Alumina Limited is committed to protecting and enhancing shareholder value and adopting best practice governance policies and practices. At a minimum we will ensure that all regulatory requirements are met and ethical standards maintained. During 2003, the Alumina Limited Board of Directors reviewed, and in some instances revised, our corporate governance policies and procedures. Alumina Limited adheres to the substantive and procedural recommendations of the Australian Stock Exchange Corporate Governance Council Principles of Good Corporate Governance and Best Practice Recommendations (ASX Principles).

Our website (www.aluminalimited.com) provides comprehensive corporate governance information, including a discussion of the new NYSE corporate governance standards.

Role of the Alumina Limited Board of Directors
The Alumina Limited Board of Directors (the board) is ultimately responsible for the overall management of Alumina Limited and for formulating and establishing its strategic goals. Its aim is to create and deliver shareholder value by maximising the performance of our interest in the Alcoa World Alumina and Chemicals (AWAC) business.

The primary role of the board is to:

• appoint the Chief Executive Officer, and monitor performance of the Chief Executive Officer and senior executives
• monitor and optimise business performance
• formulate and establish the strategic direction of the company and monitor its execution
• protect the interests of shareholders
• approve external financial reporting by Alumina Limited.

The Board Charter defines the role of the board, its duties and specific responsibilities, responsibilities of the Chairman, the delegation of authorities to board committees and the relationship with management.

A copy of the Board Charter is available on our website.

Board composition
The Alumina Limited board has five directors; four non-executive directors including the Chairman, and one executive director.

Details of each director’s skills and experience are set out on page 27 of this report.

Directors are subject to re-election by rotation at annual general meetings as stipulated in the Corporations Act. The board has agreed that non-executive directors shall retire after nine years of continuous service, unless otherwise requested to continue by the board.

Director independence
The board assesses director independence on an annual basis, or more often, if it feels it is warranted, depending on disclosures made by individual directors.

The board has concluded that all non-executive directors are independent. In reaching that conclusion the directors considered the following:

• Mr Morley’s previous executive position with WMC Limited does not result in him taking into account any interests other than those of the company in acting as Director and Chairman.
• Mr Hay is a partner of the legal firm Freehills, a provider of services to the company. The board reviewed the company’s past association, current relationship and potential future involvement with Freehills and concluded that the relationship does not affect Mr Hay’s independence. There are no relationships relevant to independence other than noted for Mr Hay and as yet we have not established materiality thresholds.
• Mr Rayner and Mr McNeilly do not have any previous association with the company or any other relationships that are relevant to independence issues.

For further information on director independence, please refer to our website.

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

Board meetings
The full board meets on a monthly basis and meetings of non-executive directors are also conducted at regular intervals without the presence of executives. Ad hoc board and committee meetings may be convened occasionally to consider appropriate matters.

In addition the board conducts visits to operational sites to gain first-hand knowledge. Directors’ attendance at board and committee meetings is detailed on page 29 of this report.

Board committees

Audit Committee
The Audit Committee consists of four non-executive directors and meets regularly during the year. Its role is to assist the board in fulfilling its responsibilities for Alumina Limited’s accounts, external reporting and internal controls. This is achieved by ensuring that appropriate processes are in place to support the board in fulfilling these responsibilities in relation to Alumina Limited’s:

• reporting of financial information to users of financial reports
• application of accounting policies
• financial management
• internal financial control systems.

It is also the responsibility of the Audit Committee to appoint the External Auditor, to agree the scope and monitor the progress of the internal and external audit plans, review the assessment of business risk across the Group to see that there is appropriate coverage in the internal audit plans and to review other issues as requested by the board or the Chief Executive Officer.

Compensation Committee
The Compensation Committee consists of four non-executive directors, and meets at least
two times a year. The role of the committee is to oversee Alumina Limited’s remuneration and compensation plans, policies and practices on behalf of the board and shareholders to ensure that:

• shareholder interests and employee interests are aligned
• Alumina Limited is able to attract, develop and retain employees of superior talent
• the integrity of Alumina Limited’s reward program is maintained.

Nomination Committee
The Nomination Committee consists of four non-executive directors, and meets as necessary. The committee's objective is to assist the board in fulfilling its responsibilities to shareholders relating to:

• identifying the necessary and desirable competencies of board members
• assessing the extent to which the competencies are represented on the board
• the selection and appointment process for directors.

In endeavouring to ensure that the board has an appropriate mix of skills and experience, the committee will consider directors who have a demonstrated record of high levels of integrity and performance and enhancing shareholder returns, and who can apply those skills and experience to the benefit of the company.

Charters for each of the board committees’ are available for review on our website (www.aluminalimited.com) or can be obtained from us on request.

Board performance evaluation
The directors recognise the merit of annually evaluating both the collective performance of the board and that of individual members. A process of performance evaluation of the board and individual directors was implemented in 2003. That performance evaluation was conducted in accordance with Alumina’s established process for performance evaluation, details of which are included on our website.

Directors’ access to independent advice
The board collectively, and each director individually, has the right to seek independent professional advice to enable them to fulfil their responsibilities. Where the directors intend to exercise their right to obtain independent advice, Alumina Limited will meet the expense, providing prior approval by the Chairman or the Board to obtain such advice has been given.

Code of Conduct
The Alumina Code of Conduct sets parameters for ethical behaviour and business practices for directors, employees and contractors. The board has adopted a new Code of Conduct in 2003. The board is also available to any employee for guidance on ethical issues. Alumina Limited’s values and Code of Conduct are available on our website.

Share trading
Alumina Limited has established a policy on the trading of its shares by its directors and employees. A copy of the policy is on our website. Directors and employees are prohibited from engaging in short-term trading of any Alumina Limited securities, or buying or selling Alumina Limited shares, if they possess unpublished price-sensitive information. In addition, directors and senior management must not buy or sell Alumina Limited shares in the period between the end of the half or full financial year and the release of the results for the relevant period. Directors and senior management must also receive approval from the Chairman, Chief Executive Officer or Company Secretary before buying or selling company shares.

Disclosure
Alumina Limited has in place comprehensive policies and procedures for the purposes of compliance with our continuous and periodic disclosure obligations under the Corporations Act and the ASX Listing Rules, including a Continuous Disclosure Policy. A copy of the policy is available on our website. The Company Secretary has primary responsibility for meeting stock exchange disclosure requirements.

Conflicts of interest
Alumina Limited’s directors are required to disclose to the board details of transactions that may create a conflict of interest.

Auditors
Alumina Limited and PricewaterhouseCoopers have adopted the following policy in relation to any work undertaken by the external auditors, PricewaterhouseCoopers, that does not directly relate to auditing:

• PricewaterhouseCoopers services which have fees of up to $100,000 require the prior approval of the Audit Committee Chairman. Such approval includes the scope of the services and the approximate amount of fees and shall be reported to the next Audit Committee meeting
• For PricewaterhouseCoopers services of more than $100,000 and less than $250,000, the provision of such services requires the prior approval of the Audit Committee
• For PricewaterhouseCoopers services of more than $250,000, the proposed services are to be put to competitive tender with the requirement for Chief Financial Officer, Chief Executive Officer and Audit Committee Chairman's approval of the inclusion of PricewaterhouseCoopers in the tender list. The provision of such services also requires the prior approval of the Audit Committee.

During 2003, we paid PricewaterhouseCoopers $609,000 to audit the parent entity and controlled entities, and $205,000 for other services, primarily for work on taxation issues. The PricewaterhouseCoopers partner responsible for Alumina Limited’s audit has recently been rotated and there will be periodic rotation of the audit partner.

Managing business risk
During 2003 our Risk Management Policy was revised. This policy sets out our policies and procedures for covering risks such as those relating to markets, credit, price, operations, safety, health, environment, financial reporting and internal control. The Risk Management Policy has been adopted by the board and is reviewed annually.

Alumina Limited is exposed to risks, both indirectly through its investment in AWAC, and directly as a separately listed public company.

Alcoa is the manager of the AWAC venture and has direct responsibility for managing the risks associated with the AWAC business. Alumina Limited is subject to those risks and Alcoa utilises its policies and management systems to identify, manage and mitigate those risks. Alumina Limited reviews the management and mitigation of AWAC risks through its participation on the AWAC Strategic Council and the boards of the key operating entities within AWAC.

Alumina Limited uses appropriate internal controls and formulation of, and adherence to, risk management policies appropriate for its risks as an independent corporate entity.

Alumina’s most significant risks are to the AUD/USD exchange rate and the aluminium price.

Exchange rate and aluminium price risk
Alumina Limited’s current financial position is strong and debt levels are modest. AWAC’s operations are low-cost and long life, generating substantial positive net cash flow. AWAC’s revenues are underpinned by medium and long-term sales contracts with high quality industry participants with whom AWAC has long-standing relationships.

Given this strong underlying business position, shareholders’ interests are best served by Alumina Limited and AWAC remaining exposed to aluminium price and exchange rate risk and not seeking to manage that risk through the use of derivative instruments.

When managing interest rate risk, Alumina Limited seeks to reduce the overall cost of funds. A preference for floating rate exposure will be sought in light of the cash-generating capacity of AWAC and the continued strength of Alumina Limited’s financial position.

Political donations
Alumina Limited does not make donations to political parties.

Alumina Limited Board of Directors
Alumina Limited directors in office as at 31 December 2003 were:

DON MORLEY Age 63
BSc MBA FAuslMM Chair
Elected to take office as non-executive director and appointed Chairman of Alumina Limited on 11 December 2002. He is a member of the Audit Committee, Compensation Committee and Nomination Committee. Mr Morley was the Director of Finance of WMC Limited until April 2001. He retired from his executive duties with WMC in October 2002. Mr Morley is a director of Iluka Resources Ltd.

PETER A F HAY Age 53
LLB Director
Elected to take office as non-executive director of Alumina Limited on 11 December 2002. Chief Executive Officer and member of the board, and former National Executive Chairman, of the national law firm Freehills; Director of Pacifica Group Limited; and former Chairman of the Board of Freehill Hollingdale & Page, Melbourne. Mr Hay is a member of the Audit Committee, Compensation Committee and the Nomination Committee.

RONALD J McNEILLY Age 60
BCom MBA, FCPA, FAICD Director
Elected to take office as non-executive director of Alumina Limited on 11 December 2002. Deputy Chairman BlueScope Steel Limited; Director of Ausmelt Limited and Chairman; Director of GH Michell Holdings Pty Ltd; Deputy Chairman of Worley Limited; Chairman of Melbourne Business School Limited; Past Director of BHP Billiton Limited, QCT Resources Limited and Tubemakers of Australia Limited. Executive Director Global Markets BHP Billiton Limited from 2001 to 2002; Executive Director and President of BHP Minerals from 1999 to 2001; Mr McNeilly is a member of the Audit Committee and Chair of the Compensation and Nomination Committees.

MARK R RAYNER Age 66
BSc (Hons) ChemEng FTSE FAusIMM FIEA FAICD Director
Elected to take office as non-executive director of Alumina Limited on 11 December 2002. Director and CEO Comalco Ltd 1978-89, Deputy Chairman 1989-97, Executive Director CRA Limited 1989-95. Director of Boral Ltd since February 1996. Mr Rayner is a member of the Nomination Committee and Compensation Committee and Chair of the Audit Committee.

JOHN MARLAY Age 55
BSc GAICD Chief Executive Officer
Elected as executive director and Chief Executive Officer on 11 December 2002. Joined WMC in August 2002, following role as Head of Strategy for RMC Group PLC in London. Mr Marlay was previously Executive General Manager Business Integration, Hanson PLC from 2000 to 2001.
He has held senior management roles with Pioneer International Ltd, James Hardie Industries Limited and Esso Australia Ltd.

Focused management
Alumina Limited’s management team is a small group with a practical focus on maximising returns and growth from the AWAC business, and providing our shareholders with consistent returns.

The Alumina Limited executive management team comprises:

JOHN MARLAY BSc GAICD
Chief Executive Officer
As Chief Executive Officer, John Marlay has responsibility for the overall ongoing management of Alumina Limited in accordance with the strategy, policies and business processes adopted by the board.

ROBERT DAVIES CMA, Canadian designation
Chief Financial Officer
As Chief Financial Officer, Robert Davies is responsible for finance, accounting, treasury, investor relations and tax.

STEPHEN FOSTER BCom LLB(Hons) GdipAppFin (Sec Inst) Grad.Dip. CSP
General Counsel & Company Secretary
Stephen Foster is responsible for legal, company secretarial, shareholder services, insurance and human resources.

Remuneration

Non-executive director fees
Total remuneration for non-executive directors is determined by resolution of shareholders. The maximum aggregate remuneration approved for directors is currently $950,000. During 2003, $512,283 was paid.

Directors’ remuneration details are set out on page 30.

Non-executive director retirement benefits
Non-executive directors receive a superannuation guarantee contribution required by government regulation which is currently 9 per cent of their fees, and do not receive any other retirement benefits.

Non-executive director share acquisitions
During 2003 a share plan was approved and introduced for the non-executive directors.
The plan requires the directors to allocate a minimum of 10 per cent of fees to acquiring shares in the Company. There are no discounts provided to directors for the acquisition of shares under the Plan. The directors can determine their level of participation in the plan above the minimum. The plan further aligns the directors’ interests with those of shareholders. The Company’s policy is that directors must hold shares in the Company having a value approximately equal to their annual fees by the expiry of their first term as a director.

Executive director and senior executive remuneration
Alumina Limited executives receive competitive remuneration packages which include a fixed annual salary inclusive of superannuation benefits, a variable short-term incentive which is performance related, and an annual long-term incentive taking the form of participation in the Alumina Employee Share Plan, which only vests if longer term shareholder returns exceed the median of peer indices. The cost and value of overall remuneration components are considered as a whole and are designed to ensure an appropriate balance between fixed and variable performance-related components.

The Compensation Committee reviews executive remuneration packages and other employment terms annually. This review is based on performance against specific business goals set at the start of the year, relevant market information and independent expert advice.

In February 2003, the Alumina Employee Share Plan was introduced. The plan provides reward for employees based on Alumina Limited’s total shareholder return (TSR) against two peer indices. Actual rewards are determined and vest progressively based on the performance of Alumina Limited exceeding the performance

of a percentage of companies in an index on a total shareholder return basis. Shares will only vest if the TSR exceeds the fiftieth percentile of the index and are fully vested above the seventy-fifth percentile. All rewards for employees through this plan are directed to purchasing Alumina Limited shares. Executive officers are required to hold shares equivalent in value to 0.5 times their salary. These shares may only be released to executives once the multiple is exceeded and then only those shares over the multiple. The total gross cost (pre tax) of the share plan awards to employees in 2003 was $385,373.

Alumina Limited’s short-term variable remuneration is subject to the approval of the Compensation Committee and is based on the achievement of key performance indicators (KPIs) applicable to the individual and the total shareholder return generated for the year. KPIs applicable to the individual relate to performance against individual objectives. In 2003 only, a proportion of short-term variable remuneration was also linked to strategic objectives with regard to the successful establishment of Alumina Limited post demerger.

Chief Executive Officer contract arrangement
Mr John Marlay was appointed Chief Executive Officer of Alumina Limited on 11 December 2002. His contract is for three years on a fixed annual salary of $700,000 in 2003, with an annual performance-based short-term incentive and a performance-based award of Alumina Limited shares under the long-term incentive. Both of these performance-based benefits, which have a combined maximum payout of 100 per cent of fixed annual reward, are assessed against individual objectives and company performance and are subject to review and board approval. Under the terms of his contract, certain relocation costs were also payable to him.

Mr Marlay’s employment contract provides for an initial three-year term, expiring in August 2005. Under the terms of that contract, he is required to provide six months notice to Alumina Limited to terminate his employment. Alumina Limited is required to give 12 months notice of termination, or payment in lieu of notice, or of a period equivalent to the remaining period of his initial term, whichever is the greater.

Shareholders
Alumina Limited has more than 93,000 shareholders, with the 20 largest holding 53 per cent of the approximately 1.16 billion shares on issue. Some 94.6 per cent of these shareholders have registered addresses in Australia. A more detailed analysis of our shareholders is available in the full financial report, available on request or on our website. Our shares are listed on the Australian and New York stock exchanges.

Shareholder communication
At Alumina Limited we place considerable importance on timely and effective communication with our shareholders and the market.

We use internet-based information systems to improve communication with our shareholders and the investment community. Examples include posting company announcements on our website (usually within one hour of lodgement with the Australian Stock Exchange), and webcasting our financial presentations and briefings. Shareholders may elect to receive company reports by mail or e-mail.

Dividends
The board determines dividends paid to shareholders based on performance and current business conditions. Our intention is, to the extent practicable, to distribute to shareholders all fully franked dividends received by Alumina Limited from AWAC.

Share enquiries
Investors seeking information about their Alumina Limited shareholding or dividends should contact:

Computershare Investor Services Pty Limited
GPO Box 2975 Melbourne, Victoria 3001, Australia

Telephone: 1300 556 050 (for callers within Australia)
+61 (0) 3 9415 4027 (for international callers)

Facsimile: (03) 9473 2500 (for callers within Australia)
+61 (0) 3 9473 2500 (for international callers)

E-mail: web.queries@computershare.com.au

Please note, when seeking information shareholders will be required to provide their Shareholder Reference Number or Holder Identification Number, which is recorded on their shareholding statements.

American depositary receipts
Alumina Limited shares are traded on the New York Stock Exchange as American Depositary Receipts (ADRs). This facility enables American investors to conveniently hold and trade Alumina Limited securities. Each ADR represents four Alumina Limited shares. Investors seeking information on our ADRs should contact our depositary, the Bank of New York:

Telephone: +1 (610) 312 5315 (for non-US callers)
1-888-BNY-ADRS (US callers only)
Website: www.adrbny.com
E-mail: shareowners@bankofny.com

Annual General Meeting
The Annual General Meeting of Alumina Limited will be held on Wednesday 21 April 2004 commencing at 10.30 am (AEST), Auditorium, Melbourne Exhibition Centre, 2 Clarendon Street, Southbank, Melbourne.