—	—	—	—
Lin Ni(9)	—	—	—	—	—
Shan Shulan	—	—	—	—	—
Guan Xiaoguang(10)	—	770	—	93	863
Yue Xuguang	—	770	—	93	863
Subtotal	—	1,540	—	186	1,726
Total	579	4,526	—	449	5,554

(1) On June 29, 2021, Mr. Liu Jianping was elected as executive director of the seventh session of the Board at the 2020 annual general meeting of the Company. On the same day, Mr. Liu Jianping was elected as the chairman of the seventh session of the Board. Mr. Liu Jianping received emoluments from Chinalco.

(2) On June 29, 2021, Mr. Ou Xiaowu was elected as executive director of the seventh session of the Board at the 2020 annual general meeting of the Company.

(3) On June 29, 2021, Mr. Jiang Tao was elected as executive director of the seventh session of the Board at the 2020 annual general meeting of the Company. On August 24, 2021, the appointment of Mr. Jiang Tao as the vice president of the Company was approved at the 22nd meeting of the seventh session of the Board.

(4) On June 29, 2021, Mr. Zhang Jilong was elected as non-executive director of the seventh session of the Board at the 2020 annual general meeting of the Company. Mr. Zhang Jilong received emoluments from Chinalco.

(5) On June 7, 2021, Mr. Ao Hong proposed to resign as a non-executive director of the Company and from all other positions in each of the special committees under the Board, with effect upon the election of a new non-executive director at the 2020 annual general meeting of the Company on June 29, 2021. Mr. Ao Hong received emoluments from Chinalco.

(6) Mr. Wang Jun submitted a voluntary waiver of director’s remuneration to the Company, according to which Mr. Wang has voluntarily waived his remuneration for his service as a director of the Company since May 2020. Accordingly, Mr. Wang Jun did not receive remuneration from the Company in 2021.

(7) On June 29, 2021, Mr. Qiu Guanzhou, Mr. Yu Jinsong and Ms. Chan Yuen Sau Kelly were elected as independent non-executive directors of the seventh session of the Board at the 2020 annual general meeting of the Company.

(8) Ms. Chen Lijie, Mr. Hu Shihai and Mr. Lie-A-Cheong Tai Chong, David, reached the maximum term for consecutive appointment and no longer served as the independent nonexecutive directors and all other positions in each of the special committees under the Board upon election of new independent non-executive directors at the 2020 annual general meeting of the Company.

(9) On June 29, 2021, Ms. Lin Ni was elected as a shareholder representative supervisor of the Company at the 2020 annual general meeting of the Company.

102

(10)  On March 18, 2022, Mr. Guan Xiaoguang resigned as a supervisor of the Company.

(11)  On March 18, 2022, Ms. Xu Shuxiang was elected as an employee representative supervisor of the Company at the seventh session of the Supervisory Committee of the Company.

(12)  The amounts of emoluments paid to directors and supervisors disclosed in this table include amounts paid for their services in all capacities to the Company and its subsidiaries.

Senior Management Incentive System

In order to better provide incentives for our senior management and improve our shareholders’ value, we adopted a special compensation system for our senior management designed to align our senior management’s financial interests with our operating performance. Under this system, the senior management’s compensation consists of the following components:

● basic salaries;

● performance bonuses;

● welfare benefits; and

● incentive bonuses.

C.Board Practices

Board of Directors

All of our directors and supervisors serve a term of three years or until such later date as their successors are elected or appointed. Directors and supervisors may serve consecutive terms. Each of our directors and supervisors has entered into a service contract with us, none of which can be terminated by us within one year without payment of compensation (other than statutory compensation). There were no arrangements providing for benefits upon termination of directors, supervisors or other senior management personnel. Two of the supervisors are employee representatives appointed by our employees and the rest are appointed by the shareholders. The following table sets forth the number of years our current directors and supervisors have held their positions and the expiration of their current term:

Name	Held Position Since	Expiration of Term
Liu Jianping	June 29, 2021	June 30, 2022
Zhu Runzhou	December 11, 2018	June 30, 2022
Jiang Tao	June 29, 2021	June 30, 2022
Ou Xiaowu	June 29, 2021	June 30, 2022
Zhang Jilong	June 29, 2021	June 30, 2022
Wang Jun	June 27, 2013	June 30, 2022
Qiu Guanzhou	June 29, 2021	June 30, 2022
Yu Jinsong	June 29, 2021	June 30, 2022
Chan Yuen Sau Kelly	June 29, 2021	June 30, 2022
Ye Guohua	December 11, 2018	June 30, 2022
Lin Ni	December 21, 2021	June 30, 2022
Shan Shulan	February 20, 2019	June 30, 2022
Yue Xuguang	December 10, 2019	June 30, 2022
Xu Shuxiang	March 18, 2022	June 30, 2022

Audit Committee

As at the date of this annual report, our audit committee consists of three independent non-executive directors, namely, Mr. Qiu Guanzhou, Mr. Yu Jinsong and Ms. Chan Yuen Sau Kelly. Ms. Chan Yuen Sau Kelly is the chairman of the audit committee.

103

The primary duties of our audit committee as set out in the committee charter include proposing to engage or replace the auditor, supervising our internal audit and its implementation, being responsible for the communication between the internal audit and external audit, auditing our financial information and its disclosure, reviewing the Company’s financial control, internal control and risk management systems, studying on our other relevant professional matters, and putting forward suggestions for the decisions of the Board for reference.

Remuneration Committee

As at the date of this annual report, our remuneration committee consists of one non-executive director, namely Mr. Zhang Jilong, and two independent non-executive directors, namely Mr. Qiu Guanzhou and Mr. Yu Jinsong. Mr. Qiu Guanzhou is the chairman of the remuneration committee. The primary duties of our remuneration committee as set out in the committee charter include: preparing the remuneration management scheme and remuneration proposal for directors, employee-representative supervisors and senior management, and providing suggestions to the Board; preparing measures on performance evaluation of senior management, performance assessment procedures and relevant rewards and punishments, and providing suggestions to the Board; monitoring the implementation of the remuneration system of our Company; reviewing senior management’s fulfilment of duties and conducting performance assessments; and other functions and authorities delegated by the Board. In 2021, the remuneration committee convened two meetings to consider and approve remuneration standards for 2021 for our directors, supervisors and other senior management members.

We follow our home country practice in relation to the composition of our remuneration committee in reliance on the exemption provided under NYSE Corporate Governance Rule 303A.00 available to foreign private issuers. Our home country practice does not require us to establish a remuneration committee which must be composed entirely of independent directors.

Nomination Committee

As at the date of this annual report, our nomination committee consists of two executive directors, namely Mr. Liu Jianping and Mr. Zhu Runzhou, and three independent non-executive directors, namely Mr. Qiu Guanzhou, Mr. Yu Jinsong and Ms. Chan Yuen Sau Kelly. Mr. Liu Jianping is the chairman of the nomination committee. The primary duties of our nomination committee as set out in the committee charter include: studying the selection standards and procedures for directors, senior management and members of special committees under the Board and providing suggestions to the Board; reviewing the qualification of candidates for directors, senior management and members of special committees under the Board and providing advice on inspection and appointment; assessing the independence of independent non-executive directors; and other functions and authorities delegated by the Board.

We follow our home country practice in relation to the composition of our nomination committee in reliance on the exemption provided under NYSE Corporate Governance Rule 303A.00 available to foreign private issuers. Our home country practice does not require us to establish a nomination committee which must be composed entirely of independent directors.

Development and Planning Committee

As at the date of this annual report, our development and planning committee consists of two executive directors, namely Mr. Liu Jianping and Mr. Zhu Runzhou, one non-executive director, namely Mr. Zhang Jilong, and two independent non-executive directors, namely Mr. Qiu Guanzhou and Mr. Yu Jinsong. Mr. Liu Jianping is the chairman of our development and planning committee. In accordance with the committee charter, the committee reviews and assesses our strategic plans for long-term development, fiscal budgeting, investment, business operations and investments returns.

Occupational Health and Safety and Environmental Committee

As at the date of this annual report, our occupational health and safety and environmental committee consists of three executive directors, namely Mr. Zhu Runzhou, Mr. Ou Xiaowu and Mr. Jiang Tao. Mr. Zhu Runzhou is the chairman of our occupational health and safety and environmental committee. This committee considers our annual planning on health, environmental protection and safety, supervises our implementation of the planning on health, environmental protection and safety initiatives, makes inquiries into serious incidents and inspects and supervises the handling of such incidents and makes recommendations to the Board on major decisions on health, environmental protection and safety.

104

Supervisory Committee

As at the date of this annual report, our supervisory committee consists of five supervisors, namely Mr. Ye Guohua, Ms. Lin Ni and Ms. Shan Shulan as our shareholder representative supervisors and Mr. Yue Xuguang and Ms. Xu Shuxiang as our employee representative supervisors.

Mr. Ye Guohua is the chairman of our supervisory committee. The term of all members of the supervisory committee will expire upon the election of the eighth session of the supervisory committee at the general meeting and employees’ representatives meeting of the Company by the end of June 2022. The primary duties of our supervisory committee include: inspecting implementation of resolutions of the general meetings; inspecting legal compliance of our operations; inspecting our financial activities; inspecting the utilization of proceeds raised by us; inspecting the acquisitions and disposals of our assets; inspecting our connected transactions; and reviewing self-assessment report on internal control.

D.Employees

As of December 31, 2019, 2020 and 2021, we had 65,507, 63,007 and 60,056 employees, respectively. The number of our employees decreased from 2020 to 2021, which was mainly due to retirement of employees and termination of employment contracts through negotiation. The table below sets forth the number of our employees by function and location as of the periods indicated:

	As of December 31,
	2019		2020		2021
Function		(%)		(%)		(%)
Alumina production	28,437	43.41	24,485	38.86	23,338	38.86
Primary aluminum production	22,189	33.87	22,612	35.89	21,553	35.89
Mining operation	3,996	6.10	4,721	7.49	4,500	7.49
Research and development	1,101	1.68	783	1.24	746	1.24
Sales and marketing	819	1.25	643	1.02	613	1.02
Energy	6,017	9.19	6,833	10.84	6,513	10.84
Management and others(1)	2,948	4.50	2,930	4.65	2,793	4.65
Total	65,507	100.0	63,007	100.0	60,056	100.0

(1) Excluding our management personnel for alumina production, and primary aluminum production.

105

Location	Employees	% of Total
Shandong	5,276	8.79
Chalco Shandong	5,093	8.48
Shandong Huayu	183	0.30
Henan	9,459	15.75
Chalco Mining	5,061	8.43
Zhongzhou Aluminum	3,779	6.29
Zhengzhou Institute	619	1.03
Guizhou	6,227	10.36
Guizhou Huajin	2,560	4.26
Guizhou branch	2,055	3.42
Zunyi Aluminum	811	1.35
Guizhou Huaren	201	1.33
Guangxi	3,157	5.26
Guangxi branch	2,530	4.21
Guangxi Huasheng	627	1.04
Shanxi	10,828	18.02
Shanxi branch	1,912	3.18
Shanxi Huasheng	651	1.08
Shanxi New Material	5,773	9.61
Shanxi Zhongrun	887	1.48
Shanxi Huaxing	1,100	1.83
Xinghua Technology	505	0.84
Gansu	5,226	8.70
Lanzhou Aluminum	2,550	4.25
Gansu Hualu	965	1.61
Liancheng branch	1,711	2.85
Liaoning	1,203	2.00
Fushun Aluminum	1,203	2.00
Qinghai	2,842	4.73
Qinghai branch	2,842	4.73
Chongqing	37	0.06
Chongqing branch	37	0.06
Inner Mongolia	5,316	8.85
Baotou Aluminum	5,316	8.85
Ningxia	6,333	10.55
Ningxia Energy	6,333	10.55
Shanghai	304	0.51
Chalco Trading Group	304	0.51
Beijing	3,032	5.05
Chalco Materials	115	0.19
Chalco Energy	65	0.11
Chalco Logistics	2,852	4.75
Overseas	620	1.03
Chalco Guinea Company S.A.	620	1.03
Others	18	0.03
Chalco Hong Kong	18	0.03
Headquarters	178	0.30
Total	60,056	100.00

We have workers’ unions at the plant level that protect employees’ rights and welfare benefits, organize educational programs, encourage employee participation in management decisions and mediate disputes between individual employees and us. All employees are union members. We have not experienced any strikes or other labor disturbances that have interfered with our operations and we believe that we maintain good relationships with our employees.

The remuneration package of our employees includes salaries, bonuses, subsidies, allowances and medical care, housing subsidies, maternity, unemployment, occupational injury, retirement pension and other benefits.

106

In accordance with applicable PRC regulations, we participate in pension contribution plans organized by provincial and municipal governments, under which each of our plants is required to contribute an amount equal to a specified percentage of its employees’ salaries, bonuses and various allowances. As the relevant PRC authorities adjusted the social insurance rate, the amount of contribution as a percentage of the employees’ salary has been adjusted to approximately 16% from approximately 20% since May 1, 2019. We have made all required pension contributions up to December 31, 2021. Retirees who retired prior to the date of the reorganization have their pensions paid out of the pension plans established by the PRC government. We provide to our employees various social welfare benefits through various institutions owned by Chinalco and its other affiliates or through third parties.

E.Share Ownership

As of the date of this annual report, other than as listed in the following table, none of our directors, supervisors or senior management own any interest in shares of our Company.

Name	Position	Share class	Number of shares	% of respective share class
Jiang Tao	Executive Director and Vice President	A Share	4,000*	<0.1%

* Directly held by Ms. Shi Biqiong, Mr. Jiang Tao’s spouse.

On December 21, 2021, our Board reviewed and approved the relevant proposals on the Company’s restricted share incentive scheme in 2021, and proposed to grant not more than 141 million restricted A shares to not more than 1,192 employees comprising directors, senior management, middle level management and core technical (business) backbones of the Company, including the grant of restricted A shares to connected persons under the Hong Kong Listing Rules. The aforesaid share incentive scheme is pending submission at the 2022 first extraordinary general meeting, 2022 first class meeting of A shareholders and 2022 first class meeting of H shareholders to be convened by the Company on April 26, 2022 for consideration and approval.

107

Item 7.Major Shareholders and Related Party Transactions

A.Major Shareholders

We are a joint stock limited company organized under the laws of the PRC. Our parent company, Chinalco, a state-owned enterprise, beneficially owns 32.16% of our outstanding ordinary Shares directly and indirectly through its controlled entities as of March 31, 2022. Chinalco holds a significant portion of our domestic shares in the form of state legal person shares, which do not have voting rights different from our other shares. Chinalco has substantial influence over our management, policies and corporate actions and can exercise all rights as our controlling shareholder subject to the relevant laws, rules and regulations. As of March 31, 2022, approximately 67.84% of our total outstanding ordinary Shares are held by public shareholders, of which 45.72% and 22.12% are owned by holders of A Shares and H Shares, respectively. The following table sets forth information regarding ownership of our issued and outstanding capital stock as of March 31, 2022. The table includes all persons who are known by us to own, either as beneficial owners or holders of record, 5% or more of any class of shares:

	March 31, 2022(2)
			% of	% of issued
	Number of		respective	total share
Holders of A Shares and H Shares(1)	shares		share class	capital
Chinalco(3)
A Shares	5,295,895,019 (L)	(4)​	40.49 (L)	31.11 (L)
H Shares	178,590,000 (L)		4.53 (L)	1.05 (L)
UBS Group AG (5)
H Shares	308,462,487 (L)		7.82 (L)	1.81 (L)
	194,359,064 (S)	(6)​	4.93 (S)	1.14 (S)
BlackRock, Inc.(8)
H Shares
	287,133,951 (L)		7.28 (L)	1.69 (L)
	8,040,000 (S)		0.20 (S)	0.05 (S)
Citigroup Inc. (9)
H Shares	217,774,017 (L)		5.52 (L)	1.28 (L)
	4,880,973 (S)		0.12 (S)	0.03 (S)
	103,683,057 (P)	(7)​	2.62 (P)	0.06 (P)
Brown Brothers Harriman & Co.
H Shares	198,003,860 (L)		5.02 (L)	1.16 (L)
	198,003,860 (P)		5.02 (P)	1.16 (P)

(1) Information disclosed hereby is based on the information available on the website of the Hong Kong Stock Exchange at www.hkexnews.hk.

(2) As at March 31, 2022, the total number of our A Shares was 13,078,706,983, the total number of our H Shares was 3,943,965,968, and the number of our total issued shares was 17,022,672,951 shares.

(3) Including 5,050,376,970 A Shares directly held by Chinalco, an aggregate interest of 245,518,049 A Shares directly held by various controlled subsidiaries of Chinalco, comprising 238,377,795 A Shares held by Baotou Aluminum (Group) Co., Ltd. and 7,140,254 A Shares held by Chalco Shanxi Aluminum Co., Ltd. and an interest of 178,590,000 H Shares directly held by Aluminum Corporation of China Overseas Holdings Limited, a subsidiary of Chinalco.

(4) The letter “L” denotes a long position.

(5) These interests were held directly by various corporations controlled by UBS Group AG. Among the aggregate interests in the long position in H shares, 227,419,502 H shares were held as derivatives. Among the aggregate interests in the short position in H shares, 132,126,723‬ H shares were held as derivatives.

(6) The letter “S” denotes a short position.

(7) The letter “P” denotes a lending pool.

108

(8) These interests were held directly by various corporations controlled by BlackRock, Inc. Among the aggregate interests in the long position in H shares, 22,000 H shares were held as derivatives. Among the aggregate interests in the short position in H shares, 7,962,000 H shares were held as derivatives.

(9) These interests were held directly by various corporations controlled by Citigroup Inc. Among the aggregate interests in the long position in H shares, 7,845,143 H shares were held as derivatives. Among the aggregate interests in the short position in H shares, 2,807,810 H shares were held as derivatives.

We are not aware of any arrangement that may on a subsequent date result in a change of control of Chalco. We have completed the Asset Restructuring through capital contributions by several investors to our subsidiaries and subsequent issuance of additional A Shares to these investors to purchase their entire stake in these subsidiaries. On February 25, 2019, we issued to the investors approximately 2.1 billion A Shares in aggregate, representing approximately 12.45% of the enlarged total issued share capital of the Company. See “Item 4. Information on the Company - A. History and Development of the Company - Subscription of Equity Interest of Certain Subsidiaries and Subsequent Issuance of Additional A Shares” for detailed information of the Asset Restructuring. For the period from June 25, 2018 to June 24, 2019, Chinalco increased its shareholding in the Company by 160,512,964 A shares and 115,276,000 H shares on a cumulative basis, representing approximately 0.94% and 0.68% of our total issued share capital as of June 24, 2019, respectively. See “Item 4. Information on the Company - A. History and Development of the Company - Controlling Shareholder’s Shareholding Increase in the Company” for detailed information of the shareholding increase. For the period from May 22, 2020 to May 29, 2020, Chinalco increased its shareholding in the Company by 16,314,000 H shares on a cumulative basis through its subsidiary, representing approximately 0.10% of our total issued share capital as of December 31, 2020.

As of March 31, 2022, there were 45 registered holders of ADRs evidencing 5,439,770 of our ADSs.

As an owner of at least 30% of our issued and outstanding shares, the parent company is deemed a controlling shareholder and therefore may not exercise its voting rights with respect to various matters related to our shares in a manner prejudicial to the interests of our other shareholders. See “Item 10. Additional Information - B. Memorandum and Articles of Association.” In accordance with our Articles of Association, each share of our capital stock has one vote and the shares of the same class have the same rights. Other than the foregoing restrictions, the voting rights of our major holders of domestic and H Shares are identical to those of any other holders of the same class of shares. Holders of domestic shares and H Shares are deemed to be shareholders of different classes for some matters, which may affect their respective interests. Other than the foregoing, holders of H Shares and domestic shares are entitled to the same voting rights.

B.Related Party Transactions

Connected Transactions under Hong Kong Listing Rules

Under the Listing Rules, transactions between connected persons and us, or connected transactions, generally must be reported to the Hong Kong Stock Exchange, announced to the public and/or approved by shareholders unless the foregoing requirements are waived by the Hong Kong Stock Exchange or exempted under the Listing Rules. Each year our independent non-executive directors must review our non-exempt continuing transactions and confirm that these transactions have been entered into:

(i) in the ordinary and usual course of our business;

(ii) with the terms of the transaction being fair and reasonable as far as our shareholders are concerned;

(iii) either on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favorable to us than terms available to or from (as appropriate) independent third parties; and

(iv) in accordance with the relevant agreement governing them on terms that are fair and reasonable and in the interests of our shareholders as a whole.

Although the definition of connected transactions is not synonymous with the definition of related party transactions, the concepts are sufficiently similar that the description of our connected transactions would satisfy disclosure requirements under U.S. securities laws.

109

The following table sets forth the details of our major connected transactions for the year ended December 31, 2021:

Agreement	Nature	Term/ Date of the Agreement	Transaction Amount in 2021	Cap for 2021
			(RMB in millions)	(RMB in millions)
Continuing Connected Transactions
Comprehensive Social and Logistics Services Agreement (Counterparty: Chinalco)	Chinalco provides us with a broad range of social and logistics services including education and schooling, public transportation and property management.	The original agreement was entered into on November 5, 2001, and expired on December 31, 2012. Pursuant to the supplementary agreement entered into in 2012, the term was renewed and expired on December 31, 2015. Pursuant to the supplementary agreement entered into in 2015, the term was renewed for three years from January 1, 2016 to December 31, 2018. Pursuant to the supplementary agreement entered into in 2018, the term was renewed for three years from January 1, 2019 to December 31, 2021. Pursuant to the supplementary agreement entered into in 2021, the term was renewed for three years from January 1, 2022 to December 31, 2024.	481	Annual cap: 500

110

Agreement	Nature	Term/ Date of the Agreement	Transaction Amount in 2021	Cap for 2021
			(RMB in millions)	(RMB in millions)
General Agreement on Mutual Provision of Production Supplies and Ancillary Services (Counterparty: Chinalco)	We purchase from Chinalco ancillary production supplies and services which include, among other things, various raw materials required in alumina and primary aluminum production, transportation and loading services and production supporting services.	The original agreement was entered into on November 5, 2001, and expired on December 31, 2012. Pursuant to the supplementary agreement entered into in 2012, the term was renewed and entered into on December 31, 2015. Pursuant to the supplementary agreement entered into in 2015, the term was renewed for three years from January 1, 2016 to December 31, 2018. Pursuant to the supplementary agreement entered into in 2018, the term was renewed for three years from January 1, 2019 to December 31, 2021. On June 3, 2019, we and Chinalco entered into a supplemental agreement to revise the scope of mutual supply of products and include the pricing principles and methods of payment for the additional products subject to mutual supply. Pursuant to the supplementary agreement entered into in 2021, the term was renewed for three years from January 1, 2022 to December 31, 2024.	6,578	Annual cap for expenditure transactions: 17,500
	We provide Chinalco with products including, among other things, aluminum and alumina products, supporting services and ancillary production services.		21,684	Annual cap for revenue transactions: 33,500

111

Agreement	Nature	Term/ Date of the Agreement	Transaction Amount in 2021	Cap for 2021
			(RMB in millions)	(RMB in millions)
Mineral Supply Agreement (Counterparty: Chinalco)	Chinalco provides us with bauxite and limestone from several mines that it operates. Chinalco must not provide bauxite and limestone to bauxite and limestone requirements.	The original agreement was entered into on November 5, 2001, and expired on December 31, 2012. Pursuant to the supplementary agreement entered into in 2012, the term was renewed and expired in December 31, 2015. Pursuant to the supplementary agreement entered into in 2015, the term was renewed for three years from January 1, 2016 to December 31, 2018. Pursuant to the supplementary agreement entered into in 2018, the term was renewed for three years from January 1, 2019 to December 31, 2021. Pursuant to the supplementary agreement entered into in 2021, the term was renewed for three years from January 1, 2022 to December 31, 2024.	87	Annual cap: 360

112

Agreement	Nature	Term/ Date of the Agreement	Transaction Amount in 2021	Cap for 2021
			(RMB in millions)	(RMB in millions)
Provision of Engineering, Construction and Supervisory Services Agreement (Counterparty: Chinalco)	Chinalco provides us with certain engineering, construction and supervisory services at the state guidance price and, where there is no state guidance price, at market price. Such services are mainly provided by subsidiaries of Chinalco including China Aluminum International Engineering Corporation Limited.	The original agreement was entered into on November 5, 2001, and expired on December 31, 2012. Pursuant to the supplementary agreement entered into in 2012, the term was renewed and expired on December 31, 2015. Pursuant to the supplementary agreement entered into in 2015, the term was renewed for three years from January 1, 2016 to December 31, 2018. Pursuant to the supplementary agreement entered into in 2018, the term was renewed for three years from January 1, 2019 to December 31, 2021. Pursuant to the supplementary agreement entered into in 2021, the term was renewed for three years from January 1, 2022 to December 31, 2024.	735	Annual cap: 8,300
Land Use Rights Leasing Agreement (Counterparty: Chinalco)	Chinalco leases 470 parcels of land covering an aggregate area of approximately 61.2 million square meters and spanning across eight provinces in the PRC to us.	The original agreement was entered on November 5, 2001, for a term of 50 years, expiring on June 30, 2051.	417	Annual cap: 500
Fixed Assets Lease Framework Agreement (Counterparty: Chinalco)	We have agreed with Chinalco to provide leases to each other regarding buildings, constructions, machinery, apparatus, transportation facilities as well as equipment, appliance or tools and other fixed assets owned by either party in relation to production and operation.	The original agreement was entered into on April 28, 2015 and expired on December 31, 2018. Pursuant to the supplementary agreement entered into in 2018, the term was renewed for three years from January 1, 2019 to December 31, 2021. Pursuant to the supplementary agreement entered into in 2021, the term was renewed for three years from January 1, 2022 to December 31, 2024.	66	Annual cap for expenditure transactions: 200
			34	Annual cap for revenue transactions: 100

113

Agreement	Nature	Term/ Date of the Agreement	Transaction Amount in 2021	Cap for 2021
			(RMB in millions)	(RMB in millions)
Financial Services Agreement (Counterparty: Chinalco Finance)	Chinalco Finance has agreed with Chinalco to provide us with deposit services, credit services and miscellaneous financial services. We have the right to choose the financial institution for financial services and the financial institution for deposit services and loan services as well as the amounts of loans and deposits with reference to our own needs. Chinalco Finance undertakes that the terms for the provision of financial services to us at any time would be no less favorable than those of the same type of financial services provided by Chinalco Finance to Chinalco and other subsidiaries of Chinalco or those of the same type of financial services that may be provided to us by other financial institutions.	The original agreement expired on August 25, 2012, for a term of 1 year. Pursuant to the financial services agreement renewed on August 24, 2012, the term was extended and expired on August 25, 2015. Pursuant to the financial services agreement renewed on April 28, 2015, the term was renewed for a term of 3 years from August 26, 2015, and was amended and replaced as a whole by a new financial services agreement. A new financial services agreement was entered on October 26, 2017, for a term of 3 years, expired on October 25, 2020. Another new financial services agreement was entered into on August 27, 2020 for a term of 3 years from October 26, 2020.	7,823	Daily cap of deposit balance (including accrued interests): 12,000
			4,067	Daily cap of loan balance (including accrued interests): 15,000
			1	Other financial services (after October 26, 2020)(2): 40

114

Agreement	Nature	Term/ Date of the Agreement	Transaction Amount in 2021	Cap for 2021
			(RMB in millions)	(RMB in millions)
Finance Lease Agreement (Counterparty: Chinalco Finance Lease Co., Ltd.)	Chinalco Finance Lease Co., Ltd. provides finance lease services to us.	The original finance lease framework agreement was entered into between the Company and Chinalco Lease on August 27, 2015, with a term from August 27, 2015, to December 31, 2016. A new finance lease framework agreement was entered into between the Company and Chinalco Lease on November 13, 2015, with a term of 3 years from January 1, 2016, to December 31, 2018. Pursuant to the supplementary agreement entered into in 2018, the term was renewed for three years from January 1, 2019 to December 31, 2021. Pursuant to the supplementary agreement entered into in 2021, the term was renewed for three years from January 1, 2022 to December 31, 2024.	251	10,000
Factoring Cooperation Agreement (Counterparty: Chinalco Commercial Factoring Co., Ltd.)	Chinalco Commercial Factoring Co., Ltd. provides factoring financing services to the Company.	The original agreement was entered into on September 27, 2017, and expired on December 31, 2018. Pursuant to the supplementary agreement entered into in 2018, the term was renewed for three years from January 1, 2019 to December 31, 2021. Pursuant to the supplementary agreement entered into in 2021, the term was renewed for three years from January 1, 2022 to December 31, 2024.	-	3,000

115

Agreement	Nature	Term/ Date of the Agreement	Transaction Amount in 2021	Cap for 2021
			(RMB in millions)	(RMB in millions)
Labor and Engineering Services Framework Agreement (Counterparty: Chalco Steering Intelligent Technology Co., Ltd.)	Chalco Steering Intelligent Technology Co., Ltd. provides us with engineering services and labor services which include, among other things, equipment repairs, intelligent industrial design and maintenance.	Pursuant to the original agreement entered into on September 17, 2018, the term is from January 1, 2018 to December 31, 2020, for a term of three years. Pursuant to the new labor and engineering services framework entered into on October 27, 2020, the term was renewed for one year from January 1, 2021 to December 31, 2021.	12	Annual cap: 100
One-Off Connected Transactions(1)
Assets Transfer Agreements (Parties: Guangxi branch, Chalco Mining, Zunyi Aluminum and certain branches of China Rare Earth Holdings Limited)	Guangxi branch, Chalco Mining and Zunyi Aluminum entered into assets transfer agreements with the Guangxi Gallium branch, Henan Gallium branch and Zunyi Gallium branch of China Rare Earth Holdings Limited, respectively, pursuant to which Guangxi branch, Chalco Mining and Zunyi Aluminum agreed to acquire and the Guangxi Gallium branch, Henan Gallium branch and Zunyi Gallium branch of China Rare Earth Holdings Limited agreed to sell certain gallium assets.	August 24, 2021	395.6	N/A

116

Agreement	Nature	Term/ Date of the Agreement	Transaction Amount in 2021	Cap for 2021
			(RMB in millions)	(RMB in millions)
Establishment of Green Low-Carbon Fund (Parties: Chalco, ABC Capital Management Co., Ltd., China Aluminum Innovation and Development Equity Investment Fund Management (Beijing) Co., ABC Financial Assets Investment Co., Ltd., Chinalco, China Copper, Chinalco High-end Manufacturing Co., Ltd. and Chinalco Capital Holdings Co., Ltd.)	As considered and approved on December 21, 2021, the Company proposed to establish China Aluminum Suihe Nonferrous Metals Green Low-carbon Innovation and Development Fund (Beijing) Partnership (Limited Partnership (the “Fund”, tentative name, subject to the business registration) with ABC Capital Management Co., Ltd., China Aluminum Innovation and Development Equity Investment Fund Management (Beijing) Co., Ltd., ABC Financial Assets Investment Co., Ltd., Chinalco, China Copper, Chinalco High-end Manufacturing Co., Ltd., and Chinalco Capital Holdings Co., Ltd.	As of December 31, 2021, the parties have not entered into any specific agreement on the establishment of the Fund.	N/A	N/A
Proposed Adoption of A Share Incentive Scheme and Grant of Restricted A Shares (Parties: Chalco and 32 connected participants under the incentive scheme)	As considered and approved on December 21, 2021 and the adjustment made on March 4, 2022, the Company proposed to adopt the Restricted A Share Incentive Scheme which shall not exceed 141,000,000 Shares. Specifically, a total of 6,506,700 restricted shares would be granted to 32 connected participants and at most 124,493,300 restricted shares would be granted to at most 1,160 participants other than the connected persons of the Company for the first time of grant.	N/A	The price of the restricted shares under the first grant shall be RMB3.08 per A share.	N/A

(1) See “Item 4. Information on the Company - A. History and Development of the Company - Subscription for A Shares of Yunnan Aluminum” for detailed information of other one-off connected transactions.

117

All transactions with related parties are conducted at prices and terms mutually agreed by the parties involved, which are determined as follows:

(a) Sales of materials and finished goods comprised sales of alumina, primary aluminum, copper and scrap materials. Transactions entered into are covered by general agreements on mutual provision of production supplies and ancillary services. The pricing policy is summarized below:

(1) The price prescribed by the PRC government (“State-prescribed price”) is adopted;

(2) If there is no State-prescribed price, the price recommended in guidance issued by the PRC government (“State-guidance price”) is adopted;

(3) If there is neither a State-prescribed price nor a State-guidance price, then the market price (being price charged to and from independent third parties) is adopted; and

(4) If none of the above is available, then the adoption of a contractual price (being reasonable costs incurred in providing the relevant services plus not more than 5% of such costs is adopted).

(b) Sales of utility, including electricity, gas, heat and water, are provided at State-prescribed prices.

(c) Engineering, project construction and supervisory services were provided for our construction projects. The State-guidance price or prevailing market price (including the tender price where by way of tender) is adopted for pricing purposes.

(d) The pricing policy for purchases of key and auxiliary materials (including bauxite, limestone, carbon, cement and coal) is the same as that set out in (i) above.

(e) Social services and logistics services provided by Chinalco cover public security, fire services, education and training, school and hospital services, cultural and physical education, newspaper and magazines, broadcasting and printing as well as property management, environmental and hygiene, greenery, nurseries and kindergartens, sanatoriums, canteens and offices, public transport and retirement management and other services. Provisions of these services are covered by the Comprehensive Social and Logistics Services Agreement. The pricing policy is the same as that set out in (a) above.

(f) Pursuant to the Land Use Rights Lease Agreements entered into between Chinalco and us, operating leases for industrial or commercial land are charged at the market rent rate. We also entered into a building rental agreement with Chinalco and pay rent based on the market rate for its lease of buildings owned by Chinalco.

(g) Other services are environmental protection operation services. The prevailing market price is adopted for pricing purposes.

(h) See Note 36(a) to our audited consolidated financial statements for more detailed information about our significant related party transactions.

During the years ended December 31, 2019, 2020 and 2021, our significant transactions with other state-owned enterprises (excluding Chinalco and its subsidiaries) constituted a relatively large portion of our sales of goods and purchases of raw materials, electricity, property, plant and equipment and services. In addition, substantially all restricted cash, time deposits, cash and cash equivalents and borrowings as of December 31, 2019, 2020 and 2021 and the relevant interest earned or paid during the year are transacted with banks and other financial institutions which are controlled by the PRC government and commercial banks.

118

We provide the following additional information on significant related party transactions during the periods indicated based on Note 36 to our audited consolidated financial statements:

(a) Significant related party transactions

	For the year ended December 31
	2019	2020	2021
	(RMB in thousands)
Sales of goods and services rendered:
Sales of materials and finished goods to:
Chinalco and its subsidiaries	13,612,817	13,986,133	19,261,538
Associates of Chinalco	514,414	520,485	1,497,639
Joint ventures	5,676,548	6,694,824	9,071,474
Associates	3,812,565	9,232,432	672,403
Non-controlling shareholder of a subsidiary and its subsidiaries	—	42,298	—
	23,616,344	30,476,172	30,503,054
Provision of utility services to:
Chinalco and its subsidiaries	687,290	1,104,542	910,655
Associates of Chinalco	4,062	3,268	14,380
Joint Ventures	263,436	470,984	250,525
Associates	35,650	18,568	375
	990,438	1,597,362	1,175,935
Rental revenue of land use rights and buildings from:
Chinalco and its subsidiaries	52,571	39,284	34,221
Associates of Chinalco	65	237	237
Joint ventures	1,967	1,426	1,446
Associates	775	365	507
	55,378	41,312	36,411
Purchase of goods and services:
Purchases of engineering, construction and supervisory services from:
Chinalco and its subsidiaries	2,949,866	1,755,092	746,966
Associates of Chinalco	—	265	192
Joint ventures	69,332	—	251
Associates	218,616	12,233	12,413
	3,237,814	1,767,590	759,822
Purchases of primary and auxiliary materials, equipment and finished goods from:
Chinalco and its subsidiaries	8,161,223	6,176,513	5,526,965
Associates of Chinalco	18	2,586	37,187
Joint ventures	2,647,234	5,501,158	8,141,929
Associates	1,893,449	10,576,907	7,407,805
Non-controlling shareholder of a subsidiary and its subsidiaries	—	30,101	—
	12,701,924	22,287,265	21,113,886
Provision of social services and logistics services by: Chinalco and its subsidiaries	309,180	475,532	480,828
Purchases of utility services from: Chinalco and its subsidiaries	763,812	644,638	731,222
Associates of Chinalco	100,835	85,469	98,966
Joint Ventures	280,523	443,290	820,031
Associates	8,326	—	—
	1,153,496	1,173,397	1,650,219
Provision of other services by: A joint venture	272,220	373,655	270,972
Rental expense of land use rights and buildings from: Chinalco and its subsidiaries	499,191	661,888	734,097
New right-of-use assets in current period:
Additions
Chinalco and its subsidiaries	1,950	22,936	83,249
Contract modification
Chinalco and its subsidiaries	(91,351)	(43,395)	6,147,096
Other significant related party transactions:
Borrowing from a subsidiary of Chinalco	3,890,000	1,925,000	3,370,000
Repayment of borrowings from subsidiaries of Chinalco	4,677,000	1,676,000	5,318,000
Interest expense on borrowings, discounted notes and factoring arrangement from subsidiaries of Chinalco	141,991	87,985	61,878
Investment in subsidiaries of Chinalco:
Investment to Yunnan Aluminum	1,287,608	—	320,000
Investment to Yixin Aluminum	850,000	—	—
	2,137,608	—	320,000
Disposal of aluminum capacity quota to a subsidiary of Chinalco	800,000	—	—
Disposal of assets under a sale and leaseback contract to a subsidiary of Chinalco	500,000	—	—
Finance lease under a sale and leaseback contract to a subsidiary of Chinalco	558,924	—	—
Trade receivable factoring arrangement from a subsidiary of Chinalco	136,656	—	1,566,707
Interest income from cash and cash equivalents deposited	68,455	51,163	67,269
Discounted notes receivable to a subsidiary of Chinalco	679,517	36,750	128,000
Provision of financial guarantees to:
Joint ventures	12,450	—	—

119

(b) Balances with related parties

	December 31, 2020
	(Restated)	December 31, 2021
Cash and cash equivalents deposited with
A subsidiary of Chinalco	3,561,997	7,832,441
Trade and notes receivables
Chinalco and its subsidiaries	762,489	1,476,833
Associates of Chinalco	44,958	45,180
Joint ventures	761,392	628,231
Associates	2,287	1
Non-controlling shareholder of a subsidiary and its subsidiaries	46,450	24,465
	1,617,576	2,174,710
Provision for impairment of receivables	(103,592)	(80,102)
	1,513,984	2,094,608
Other current assets
Chinalco and its subsidiaries	818,318	325,247
Associates of Chinalco	21,753	21,820
Joint ventures	1,364,615	1,486,510
Associates	421,947	359,917
Non-controlling shareholder of a subsidiary and its subsidiaries	11,700	7,450
	2,638,333	2,200,944
Provision for impairment of other current assets	(496,703)	(1,310,379)
	2,141,630	890,565‬
Other non-current assets
Associates	111,845	111,845
Interest-bearing loans and borrowings
Subsidiaries of Chinalco (including lease liabilities)	8,887,422	13,028,565
Associates of Chinalco	—	2,245
	8,887,422	13,030,810
Trade and notes payables	437,732	301,386
Chinalco and its subsidiaries	561,508	229,994
Joint ventures	10,562	32,668
Associates	1,511	26,288
Associates of Chinalco	1,011,313	695,510
Other payables and accrued liabilities
Chinalco and its subsidiaries	2,193,344	1,054,724
Associates of Chinalco	1,019	42,659
Associates	28,424	19,926
Joint ventures	3,940	49,618
	2,226,727	1,166,927
Contract liabilities	17,460	150,730
Chinalco and its subsidiaries	13,453	27,190
Associates of Chinalco	79	139
Associates	519	535
Joint ventures	656	—
Non-controlling shareholder of a subsidiary and its subsidiaries	32,167	178,594

120

Guarantees

We did not provide any guarantees to our related parties to guarantee their loans during the period from January 1, 2021 to March 31, 2022. As of March 31, 2022, the outstanding balance of the loans we guaranteed was nil.

Our related parties also provided guarantees to us to guarantee our loans during the period from January 1, 2021 to March 31, 2022. The outstanding balance of the loans guaranteed by our related parties was RMB625 million as of March 31, 2022 and the largest amount outstanding of the loans guaranteed by our related parties during the period from January 1, 2021 to March 31, 2022 was RMB1,137.5 million. The interest rates on such loan range from 5.15% to 5.39% per annum.

Loans

We provided several entrusted loans to our related parties mainly for the purpose of supplementing working capital during the period from January 1, 2021 to March 31, 2022. The outstanding balance of such entrusted loans was mainly RMB629 million as of March 31, 2022 and the largest amount outstanding of the entrusted loans during the period from January 1, 2021 to March 31, 2022 was RMB675 million. The interest rates on such entrusted loans range from 4.3% to 10% per annum.

Our related party also provided several loans to us mainly for the purpose of supplementing working capital during the period from January 1, 2021 to March 31, 2022. The outstanding balance of such loans was RMB2.375 billion as of March 31, 2022 and the largest amount outstanding of the loans during the period from January 1, 2021 to March 31, 2022 was RMB2.38 billion. The interest rates on such loans range from 3.695% to 3.95% per annum.

C.Interests of Experts and Counsel

Not applicable.

Item 8.Financial Information

A.Consolidated Statements and Other Financial Information

We have appended our consolidated financial statements filed as part of this annual report on Form 20-F.

Legal Proceedings

We are not currently a party to any pending legal proceedings which are expected to have a significant effect on our financial position or results of operations, nor are we aware of any proceedings that are pending or threatened which may have a significant effect on our financial position or results of operations. We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.

Dividend Policy

Under the Company Law of the PRC and our Articles of Association, all of our shareholders have equal rights to dividends and distributions. The holders of the H Shares share proportionately on a per share basis in all dividends and other distributions declared by our Board. Any final dividend for a fiscal year is subject to shareholders’ approval. Cash dividends, if made, are declared in Renminbi with respect to H Shares on a per share basis and paid in HK dollars. The Bank of New York Mellon, as depositary, converts the HK dollar dividend payments and distributes them to holders of ADSs in U.S. dollars, less expenses of conversion.

We believe that our dividend policy strikes a balance between two important goals of providing our shareholders with a competitive return on investment and assuring sufficient reinvestment of profits to enable us to achieve our strategic objectives. The declaration of dividends is subject to the discretion of our Board, which takes into account the following factors:

● our financial results;

● capital requirements;

● contractual restrictions on the payment of dividends by us to our shareholders or by our subsidiaries to us;

121

● our shareholders’ interests;

● the effect on our creditworthiness;

● general business conditions; and

● other factors our Board may deem relevant.

Under our current profit distribution policy as set forth in our Articles of Association, the basic principles of such policy include (i) giving adequate consideration to return to investors and making dividends to shareholders in an applicable percentage of the distributable profits, (ii) maintaining the continuity and stability of our dividend policy, while taking into consideration of our interests in the long term and the overall interests of all shareholders, as well as our sustainable development; and (iii) giving priority to dividends in cash.

More specifically, under such policy, we may make dividends in cash, in shares or in a combination of both cash and shares. Subject to conditions, we may make interim profit distributions. Save in exceptional circumstances, if our profit for the year and our cumulative undistributed profit are positive, we may make dividends in cash and (i) the profit to be distributed in cash per annum will not be less than 10% of the distributable profit realized for that year, or (ii) the total profit to be distributed in cash in the past three years will not be less than 30% of the average annual distributable profit realized in the past three years.

Pursuant to PRC laws and regulations, dividends may only be distributed after allowance has been made for: (1) recovery of losses, if any and (2) allocations to the statutory surplus reserve. The allocations to the statutory surplus reserve is 10% of our net profit determined in accordance with PRC Generally Accepted Accounting Principles, unless the accumulated statutory surplus reserve exceeds 50% of our registered share capital, in which case the surplus reserve is discretional.

See “Item 10. Additional Information - E. Taxation” for a discussion of the tax consequences of receipt of dividends.

B.Significant Changes

Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements which is included in this annual report.

Item 9.The Offer and Listing

Our A Shares are traded under the stock code “601600” in the Shanghai Stock Exchange, as our principal host market, while our H Shares are traded under the stock code “02600” in the Hong Kong Stock Exchange as the principal market for our H Shares. The ADSs have been issued by The Bank of New York Mellon, acting as depositary bank, and are listed on the New York Stock Exchange under the symbol “ACH” with each ADS representing 25 H Shares.

Item 10.Additional Information

A.Share Capital

Not applicable.

B.Memorandum and Articles of Association

The following is a summary of certain provisions of our Articles of Association, as amended. Such summary does not purport to be complete. For further information, you and your advisors should refer to the text of our Articles of Association, as amended, and to the texts of applicable laws and regulations. A copy of our Articles of Association is filed as an exhibit to this annual report.

Our objects and purposes

Our Articles of Association as amended from time to time are filed with the Hong Kong Companies Registrar. Our business purpose and business scope can be found in Article 13 and Article 14, respectively, of our Articles of Association.

122

Directors’ power to vote on matters in which he or she has an interest

Under Article 174, a director shall not vote in any resolution of the board of directors for approving any contract, transaction or arrangement in which such director or any of his associates (as defined in the applicable rules governing the listing of securities amended from time to time) is materially interested, and shall not be counted into the quorum of the meeting either. Unless the interested director has disclosed his or her interest to the board of directors in accordance with Article 174 and the contract, transaction or arrangement has been approved by the board of directors at a meeting in which the interested director is not counted in the quorum and has refrained from voting, a contract, transaction or arrangement in which such director is materially interested is voidable at the instance of our Company except as against a bona fide party thereto acting without notice of the breach of duty by such director. According to Article 86(2), matters concerning the remuneration of directors shall be decided by the shareholders’ general meeting.

Borrowing powers

Subject to compliance with applicable laws and regulations of the PRC, we have the power to raise and borrow money which power includes (without limitation) the issuance of debentures and the charging or mortgaging of part or whole of our business or properties and other rights permitted. The Articles of Association do not contain any specific provision in respect of the manner in which borrowing powers may be exercised by the directors nor do they contain any specific provision in respect of the manner in which such powers may be varied, other than (a) provisions which give the directors the power to formulate proposals for the issuance of debentures by us; (b) Article 87(2), which provides that the issuance of bonds must be approved by the shareholders in a general meeting by way of a special resolution; and (c) Article 112(4), which provides that the directors have the power to formulate our annual final financial budgets and final accounts.

Age limit for retirement

There is no provision pertaining to the retirement of directors pursuant to an age limit requirement in our Articles of Association.

Directors’ qualifying shares

Under Article 107, the directors are not required to hold any qualifying shares.

Dividend rights

Article 55(1) provides that holders of our ordinary shares have the right to receive dividends and distribution of profits in other forms, in proportion to the number of shares held. Under Article 49, when we convene a shareholders’ general meeting, distribute dividends, liquidate or perform other activities that require the verification of equity rights, the Board or the general meeting convener must specify a date as the record date. The shareholders registered in the shareholder register at closing on the record date are our shareholders entitled to appropriate rights and interests. Article 207 provides that under the premise of obeying the laws of the PRC, we have the right to forfeit the unclaimed dividends, subject to the expiry of the applicable relevant limitation period.

Voting rights

Article 55(2) provides that holders of our ordinary shares have the right to lawfully request, convene, chair, attend in person or appoint a proxy to attend and vote at shareholders’ meetings in respect of the number of shares held. Each ordinary share is entitled to one vote on all matters submitted to a vote of our shareholders at all shareholders’ meetings, except for (i) the cumulative voting system under Article 110; and (ii) meetings of a special class of shareholders where only holders of shares of the affected class are entitled to vote on the basis of one vote per share of the affected class, but Article 98 provides that interested shareholders shall not vote at class shareholders’ meetings. Article 110 provides that in the case that our controlling shareholders’ shareholding percentage is more than 30%, the cumulative voting system may be implemented for the election of directors and supervisors at a shareholders’ general meeting.

A special resolution of the shareholders’ general meeting will be required for important matters specified in Article 87, such as the increase or reduction of the registered capital and issuance of any class of shares, amendments to our Articles of Association, and our division, merger, dissolution and liquidation, and a special resolution must be adopted by shareholders in attendance (including proxies) at the meeting with supermajority votes as set forth in Article 80. For other matters to be approved in a shareholders’ general meeting, an ordinary resolution as set forth in Article 80 will need to be adopted.

123

Rights to share profits

Article 61(7) provides that a plan for profit distribution and a plan for making up for losses formulated by the Board in accordance with Article 112(6) must be approved by way of the shareholders’ general meeting.

Rights to share surplus in the event of liquidation

Article 55(6) provides that the holders of ordinary shares have the right to participate in the distribution of our surplus assets in proportion to the number of shares held in the event of the termination or liquidation of us. Article 228 sets forth the order of priority of payments out of our properties in the event of liquidation.

Enforceability of Shareholders’ Rights

Our Articles of Association provide that, with certain limited exceptions, where disputes and claims which concern our affairs and are based on rights or obligations provided for in our Articles of Association, the Company Law of the PRC or other relevant laws arise between holders of H Shares and us, holders of A Shares, or our director, supervisor, general manager or other senior management staff, such disputes and claims must be submitted to arbitration. Chapter 23 of our Articles of Association sets forth further details of the dispute resolution procedure.

Redemption provisions; sinking fund provisions and liability to further capital calls

Article 30 provides that we may repurchase issued shares in compliance with the requirements provided in relevant PRC laws and regulations, regulatory requirements or the Articles of Association and with the approvals from the relevant governing authorities of PRC under the following circumstances: (1) reduction of our registered capital; (2) merger with another company which owns our shares; (3) use of shares for our employee shareholding scheme or as equity incentive; (4) shareholders disagreeing with our general meeting’s resolution on merger or division and requiring us to acquire the shares in their possession; (5) use of shares for conversion of corporate bonds convertible into our shares; (6) where it is necessary to safeguard our value and the rights and interests of our shareholders; and (7) other circumstances required by law and administrative regulations. Under Articles 32 and 33, share repurchases by agreements outside a stock exchange are generally subject to our shareholders’ approval. Under Article 33, share repurchases under the circumstances described in items (1), (2) and (3) above shall be resolved at the shareholders’ general meeting, while share repurchases under the circumstances described in item (5) and (6) above shall be subject to approval by more than two-thirds of directors present at the meeting of the Board.

No shares issued by us are redeemable, entitled to a sinking fund or subject to liability for further capital calls.

Actions necessary to change the rights of holders of our shares or holders of a class of shares

Under Article 87(5), revision of any rights of class shareholders, e.g., rights to dividends, share profits or surplus in the event of liquidation or voting rights, requires a special resolution of the shareholders’ general meeting. A special resolution must be adopted by shareholders in attendance (including proxies) at the meeting with supermajority votes as set forth in Article 80.

The rights attached to any class of shares may be varied or abrogated only with the sanction of a special resolution passed at the shareholders’ general meeting and by holders of shares of the affected class passed at a separate general meeting of the class convened in accordance with Articles 97 to 101, respectively. The circumstances which are deemed to be a variation or abrogation of the class rights, including alternation of the number of shares of the class, are set forth under Article 97. Except for the circumstances under Article 97(1), (9) and (10), shareholders of the affected class, whether or not otherwise having the right to vote at shareholders’ general meetings, have the right to vote at class meetings but interested shareholders (which is defined under Article 98) are not entitled to vote at class meetings.

Resolutions of a class meeting shall be passed by the required percentage of shares (as specified under Article 99) with voting rights held by the class shareholders who, according to Article 98, are entitled to vote at that class meeting. Written notice must be given to all shareholders who are registered as holders of that class in the register of shareholders 45 days (inclusive of date of meeting) before the date of the class meeting. Such notice must contain the matters to be considered at such meeting, the date and the place of meeting. Those shareholders of the class who intend to attend shall send the written reply to us 20 days before the class meeting according to Article 100.

124

The proceedings of class meetings shall be conducted as near as possible to those of shareholders’ general meetings. The provisions in the Articles of Association relating to the proceedings of shareholders’ general meetings shall apply to class meetings.

The special procedures for approval by a class of shareholders do not apply where we issue, upon approval by special resolution of shareholders in a general meeting, either separately or concurrently once every 12 months, domestic shares and H Shares not more than 20% of the outstanding shares of the respective class.

Provisions discriminating against any existing or prospective shareholder as a result of owning a substantial number of shares

Chinalco, as our controlling shareholder (which is defined under Article 59), shall not exercise its voting rights in a manner prejudicial to the interest of all or some part of the shareholders when making decisions:

● to relieve a director or supervisor of his duty to act honestly in our best interest;

● to approve the expropriation by a director or supervisor (for his own benefit or for the benefit of another) of our assets, in any manner, including but not limited to an opportunity beneficial to us; or

● to approve the expropriation by a director or supervisor (for his own benefit or for the benefit of another) the individual rights of other shareholders, including but not limited to rights to distributions and voting rights save and except for our restructuring, submitted for approval by the shareholders in a general meeting in accordance with the Articles of Association.

Conditions governing the manner in which annual general meetings and extraordinary general meetings of shareholders are convoked

Shareholders’ general meetings can be held as annual general meetings or extraordinary general meetings. Annual general meetings are held once a year within six months after the end of the preceding fiscal year.

The Board is required to convene an extraordinary general meeting within two months of the occurrence of any of the following circumstances:

(1) the number of directors falls below the number required by the Company Law of the PRC or two-thirds of the number required by the Articles of Association;

(2) our unrecovered losses amount to one-third of the total amount of our paid-in-capital;

(3) upon the request of shareholder(s) holding 10% or more of our shares for more than ninety consecutive days (the number of shares held shall be the figures as of the date of the written request from the shareholder); and

(4) whenever the Board deems necessary or the supervisory committee proposes to convene the same.

We shall, within 45 days (inclusive of date of the meeting) before the date of the meeting, send written notices of the shareholders’ general meeting and inform all registered shareholders of the matters to be considered at the meeting and the date and venue of the meeting. Those shareholders who intend to attend the meeting shall send the written reply to us 20 days before the meeting. The meeting may be held if the number of voting shares represented by the shareholders intending to attend the meeting meets the threshold prescribed under Article 66. Otherwise, we shall, within five days, inform the shareholders once again of the matters to be considered at, and the date and place of, the meeting in the form of a public announcement, after which we may hold the meeting. A meeting and the resolutions adopted thereat shall not be invalidated due to the accidental omission to give notice of the meeting to, or the non-receipt of notice of the meeting by, a person entitled to receive notice. Motions put forward at the general meeting shall be specific and shall relate to the matters to be considered at a shareholders’ general meeting. Motions raised at a general meeting shall:

(1) be free of conflicts with the provision of laws, administrative regulations and Articles of Association, and fall within our business scope and the terms of the reference of the shareholders’ general meeting;

(2) have definite topics to discuss and specific matters to resolve; and

125

(3) be submitted in writing or served to the board of directors.

Limitations on the rights to own securities

Under Article 19, the shares issued to domestic investors and denominated in Renminbi are Domestic-Invested Shares whereas the shares issued to overseas investors and denominated in foreign currency are Foreign-Invested Shares.

Provisions having an effect of delaying, deferring or preventing a change in control

Under Article 116, decisions in respect of market development, merger and acquisition, and investment in a new field, where the consideration to be paid or the assets to be acquired exceed 10% of our total assets, the Board is required to engage relevant professional consultants to provide professional opinions, which shall serve as the key reference for the decision of the Board concerning such investment, merger or acquisition.

Under Article 87(3), division, merger, dissolution and liquidation of us and material acquisitions and disposals by us must be approved by a special resolution at a shareholders’ general meeting.

There are no provisions under the Articles of Association pertaining to the ownership threshold above which shareholder ownership must be disclosed.

Conditions governing changes in registered capital

Under Article 112(7), any proposal for the increase or decrease of our registered capital must be formulated by the Board. Article 87(1) further provides that any increase or reduction in share capital requires adoption of a special resolution at a shareholders’ general meeting. In addition, according to Article 97, alternation of the number of shares of a class or of a different class having voting rights, distribution rights or other privileges equal or superior to such class is regarded as alternation or abolishment of rights of such class, and must satisfy the requirements for shareholders’ meetings of the affected class. See “—Actions necessary to change the rights of holders of our shares or holders of a class of shares.”

Certain Differences Between PRC Company Law and Delaware Corporate Law

We are a PRC joint stock company, which is a corporate entity organized under the Company Law of the PRC. The PRC company law differs from laws applicable to United States corporations and their shareholders. A description of securities registered under Section 12 of the Exchange Act is filed as Exhibit 2.4 to this annual report on Form 20-F and includes a summary of certain significant differences between the provisions of the PRC company law applicable to us and the comparable provisions of the laws applicable to companies incorporated in the United States and their shareholders (for this purpose we refer to Delaware corporate law). Such summary does not purport to be complete and is subject to and qualified in its entirety by reference to our Articles of Association, as amended, and to the relevant laws and regulations.

C.Material Contracts

For the two years immediately preceding the date of this annual report, we have not entered into any additional material contracts other than in the ordinary course of business and other than those described in “Item 4. Information on the Company - A. History and Development of the Company” and “Item 7. Major Shareholders and Related Party Transactions - B. Related Party Transactions.”

D.Exchange Controls

The existing PRC foreign exchange regulations have significantly reduced government foreign exchange controls for transactions under the current account, including trade and service-related foreign exchange transactions and payment of dividends. We may undertake current account foreign exchange transactions without prior approval from the SAFE by producing commercial documents evidencing such transactions, provided that they are processed through Chinese banks licensed to engage in foreign exchange transactions. The PRC government has stated publicly that it intends to make the Renminbi freely convertible in the future. However, we cannot predict whether the PRC government will continue its existing foreign exchange policy and when the PRC government will allow free conversion of Renminbi to foreign currency.

126

Foreign exchange transactions under the capital account, including principal payments in respect of foreign currency-denominated obligations, continue to be subject to significant foreign exchange controls and require the approval of the SAFE. These limitations could affect our ability to obtain foreign exchange through debt or equity financing, or to obtain foreign exchange for capital expenditures.

Since 1994, the conversion of Renminbi into HK and U.S. dollars has been based on rates set by the PBOC, which are set daily based on the previous day’s PRC interbank foreign exchange market rate and current exchange rates on the world financial markets. From 1994 to July 20, 2005, the official exchange rate for the conversion of Renminbi to U.S. dollars was generally stable. On July 21, 2005, the PRC government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. Since then, the PRC government has made, and may in the future make, further adjustments to the exchange rate system. In April 2012, the PRC government took a milestone step in turning the Renminbi into a global currency by doubling the size of its trading band against the U.S. dollar, pushing through a crucial reform that further liberalizes its financial markets. The PBOC allows the Renminbi to rise or fall 1% from a mid-point every day, effective April 16, 2012, compared with its previous 0.5% limit. The PBOC further allows the Renminbi to rise or fall 2% from a mid-point every day, effective March 17, 2014. In August 2015, the PBOC announced that the daily central parity quotes the market-makers reported to the China Foreign Exchange Trade System operated by the PBOC before the market opens should be based on the closing rate of the inter-bank foreign exchange rate market on the previous day, supply and demand in the market, and price movement of major currencies, effective on August 11, 2015. Fluctuations in exchange rates may adversely affect the value, translated or converted into U.S. dollars or HK dollars, of our net assets, earnings and any declared dividends. We cannot give any assurance that any future movements in the exchange rate of the Renminbi against the U.S. dollar and other foreign currencies will not adversely affect our results of operations and financial condition.

E.Taxation

PRC Taxation

The following summary of the material PRC and United States federal income tax provisions relating to the ownership and disposition of H Shares or ADSs held by the investor as capital assets is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change, and does not constitute legal or tax advice. This summary does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences under state, local and other tax laws.

Dividends Paid to Individual Investors

Any shares registered in the name of our depositary bank will be deemed as being held by non-resident enterprise shareholders and the dividends attributable to the corresponding ADSs will be subject to the withholding of the PRC corporate income tax. We are therefore required to withhold 10% corporate income tax when we make dividend distributions to the investors of our ADSs. Investors of our ADSs will not be subject to further PRC individual income tax or PRC corporate income tax. The 10% dividend withholding tax rate is not subject to any reduction under the 1984 Agreement between the United States and the People’s Republic of China for the Avoidance of Double Taxation, or the PRC Treaty.

Capital Gains

With respect to foreign enterprises which are established under the laws of non-PRC jurisdictions and have no establishment or residence in China or whose capital gains from China do not relate to their establishment or residence in China (“non-resident foreign enterprises”), according to the Enterprise Income Tax Law and its implementation rules, which became effective on January 1, 2008, capital gains realized by non-resident foreign enterprises are ordinarily subject to capital gains tax at the rate of 10%, unless exempted or reduced pursuant to an applicable double-taxation treaty or other exemptions. The capital gains realized by resident enterprises, including enterprises established under the laws of non-PRC jurisdictions but whose “de facto management body” is located in the PRC, upon the sales of overseas-listed shares are subject to the PRC enterprise income tax.

With respect to foreign individual investors, the Provisions for Implementation of Individual Income Tax Law of China, as amended, stipulated that individual income tax on gains realized on the sale of equity shares shall be regulated in separate rules to be drafted by the State Council of China. However, as of the date of this annual report, there are no such rules enacted by the State Council yet. On March 30, 1998, the MOF and the SAT jointly issued the “Circular of Taxation Regarding the Continued Exemption of Individual Income Taxes Levied on Income Obtained from the Transfer of Shares,” which provided that income derived from the transfer of shares issued by listed companies shall not be taxed as income for the purposes of levying individual income taxes after July 1, 1997.

127

For PRC mainland investors, on October 31, 2014, the SAT issued “Circular on Tax Policies Relating to the Pilot Program of Shanghai-Hong Kong Stock Connect,” which provided that any capital gain from transferring stocks listed on the Hong Kong Stock Exchange by a PRC mainland investor would not be subject to tax during the period from November 17, 2014 to November 16, 2017. For mainland enterprises, such capital gains would be included in its income and subject to income tax. On November 1, 2017, the MOF, the SAT and the CSRC jointly issued “Circular on Extending Individual Income Tax Policies Relating to the Shanghai-Hong Kong Stock Connect,” which provided that income generated from price differences through investment in stocks listed on the Hong Kong Stock Exchange by PRC mainland individual investors via the Shanghai-Hong Kong Stock Connect would be exempt from individual income tax from November 17, 2017 to December 4, 2019. On December 4, 2019, the MOF, the SAT and the CSRC jointly issued the “Circular on Extending Individual Income Tax Policies Relating to the Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect and Mainland-Hong Kong Mutual Recognition of Funds,” which further exempts the individual income tax on income generated from transfer through investment in stocks listed on the Hong Kong Stock Exchange by PRC mainland individual investors via the Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect and investment in Mainland-Hong Kong mutually recognized Funds from December 5, 2019 to December 31, 2022.

Tax Treaties

China currently has such treaties with more than one hundred countries and regions, including the following countries:

● the United States;

● Australia;

● Canada;

● France;

● Germany;

● Japan;

● Malaysia;

● Singapore;

● the United Kingdom; and

● the Netherlands.

Under most treaties, the rate of withholding tax imposed by China’s taxation authorities remains 10%. The double taxation treaty between China and the United States provides that 10% withholding tax rate will be applied to the gross amount of dividends repatriated to an eligible U.S. holder. Under the treaty, an eligible U.S. holder is a person who, by reason of domicile, residence, place of head office, place of incorporation or any other criterion of similar nature is subject to taxation in the United States, as applicable under the treaty’s “treaty shopping provisions.”

Additional China Tax Considerations

Pursuant to the prevailing stamp duty regulations, a stamp duty is not imposed by China on the transfer of shares, such as the H Shares or ADSs, of Chinese publicly traded companies that take place outside of China.

United States Federal Income Taxation

Each potential investor is strongly urged to consult its own tax advisor to determine the particular U.S. federal, state, local, treaty and foreign tax consequences of acquiring, owning or disposing of the H Shares or ADSs.

128

The following summary describes the principal U.S. federal income tax consequences of purchasing, owning and disposing of the H Shares or ADSs. This summary only applies to U.S. holders, as defined below, who hold the H Shares or ADSs as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986 as amended (the “Code”). This discussion does not address all of the tax consequences relating to the purchase, ownership and disposition of the H Shares or ADSs, and does not take into account U.S. holders that may be subject to special rules, including:

● financial institutions;

● insurance companies;

● tax-exempt organizations;

● real estate investment trusts, regulated investment companies, grantor trusts;

● persons that have a functional currency other than the U.S. dollar;

● persons that will own H Shares or ADSs through partnerships or other pass-through entities;

● persons that actually or constructively own 10% or more of the combined voting power of our voting stock or of the total value of our stock;

● dealers or traders in securities or currencies;

● certain former citizens or long-term residents of the United States;

● persons that will hold the H Shares or ADSs as a position in a “straddle” or as part of a “hedging” or “conversion” or other risk reduction transaction for U.S. federal income tax purposes;

● persons who receive the H Shares or ADSs as compensation for services;

● “dual resident” corporations;

● persons that generally mark their securities to market for U.S. federal income tax purposes;

● persons who are residents of the People’s Republic of China or who are subject to Hong Kong profits tax; or

● persons who purchase or sell the H Shares or ADSs as part of a wash sale for U.S. federal tax purposes.

Moreover, this description does not address U.S. federal estate, gift or alternative minimum taxes, the U.S. federal unearned income Medicare contribution tax, or any foreign state or local tax consequences of the acquisition, ownership and disposition of the H Shares or ADSs. Each U.S. holder should consult its tax advisor with respect to the U.S. federal, state, local and foreign tax consequences of acquiring, owning and disposing of H Shares or ADSs.

This discussion is based on the Code, its legislative history, final, temporary and proposed U.S. Treasury regulations promulgated thereunder, published rulings and court decisions as in effect on the date hereof, as well as on the agreement between the United States and the People’s Republic of China for the avoidance of double taxation (the “Treaty”), all of which are subject to change, or change in interpretation, possibly with retroactive effect. In addition, this discussion is based in part upon the assumption that each obligation in the deposit agreement and any related agreements will be performed according to its terms.

You are a “U.S. holder” if you are a beneficial owner of H Shares or ADSs and, for U.S. federal income tax purposes, are:

● an individual citizen or resident of the United States;

● a corporation created or organized under the laws of the United States or any political subdivision thereof;

129

● an estate the income of which is subject to U.S. federal income tax without regard to its source; or

● a trust: (i) subject to the primary supervision of a U.S. court and one or more U.S. persons (within the meaning of the Code) have the authority to control all substantial decisions of the trust; or (ii) that has validly elected to be treated as a U.S. person under applicable U.S. Treasury Regulations.

If a partnership (including any entity or arrangement treated as a partnership for U.S. federal tax purposes) holds H Shares or ADSs, the tax treatment of the partnership and a partner in such partnership will generally depend upon the status of the partner and the activities of the partnership. If an investor is a partner in a partnership that holds H Shares or ADSs, such investor should consult its tax advisor.

In general, if you hold ADSs evidencing H Shares, you will be treated as the owner of the H Shares represented by the ADSs. Exchanges of H Shares for ADSs, and ADSs for H Shares, generally will not be subject to United States federal income tax.

The tax treatment of your H Shares or ADSs will depend in part on whether or not we are classified as a passive foreign investment company, or PFIC, for United States federal income tax purposes. Except as discussed below under “—Passive Foreign Investment Company Rules,” this discussion assumes that we are not classified as a PFIC for U.S. federal income tax purposes.

INVESTORS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSIDERATIONS APPLICABLE TO THEM RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE H SHARES OR ADSs, INCLUDING THE APPLICABILITY OF U.S. FEDERAL, STATE AND LOCAL TAX LAWS OR NON-U.S. TAX LAWS, ANY CHANGES IN APPLICABLE TAX LAWS AND ANY PENDING OR PROPOSED LEGISLATION OR REGULATIONS.

Distributions on the H Shares or ADSs

The gross amount of any distribution (without reduction for any PRC tax withheld) we make on the H Shares or ADSs, other than certain pro-rata distributions of the H Shares, will be includible in income as dividend income when you, in the case of the H Shares, or the depositary, in the case of ADSs, receive the distribution, actually or constructively. Because we do not calculate earnings and profits in accordance with U.S. tax principles, all distributions by us to U.S. holders will generally be treated as dividends. Any dividend will not be eligible for the dividends-received deduction allowed to certain U.S. corporations in respect of dividends received from U.S. corporations.

If you are a noncorporate U.S. holder, dividends that constitute qualified dividend income will be taxable to you at the preferential rates applicable to long-term capital gains provided that you hold the H Shares or ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meet other holding period requirements. Dividends that we pay with respect to the H Shares or ADSs will be qualified dividend income, provided that, in the year that you receive the dividend, we are eligible for the benefits of the Treaty. We believe that we are currently eligible for the benefits of the Treaty, and we therefore believe that dividends that we currently distribute on the H Shares or ADSs constitute qualified dividend income. However, there can be no assurance that we will be eligible for the benefits of the Treaty in future taxable years, and there can therefore be no assurance that dividends that we distribute on the H Shares or ADSs will continue to constitute qualified dividend income in such years.

Furthermore, even if we are not eligible for the benefits of the Treaty in a taxable year, dividends on the ADSs will nevertheless be treated as qualified dividend income if the ADSs are readily tradable on an established securities market in the United States. So long as our ADSs remain listed on the NYSE, we are therefore expect that dividends on the ADSs will be treated as qualified dividend income irrespective of whether we eligible for the benefits of the Treaty. However, if our ADSs were to be delisted from the NYSE (as discussed above in “Item 3. Key Information – D. Risk Factors – Our ADSs will be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors who are located in China. In addition, legislative and regulatory developments related to U.S.-listed China-based companies due to lack of PCAOB inspection and other developments may have a material adverse impact on our listing and trading in the United States and the trading prices of our ADSs. The potential delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.”), our ADSs would no longer be readily tradable on an established securities market in the United States. If our ADSs were delisted from the NYSE, dividends paid with respect to ADSs will continue to be qualified dividend income so long as we continue to be eligible for the benefits of the Treaty (as discussed above).

130

The amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of the HK dollar payments made, determined at the spot HK dollar/U.S. dollar rate on the date the dividend is distributed, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend is distributed to the date you or the depositary convert the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. Dividends paid by us generally will constitute income from sources outside the United States for U.S. foreign tax credit limitation purposes and will generally be categorized as “passive income” for U.S. foreign tax credit purposes. We may be required to withhold PRC income tax on dividends paid to U.S. holders on the H Shares or ADSs. Subject to various limitations, any PRC tax withheld from distributions in accordance with the Treaty will be deductible or creditable against your U.S. federal income tax liability.

You may not be able to claim a foreign tax credit (and instead may qualify to claim a deduction) for non-U.S. taxes imposed on dividends paid on the H Shares or ADSs if you (i) have held the H Shares or ADSs for less than a specified minimum period, or (ii) are obligated to make related payments with respect to positions in substantially similar or related property (for example, pursuant to a short sale). The rules relating to the U.S. foreign tax credit are complex and U.S. holders may be subject to various limitations on the amount of foreign tax credits that are available. In addition, in the case of a noncorporate U.S. holder, rules similar to the special rules that apply in determining the foreign tax credit limitation when the taxpayer has foreign source capital gains that are taxed in the U.S. at the lower capital gains rate apply in determining the noncorporate U.S. holder’s foreign tax credit limitation arising from dividends that are taxed at the capital gains rate.

Sale, Exchange or Other Disposition

Upon a sale, exchange or other disposition of the H Shares, you will generally recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the U.S. dollar value of the amount realized and your tax basis, determined in U.S. dollars, in such H Shares. Generally, gain or loss recognized upon the sale or other disposition of H Shares or ADSs will be capital gain or loss, will be long-term capital gain or loss if the U.S. holder’s holding period for such H Shares or ADSs exceeds one year, and will be income or loss from sources within the United States for foreign tax credit limitation purposes. Long-term capital gains of noncorporate U.S. holders are generally taxed at preferential rates. The deductibility of capital losses is subject to significant limitations.

With respect to the sale or exchange of H Shares, the amount realized upon a sale of H Shares generally will be the U.S. dollar value on the settlement date for the sale in the case of a cash basis U.S. holder (or an accrual basis U.S. Holder that so elects). If H Shares are traded on an “established securities market,” a cash basis taxpayer or, if it so elects, an accrual basis taxpayer, will determine the U.S. dollar value of the amount realized by translating the amount received at the spot rate of exchange on the settlement date of the sale. A U.S. holder will have a tax basis in the foreign currency received equal to the U.S. dollar amount realized. Any currency exchange gain or loss realized on a subsequent conversion of the foreign currency into U.S. dollars for a different amount generally will be treated as ordinary income or loss from sources within the United States. However, if such foreign currency is converted into U.S. dollars on the date received by the U.S. holder, a cash basis or electing accrual basis U.S. holder should not recognize any gain or loss on such conversion.

Any gain or loss that you recognize upon a sale of the H Shares or ADSs will generally be U.S. source gain or loss for foreign tax credit limitation purposes. Under the Treaty, however, if any PRC tax were to be imposed on any gain from the disposition of H Shares or ADSs, the gain could be treated as PRC source income. In addition, under recently finalized Treasury regulations, you will generally be precluded from claiming a foreign tax credit in respect of any such taxes unless you are eligible for and elect to apply the benefits of the Treaty. U.S. holders are urged to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of H Shares or ADSs, including the availability of the foreign tax credit under their particular circumstances. Any Hong Kong stamp duty paid will not be a creditable tax for United States federal income tax purposes, although the proceeds that you are treated as receiving upon a sale of the H Shares will be reduced by the amount of the stamp duty.

Passive Foreign Investment Company Rules

A non-U.S. corporation is a PFIC for any taxable year in which, after applying relevant look-through rules with respect to the income and assets of subsidiaries:

● 75% or more of its gross income consists of passive income, such as dividends, interest, rents, royalties, and gains from the sale of assets that give rise to such income; or

131

● 50% or more of the average quarterly value of its gross assets consists of assets that produce, or are held for the production of, passive income.

Passive income generally includes dividends, interest, gains from the sale or exchange of investment property, rents and royalties, and certain other specified categories of income. However, passive income does not include certain rents and royalties derived from the active conduct of a trade or business. If the stock of a non-U.S. corporation is publicly traded for the taxable year, the asset test is applied using the fair market value of the assets for purposes of measuring such corporation’s assets. If we own at least 25% (by value) of the stock of another corporation, we will be treated, for purposes of the PFIC tests, as owning our proportionate share of the other corporation’s assets and receiving our proportionate share of the other corporation’s income for purposes of the PFIC income and asset tests.

Based on the composition of our assets and income and the current expectations regarding the price of the H Shares and ADSs, we believe that we were not a PFIC for U.S. federal income tax purposes with respect to our 2021 taxable year and we do not intend or anticipate becoming a PFIC in the foreseeable future. However, the determination of PFIC status is a factual determination that must be made annually at the close of each taxable year and, therefore, there can be no certainty as to our status in this regard until the close of the current or any future taxable year. Changes in the nature of our income or assets or a decrease in the trading price of our shares may cause us to be considered a PFIC in the current or any subsequent year. If we were a PFIC in any year during a U.S. holder’s holding period for the H Shares or ADSs, we would ordinarily continue to be treated as a PFIC for each subsequent year during which the U.S. holder owned the H Shares or ADSs.

If we were a PFIC in any taxable year that you held the H Shares or ADSs, you generally would be subject to special rules with respect to “excess distributions” made by us on the H Shares or ADSs and with respect to gain from your disposition of the H Shares or ADSs. An “excess distribution” generally is defined as the excess of the distributions you receive with respect to the H Shares or ADSs in any taxable year, other than the taxable year in which your holding period in the H Shares or ADSs begins, over 125% of the average annual distributions you have received from us during the shorter of the three preceding years, or your holding period for the H Shares or ADSs that preceded the taxable year in which you receive the distribution. Generally, you would be required to allocate any excess distribution or gain from the disposition of the H Shares or ADSs ratably over your holding period for the H Shares or ADSs. The portion of the excess distribution or gain allocated to a prior taxable year, other than a year prior to the first year in which we became a PFIC, would be taxed at the highest U.S. federal income tax rate in effect for such taxable year, and you would be subject to an interest charge on the resulting tax liability, determined as if the tax liability had been due with respect to such particular taxable years. The portion of the excess distribution or gain that is not allocated to prior taxable years, together with the portion allocated to the years prior to the first year in which we became a PFIC, would be included in your gross income for the taxable year of the excess distribution or disposition and taxed as ordinary income.

These adverse tax consequences may be mitigated if the U.S. holder is eligible to and does elect to annually mark-to-market the H Shares or ADSs. If a U.S. holder makes a mark-to-market election, such holder will generally include as ordinary income the excess, if any, of the fair market value of the H Shares or ADSs at the end of each taxable year over its adjusted basis, and will be permitted an ordinary loss in respect of the excess, if any, of the adjusted basis of the H Shares or ADSs over their fair market value at the end of the taxable year (but only to the extent of the net amount of income previously included in income as a result of the mark-to-market election). Any gain recognized on the sale or other disposition of the H Shares or ADSs will be treated as ordinary income and any loss would be an ordinary loss to the extent of the net amount of previously included income as a result of the market-to-market election and, thereafter, a capital loss. The mark-to-market election is available only for “marketable stock,” which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter on a qualified exchange or other market, as defined in the applicable Treasury regulations. The H Shares or ADSs may qualify as “marketable stock” because the ADSs are listed on the New York Stock Exchange.

A U.S. holder’s adjusted tax basis in the H Shares or ADSs will be increased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules. If a U.S. holder makes a mark-to-market election it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the H Shares or ADSs are no longer regularly traded on a qualified exchange or the IRS consents to the revocation of the election. U.S. holders are urged to consult their tax advisors about the availability of the mark-to-market election, and whether making the election would be advisable in their particular circumstances. However, the stock of any of our subsidiaries that were PFICs would not be eligible for the mark-to-market election.

Alternatively, a timely election to treat us as a qualified electing fund could be made to avoid the foregoing rules with respect to excess distributions and dispositions. You should be aware, however, that if we become a PFIC, we do not intend to satisfy the recordkeeping requirements that would permit you to make a qualified electing fund election.

132

In addition, notwithstanding any election you make with regard to the shares or ADSs, dividends that you receive from us will not constitute qualified dividend income to you if we are a PFIC (or are treated as a PFIC with respect to you) either in the taxable year of the distribution or the preceding taxable year. Dividends that you receive that do not constitute qualified dividend income are not eligible for taxation at the preferential rates applicable to qualified dividend income. Instead, you must include the gross amount of any such dividend paid by us in your gross income, and it will be subject to tax at rates applicable to ordinary income.

If we were regarded as a PFIC, a U.S. holder of H Shares or ADSs may be required to file an information return on IRS Form 8621.

U.S. holders should consult their tax advisors concerning the U.S. federal income tax consequences of holding the H Shares or ADSs if we were considered to be a PFIC.

Information with Respect to Foreign Financial Assets

Owners of “specified foreign financial assets” with an aggregate value in excess of $50,000 (and in some circumstances, a higher threshold) may be required to file an information report with respect to such assets with their tax returns. “Specified foreign financial assets” may include financial accounts maintained by foreign financial institutions, as well as the following, but only if they are held for investment and not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-United States persons, (ii) financial instruments and contracts that have non-United States issuers or counterparties, and (iii) interests in foreign entities. Holders are urged to consult their tax advisors regarding the application of this reporting requirement to their ownership of the H Shares or ADSs.

Backup Withholding and Information Reporting

If you are a noncorporate U.S. holder, information reporting requirements, on IRS Form 1099, generally will apply to dividend payments or other taxable distributions made to you within the United States, and the payment of proceeds to you from the sale of the H Shares or ADSs effected at a United States office of a broker.

Additionally, backup withholding may apply to such payments if you fail to comply with applicable certification requirements or (in the case of dividend payments) are notified by the IRS that you have failed to report all interest and dividends required to be shown on your federal income tax returns.

Payment of the proceeds from the sale of the H Shares or ADSs effected at a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, a sale effected at a foreign office of a broker could be subject to information reporting in the same manner as a sale within the United States (and in certain cases may be subject to backup withholding as well) if (i) the broker has certain connections to the United States, (ii) the proceeds or confirmation are sent to the United States or (iii) the sale has certain other specified connections with the United States.

You generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed your income tax liability by filing a refund claim with the IRS.

Hong Kong Taxation

The following discussion summarizes the material Hong Kong tax provisions relating to the ownership of H Shares or ADSs held by you.

Dividends

Under current Hong Kong Inland Revenue Department practice, no Hong Kong tax is payable by the recipient in respect of dividends paid by us, either by withholding or otherwise, unless such dividends are attributable to a trade, profession or business carried on in Hong Kong.

133

Taxation of Capital Gains

Hong Kong profits tax is currently charged at a flat rate of 16.5% for corporations and 15% for unincorporated businesses and individuals, except that the respective half-rates of 8.25% and 7.5% apply for the first HK$2 million of assessable profits for years of assessment beginning on or after April 1, 2018.

No Hong Kong tax is imposed on capital gains arising from the sale of property (such as H Shares) acquired and held as a capital investment. However, if a person carries on a business in Hong Kong that includes trading and dealing in securities, and derives trading gains from such activities or from other Hong Kong sources, Hong Kong profits tax will be payable. Gains from sales of H Shares effected on the Hong Kong Stock Exchange are considered to be from a Hong Kong source for this purpose. The source of gains from off-exchange transactions is less clear and, generally, will depend on whether the purchase and sale contracts were negotiated and, in substance, concluded in Hong Kong. In addition, exemption from profits tax is available for certain classes of taxpayers, notably privately offered onshore and offshore funds operating in Hong Kong, as well as non-Hong Kong residents who do not otherwise carry on business in Hong Kong, subject to compliance with various other requirements.

The Hong Kong tax position with respect to gains from the disposal of ADSs is similar. However, no Hong Kong tax will apply on trading gains arising from the sale of ADSs where the purchase and sale were effected on the NYSE.

Hong Kong Stamp Duty

Hong Kong stamp duty is payable by each seller and purchaser for every sold note and every bought note created for every sale and purchase of “Hong Kong stock” (which means stock the transfer of which is required to be registered in Hong Kong), including the H Shares. Stamp duty is currently charged at the total rate of 0.26% of the value of the H Shares transferred (the buyer and seller each paying half of such stamp duty). In addition, a fixed duty of HK$5 is currently payable on an instrument of transfer of H Shares. If one of the parties to a sale is a non-resident of Hong Kong and does not pay the required stamp duty, the unpaid stamp duty will be assessed on the instrument of transfer (if any), and the transferee will be liable for the full payment of such amount.

If the withdrawal of H Shares when ADSs are surrendered or the issuance of ADSs when H Shares are deposited results in a change of beneficial ownership in the H Shares under Hong Kong law, Hong Kong stamp duty at the rate described above for sale and purchase transactions will apply. The issuance of ADSs for deposited H Shares issued directly to the depositary or for the account of the depositary should not lead to a Hong Kong stamp duty liability. Holders of the ADSs are not liable for the Hong Kong stamp duty on transfers of ADSs outside of Hong Kong so long as the transfers do not result in a change of beneficial interest in the H Shares under Hong Kong law.

Estate Duty

The Revenue (Abolition of Estate Duty) Ordinance 2005 came into effect on February 11, 2006 in Hong Kong. No Hong Kong estate duty is payable and no estate duty clearance papers are needed for an application for a grant of representation in respect of holders of H Shares or ADSs whose death occurs on or after February 11, 2006.

F.Dividends and Paying Agents

Not applicable.

G.Statement by Experts

Not applicable.

134

H.Documents on Display

We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file an annual report under Form 20-F no later than four months after the close of each of our fiscal years, which is December 31, for fiscal years ended after December 15, 2011. Copies of reports and other information, when so filed, may be inspected without charge and may be obtained at prescribed rates at the SEC’s public reference room located at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports and other information regarding registrants that make electronic filings with the SEC using its EDGAR filing system. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders of ours are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

I.Subsidiary Information

Not applicable.

Item 11.Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various types of market risks, including credit risk relating to financial assets and changes in foreign exchange rates, interest rates and the prices of alumina and primary aluminum, in the normal course of business.

We borrow short-term, medium-term and long-term funds, including variable rate debts, principally denominated in Renminbi. We hedge a limited amount of our sales through the trade of futures contracts on the SHFE and LME. Our hedging activities are subject to policies approved by our senior management. Substantially all of the financial instruments we hold are for purposes other than trading.

The following discussion, which contains “forward-looking statements” that involve risks and uncertainties, summarize our market-sensitive financial instruments. Such discussions address markets risk only and do not present other risks, which we face in the normal course of business.

Credit Risk

Credit risk arises from balances with banks and financial institutions, trade and notes receivables, other current and non-current receivables as well as credit exposures of customers, including outstanding receivables and committed transactions. We also provide financial guarantees to certain subsidiaries. The carrying amounts of these receivables and amounts of financial guarantees represent our maximum exposure to credit risk in relation to our financial assets and guarantees.

We maintain substantially all of our bank balances and cash and short-term investments in several major state-owned banks in the PRC. Our directors are of the opinion that these assets are not exposed to significant credit risk.

With regard to receivables, the marketing department assesses the credit quality of the customers and related parties, taking into account their financial positions, past experience and other factors. We perform periodic credit evaluations of our customers and believe that adequate provisions for impairment of receivables have been made in the financial statements. Management does not expect any further losses from non-performance by these counterparties.

For the year ended December 31, 2021, revenues of approximately RMB53,205 million are derived from entities directly or indirectly owned or controlled by the PRC government including Chinalco. There were no other individual customers from whom we have derived revenue of more than 10% of our revenue during the year ended December 31, 2019, 2020 and 2021. Thus, our directors are of the opinion that we were not exposed to any significant concentration of credit risk as of December 31, 2019, 2020 and 2021.

135

Foreign Exchange Rate Risk

We conduct our business primarily in Renminbi, which is our functional and reporting currency. We convert a portion of our Renminbi revenues into other currencies to meet foreign currency obligations and to pay for imported equipment and materials.

Many foreign currency exchange transactions involving Renminbi, including foreign exchange transactions under our capital account, are subject to foreign exchange controls and require the approval of the SAFE. Actions taken by the PRC government could cause future exchange rates to vary significantly from current or historical exchange rates. On July 21, 2005, the PBOC announced a reform of its exchange rate system. Under the reform, the Renminbi is no longer effectively linked to the U.S. dollar but instead is allowed to fluctuate within a narrow and managed band against a basket of foreign currencies, according to market demand and supply conditions. In April 2012, the PRC government took a milestone step in turning the Renminbi into a global currency by doubling the size of its trading band against the U.S. dollar, pushing through a crucial reform that further liberalizes its financial markets. The PBOC allows the Renminbi to rise or fall 1% from a mid-point every day, effective on April 16, 2012, compared with its previous 0.5% limit. The PBOC allows the Renminbi to rise or fall 2% from a mid-point every day, effective on March 17, 2014, compared with its previous 1% limit. In August 2015, the PBOC announced that the daily central parity quotes the market-makers reported to the China Foreign Exchange Trade System operated by the PBOC before the market opens should be based on the closing rate of the inter-bank foreign exchange rate market on the previous day, supply and demand in the market, and price movement of major currencies, effective on August 11, 2015. Any appreciation of the Renminbi will increase the prices of our export sales denominated in foreign currencies and reduce the Renminbi equivalent value of our trade and notes receivable denominated in foreign currencies, which may adversely affect our financial condition and results of operations. Our financial condition and operating performance may also be affected by changes in the value of currencies other than Renminbi in which our earnings and obligations are denominated.

Our bank balances and cash on hand as of December 31, 2021 amounted to RMB19,178.0 million, including Renminbi balances and foreign currency deposits of U.S. dollar, HK dollar, Euro and others, which translated into RMB1,557.4 million, RMB7.3 million, RMB2.0 million and RMB6.2 million, respectively. Most of our sales are domestic and as such we have a limited amount of foreign currency denominated receivables and payables. As of December 31, 2021, we had foreign currency denominated loans with principal amount of RMB11 million in Japanese Yen and RMB1,333 million in U.S. dollars. In addition, as of December 31, 2021, our trade and notes receivables, other current assets and trade and notes payables denominated in U.S. dollars amounted to RMB512 million, RMB99 million and RMB241 million, respectively; our other payables and accrued liabilities denominated in U.S. dollars and HK dollars amounted to RMB1.24 million and RMB0.16 million, respectively.

As of December 31, 2021, if the Renminbi had strengthened/weakened by 5% against U.S. dollars with all other variables held constant, the total comprehensive income for the year would have been approximately RMB28 million higher/lower, mainly as a result of foreign exchange gains and losses arising from the translation of U.S.-dollar-denominated borrowings, other payables and medium-term notes. Profit was less sensitive to the fluctuation in the RMB/U.S. dollars exchange rates in 2021 than in 2020, mainly due to a decrease in the US$ denominated other payables and long-term and short-term borrowings.

As the assets and liabilities denominated in other foreign currencies other than U.S. dollars were relatively minimal to our total assets and liabilities, our directors are of the opinion that we were not exposed to significant foreign currency risk arising from other assets and liabilities denominated in currency other than the functional currency of the group entities as of December 31, 2020 and 2021.

Interest Rate Risk

As of December 31, 2021, as we had no significant interest-bearing assets except for bank deposits and entrusted loans, our income and operating cash flows are substantially independent of changes in market interest rates.

Most of the bank deposits are maintained in savings and time deposit accounts in the PRC. The interest rates are regulated by the PBOC and our Group treasury closely monitors the fluctuation on such rates periodically. The interest rates of entrusted loans are fixed. As the interest rates applied to the entrusted loans were fixed, our directors are of the opinion that we were not exposed to any significant interest rate risk for our financial assets held as of December 31, 2020 and 2021.

The interest rate risk for our financial liabilities primarily arises from interest-bearing loans. Loans borrowed at floating interest rates expose us to cash flow interest rate risk. We enter into debt obligations to support general corporate purposes including capital expenditures and working capital needs. Our Group treasury closely monitors market interest rates and maintains a balance between variable rate and fixed rate borrowings in order to reduce the exposures to the interest rate risk described above.

136

As of December 31, 2021, if interest rates had been 100 basis points higher/lower for bank and other loans borrowed at floating interest rates with all other variables held constant, net profit for the year would have been RMB421 million lower/higher, respectively, mainly as a result of the higher/lower interest expense on floating rate borrowings.

Our interest rate risk for our financial liabilities also arises from medium-term notes and short-term bonds issued at fixed rates. As the fluctuation of comparable interest rates of corporate bonds with similar terms was relatively low, our directors are of the opinion that we are not exposed to any significant fair value interest rate risk for its fixed interest rate borrowings held as of December 31, 2020 and 2021.

Commodity Price Risk

We are exposed to fluctuations in the prices of alumina, primary aluminum and other products. We import a small portion of our alumina supply from suppliers outside China. Such purchases are made at market prices. In addition, all our sales of alumina, primary aluminum and other products are made at market prices. Therefore, fluctuations in the prices of alumina and primary aluminum have a significant effect on our operating performances.

We use mainly futures contracts and option contracts traded on the SHFE and the LME to hedge against fluctuations in primary aluminum prices. We use the futures contract for hedging other than speculation. As of December 31, 2021, the fair values of the outstanding futures and option contracts amounting to nil and RMB69 million were recognized in financial assets and financial liabilities at fair value through profit or loss, respectively.

As of December 31, 2020 and 2021, if the commodity futures prices had increased/decreased by 3% and all other variables held constant, the profit for the respective year would have changed by the amounts shown below:

	2020	2021
Primary aluminum	Decrease/increase RMB5 million	Decrease/increase RMB6 million

Liquidity risk

We monitor rolling forecasts of our liquidity requirements to ensure we have sufficient cash to meet operational needs while maintaining sufficient headroom on our undrawn committed borrowing facilities at all times so that we do not breach borrowing limits or covenants (where applicable) on any of our borrowing facilities. Such forecasts take into consideration our debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable, external regulatory or legal requirements. Our management also monitors rolling forecasts of our liquidity reserve on the basis of expected cash flows.

As of December 31, 2021, we had total banking facilities of approximately RMB128,100 million, of which RMB36,056 million had been utilized, and unutilized banking facilities amounted to RMB92,044 million as of December 31, 2021, among which, banking facilities of approximately RMB25,530 million will remain unexpired over the 12 months from December 31, 2021. Our directors are confident that such banking facilities could be renewed upon their expiration based on our past experience with banks and our good credit standing. In addition, as of December 31, 2021, we had no credit facilities through our futures agent at LME. The futures agent has the right to adjust the related credit facilities.

137

The following table sets forth the maturity profile of our financial liabilities as of December 31, 2021:

	Within 1 year(1)	1 to 2 years(1)	2 to 5 years(1)	Over 5 years(1)	Total(1)
	(RMB in millions)
Lease liabilities, including current portion	1,590.2	1,473.7	4,347.7	15,394.4	22,806.0
Long-term bank and other loans, including current portion	5,859.1	11,837.7	9,771.4	14,657.0	42,125.2
Medium-term notes and bonds, including current portion	3,000.0	4,400.0	9,875.7	2,000.0	19,275.7
Short-term bonds	5,400.0	—	—	—	5,400.0
Short-term bank and other loans	9,219.3	—	—	—	9,219.3
Interest payables for loans and borrowings	2,620.9	2,147.8	3,941.5	1,680.4	10,390.6
Financial liabilities at fair value through profit or loss	68.9	—	—	—	68.9
Financial liabilities included in other payables and accrued liabilities, excluding accrued interest	6,497.8	—	—	—	6,497.8
Financial liabilities included in other non-current liabilities(2)	234.9	202.2	147.0	885.2	1,469.3
Trade and notes payables	15,505.4	—	—	—	15,505.4
Total	49,996.5	20,061.4	28,083.3	34,617.0	132,758.2

(1) The amounts disclosed are the contractual undiscounted cash flows.

(2) As of December 31, 2021, the carrying value of financial liabilities included in other non-current liabilities was RMB880.9 million.

Item 12.Description of Securities Other Than Equity Securities

A.Debt Securities

Not applicable.

B.Warrants and Rights

Not applicable.

C.Other Securities

Not applicable.

138

D.American Depositary Shares

The following table summarizes the fees and charges that a holder of our ADSs may have to pay, directly or indirectly, in connection with the ownership of Chalco’s ADSs.

Persons depositing or withdrawing shares must pay:	For:
$5.00 (or less) per 100 ADSs (or portion thereof)	· Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property
	· Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
$0.05 (or less) per ADS (or portion thereof) A fee equivalent to the fee that would be payable if securities distributed to ADS holders had been shares and the shares had been deposited for issuance of ADSs	· Any cash distribution to ADS holders · Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary of ADS holders
$0.05 (or less) per ADS (or portion thereof) per calendar year	· Depositary services
As necessary	· Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares
As necessary	· Cable (including SWIFT) and facsimile transmissions (when expressly provided in the deposit agreement)
	· Converting foreign currency to U.S. dollars
As necessary	· Taxes and other governmental charges that the depositary or the custodian have to pay on any ADS or share underlying an ADS, such as stock transfer taxes, stamp duty or withholding taxes
As necessary	· Any charges incurred by the depositary or its agents for servicing the deposited securities

The Bank of New York Mellon, as depositary, has agreed to reimburse certain expenses related to the administration and maintenance of our ADR program incurred by us in connection with the program. From January 1, 2021 to December 31, 2021, we received from the depositary reimbursements of US$26,129.31 for our continuing annual stock exchange listing fees and our expenses incurred in connection with investor relationship programs. The depositary has also agreed to waive certain standard out-of-pocket administrative, maintenance and shareholder services expenses related to our ADR program. From January 1, 2021 to December 31, 2021, the total amount of the fees that were waived was US$110,611.69.

139

PART III

Item 19. Exhibits

Exhibit Number	Description
1.1	English translation of the Amended Articles of Association of Aluminum Corporation of China Limited (incorporated by reference to Exhibit 1.1 of our annual report on Form 20-F (file No. 001-15264) filed with the Securities and Exchange Commission on April 22, 2020)
2.1	Registrant’s Specimen American Depositary Receipt (incorporated by reference to Exhibit 2.1 of our annual report on Form 20-F/A (file No. 001-15264) filed with the Securities and Exchange Commission on October 9, 2012)
2.2	Registrant’s Specimen Certificate for H Shares (incorporated by reference to Exhibit 2.2 of our annual report on Form 20-F/A (file No.001-15264) filed with the Securities and Exchange Commission on October 9, 2012)
2.3	Deposit Agreement among the Registrant, The Bank of New York, as depositary, and Owners and Beneficial Owners of the American Depositary Receipts (incorporated by reference to Exhibit 2.3 of our annual report on Form 20-F/A (file No. 001-15264) filed with the Securities and Exchange Commission on October 9, 2012)
2.4	Description of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 2.4 of our annual report on Form 20-F (file No. 001-15264) filed with the Securities and Exchange Commission on April 22, 2020)
4.1	English translation of Form of Employment Contract (incorporated by reference to Exhibit 4.1 of our annual report on Form 20-F/A (file No. 001-15264) filed with the Securities and Exchange Commission on October 9, 2012)
8.1#	List of Subsidiaries of Aluminum Corporation of China Limited as of December 31, 2021
12.1*	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2*	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1*	Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2*	Certification by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
96.1*	Technical Report Summary
101.INS#	Inline XBRL Instance Document—this instance document does not appear in the Interactive Data File because its XBRL tags embedded within the Inline XBRL document
101.SCH#	Inline XBRL Taxonomy Extension Schema Document
101.CAL#	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF#	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB#	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE#	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File (embedded within the Inline XBRL document)

#Filed previously with the annual report on Form 20-F, dated April 22, 2022

* Filed herewith

140

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

ALUMINUM CORPORATION OF CHINA LIMITED
By:	/s/ Zhu Runzhou
	Name: Zhu Runzhou
	Title: Executive Director and President
	Date: August 31, 2022

141