_______________

FORM 20-F

[    ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
OR
[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

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. 12B Fuxing Road, Haidian District, Beijing, People's Republic of China 100814
(Address of Principal Executive Offices)

_______________

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

Title of each Class
American Depositary Shares,
each representing 100 H Shares
Class H Ordinary Shares

Name of Each Exchange on which Registered
New York Stock Exchange, Inc.

The Stock Exchange of Hong Kong Limited

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 December 31, 2005:

Domestic Shares, par value RMB1.00 per share

7,750,010,185

H Shares, par value RMB1.00 per share

3,299,865,968

    (including 425,934,600 H Shares in the form of American Depository Shares)

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         v             No         

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

Item 17          Item 18     v    

Pages

Forward-Looking Statements

i

Certain Terms and Conventions

ii

PART I

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

8

Item 5.

Operating and Financial Review and Prospects

37

Item 6.

Directors, Senior Management and Employees

56

Item 7.

Major Shareholders and Related Party Transactions

63

Item 8.

Financial Information

68

Item 9.

The Offer and Listing

70

Item 10.

Additional Information

70

Item 11.

Quantitative and Qualitative Disclosures about Market Risk

82

Item 12.

Description of Securities Other than Equity Securities

84

PART II

Item 13.

Defaults, Dividend Arrearages and Delinquencies

84

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

85

Item 15.

Controls and Procedures

85

Item 16.

[Reserved]

85

Item 16A.

Audit Committee Financial Expert

85

Item 16B.

Code of Ethics

85

Item 16C.

Principal Accountant Fees and Services

85

Item 16D.

Exemption from the Listing Standards for Audit Committees

86

Item 16E.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

86

PART III

Item 17.

Financial Statements

86

Item 18.

Financial Statements

86

Item 19.

Exhibits

86

----------------------------------------------------------------------------

Certain information contained in this annual report, which does not relate to historical financial 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 and Exchange Act of 1934, as amended, or the Exchange Act. 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. We wish to caution readers not to 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 prices and demand for our products;

*

future PRC tariff levels for alumina and primary aluminum;

*

sales of our products;

*

the amount and nature of, and potential for, future development;

i

*

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

*

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

*

the effectiveness of our cost-saving measures;

*

future expansion plans and capital expenditures;

*

expected production capacity increases;

*

competition;

*

changes in legislation, regulations and policies;

*

estimates of proven and probable bauxite reserves;

*

our research and development plans; and

*

our dividend policy.

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 expected 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 entitled "Item 3. Key Information - 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.

Unless otherwise indicated, statistical and market trend information, as well as statements related to market position and competitive data, are based on our internal statistics and/or estimates gathered from our own research and/or various publicly available sources.

Translations of amounts in this annual report from Renminbi into U.S. dollars and vice versa have been made at the rate of RMB8.0702 to US$1.00, which was the noon buying rate in the New York City for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York on December 31, 2005. You should not construe these translations as representations that the Renminbi amounts actually represent U.S. dollar amounts or could be converted into U.S. dollars at that rate or at all. See "Item 3. Key Information - Exchange Rate Information" for information regarding the noon buying rates from January 1, 2001 through February 28, 2006.

We publish our financial statements in Renminbi.

Various amounts and percentages set out in this document have been rounded and, accordingly, are not the exact figures and may not total.

Unless the context otherwise requires, references in this annual report to:

"A Share" are to the domestic ordinary shares, with a nominal value of RMB1.00 each;

"Alcoa" are to Alcoa International (Asia) Ltd., a company incorporated under the laws of Hong Kong;

ii

"alumina-to-silica ratio" are to the ratio of alumina to silica by weight found in bauxite;

"aluminum fabrication" are to the process of taking primary aluminum and converting it into plates, strips, bars, tubes, etc. which can be further converted into consumer or other end products;

"bauxite" are to mineral ores whose composition is principally alumina;

"Bayer process" are to a refining process employed to extract alumina from ground bauxite with a strong solution of caustic soda at an elevated temperature;

"brownfield development" are to development projects at existing plants or facilities;

"CCB" are to China Construction Bank, a PRC state-owned bank established pursuant to PRC government approval;

"Chalco," "our company," "we," "our" and "us" are to Aluminum Corporation of China Limited and its subsidiaries and, where appropriate, to its predecessors;

"China" and the "PRC" are to the People's Republic of China, excluding for purposes of this annual report, Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan;

"China Cinda" are to China Cinda Asset Management Corporation, a PRC state-owned financial enterprise established pursuant to PRC government approval;

"China Development Bank" are to a PRC state-owned bank established pursuant to PRC government approval;

"Chinalco" and the "ultimate holding company" are to our controlling shareholder, Aluminum Corporation of China and its subsidiaries (other than Chalco and its subsidiaries) and, where appropriate, to its predecessors;

"China Orient" are to China Orient Asset Management Corporation, a PRC state-owned financial enterprise established pursuant to PRC government approval;

"diasporite" are to a mineral of bauxite deposits with the chemical composition of Al(2)O(3) * H(2)O;

"Exchange Act" are to The Securities Exchange Act of 1934, as amended;

"fabricating ingots" are to the primary aluminum or aluminum alloy ingots that may be used directly in the aluminum fabrication process;

"gibbsitic" are to a mineral of bauxite deposits with the chemical composition of Al(2)O(3) * 3H(2)O;

"greenfield investment" are to investment projects to construct new plants or facilities;

"Guangxi Investment" are to Guangxi Investment (Group) Co., Ltd. formerly known as Guangxi Development and Investment Co., Ltd., a PRC state-owned enterprise established in the PRC and one of our promoters and shareholders;

"Guizhou Development" are to Guizhou Provincial Materials Development and Investment Corporation, a PRC state-owned enterprise established in the PRC and one of our promoters and shareholders;

"HK$" and "HK dollars" are to Hong Kong dollars, the lawful currency of the Hong Kong Special Administrative Region of the PRC;

iii

"H Shares" are to overseas listed foreign shares of par value RMB1.00 each, which are listed on the Hong Kong Stock Exchange and subscribed for and traded in HK dollars;

"Hong Kong Stock Exchange" are to The Stock Exchange of Hong Kong Limited;

"hybrid Bayer-sintering process" are to the refining process developed in China which involves the application of the Bayer process and the sintering process in combination to extract alumina from bauxite more efficiently;

"ingots" and "remelt ingots" are to the international standard primary metal products from an aluminum smelter. Remelt ingots are the aluminum ingots generally remelted before being cast into alloyed products or used for aluminum fabrication;

"kA" are to kiloamperes, a unit for measuring the strength of an electric current, with one kiloampere equal to 1,000 amperes;

"kWh" are to kilowatt hours, a unit of electrical power, meaning one kilowatt of power for one hour;

"Lanzhou Aluminum" are to Lanzhou Aluminum Corporation Limited, our associated company that is a joint stock limited company established under the PRC law, whose A shares are traded on the Shanghai Stock Exchange;

"Listing Rules" are to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (as amended from time to time);

"NYSE" are to New York Stock Exchange;

"ore-dressing Bayer process" are to a refining process we developed which involves the treatment of bauxite in order to increase its alumina-to-silica ratio so as to allow the Bayer process to then be applied;

"provinces" are to provinces and to provincial-level autonomous regions and municipalities in China, excluding Hong Kong Special Administrative Region, Macao Special Administrative Region, and Taiwan, which are directly under the supervision of the central PRC government;

"refining" are to the chemical process required to produce alumina from bauxite;

"RMB" are to Renminbi, the lawful currency of the PRC;

"NDRC" are to China National Development and Reform Commission;

"SASAC" are to State-owned Assets Supervision and Administration Commission of the State Council;

"Shandong Aluminum" are to Shandong Aluminum Industry Co., Ltd., our subsidiary that is a joint stock limited company established under PRC law, whose A shares are traded on the Shanghai Stock Exchange;

"sintering process" are to a refining process employed to extract alumina from ground bauxite by mixing with supplemental materials and burning in a coal fired kiln;

"smelting" are to the electrolytic process required to produce molten aluminum from alumina;

"tonne" are to the metric ton, a unit of weight, with one metric ton equal to 1,000 kilograms or 2,204.6 pounds;

"US$" are to U.S. dollars, the lawful currency of the United States of America; and

"WTO" are to World Trade Organization.

iv

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

The following tables present our summary income statement data and cash flow data for the years ended December 31, 2001, 2002, 2003, 2004 and 2005; and the summary balance sheet data as of December 31, 2001, 2002, 2003, 2004 and 2005. The summary balance sheet data as of December 31, 2004 and 2005 and income statement and cash flow data for the years ended December 31, 2003, 2004 and 2005 have been derived from, and should be read in conjunction with, the audited financial statements included elsewhere in this report. The summary balance sheet data as of December 31, 2001, 2002 and 2003 and income statement and cash flow data for the years ended December 31, 2001 and 2002 have been derived from our financial statements as of and for such dates, which are not included in this annual report. We have changed certain of our accounting policies following the adoption of the new/revised Hong Kong Financial Reporting Standards, or "HKFRS", and Hong Kong Accounting Standards, or "HKAS", collectively referred to as "HK GAAP" or "HKFRSs", effective for accounting periods commencing on or after January 1, 2005. As a result, we have reclassified/restated certain income statement and balance sheet data for the years ended December 31, 2001, 2002, 2003 and 2004 as required in accordance with the relevant requirements. See Note 2(a) to our audited financial statements for the changes to our accounting policies and the effect of adopting HKFRSs. Unless otherwise indicated, the financial statements are prepared and presented in accordance with accounting principles generally accepted in Hong Kong, also known as "HK GAAP" or HKFRSs. For a reconciliation of our net income and equity under HK GAAP to generally accepted accounting principles in the United States, also known as "U.S. GAAP," see Note 33 to our audited financial statements. For more information, please see "Item 5 - Operating and Financial Review and Prospects - U.S. GAAP Reconciliation".

This financial information reflects the reorganization of China's aluminum industry, following which our company was established and has been prepared as if our current structure had been in existence throughout the relevant periods. In addition, the financial information through June 30, 2001 also includes various other operations retained by Chinalco that were historically associated with Chinalco's alumina and primary aluminum operations. The results of such businesses are not reflected in our statements of income for periods ending after June 30, 2001. Similarly, such businesses and their related balance sheet data are not reflected in our balance sheet as of any date after June 30, 2001. In addition, the financial information included in this annual report may not necessarily reflect our operating performance, financial position and cash flows in the future or what they would have been had we been a separate, stand-alone entity during all of the periods presented.

Years Ended December 31,

2001

2002

2003

2004

2005

2005

RMB

RMB

RMB

RMB

RMB

USD⁽²⁾

(restated⁽¹⁾)

(restated⁽¹⁾)

(restated⁽¹⁾)

(restated⁽¹⁾)

(in thousands, except per share and per ADS data)

INCOME STATEMENT DATA:

HK GAAP

Turnover

15,987,913

16,792,766

23,245,858

32,313,076

37,110,319

4,598,439

Cost of goods sold

11,661,992

13,368,700

16,460,283

21,503,250

24,822,109

3,075,774

Gross profit

4,325,921

3,424,066

6,785,575

10,809,826

12,288,210

1,522,665

Other revenues, net

160,255

75,285

50,642

101,293

116,441

14,429

1

Selling and distribution expenses

335,227

501,829

549,432

647,532

686,717

85,093

General and administrative expenses

1,074,411

733,803

1,047,461

1,220,902

1,523,317

188,758

Research and development expenses

144,048

131,941

173,359

132,635

113,381

14,049

Operating income

2,932,490

2,131,778

5,065,965

8,910,050

10,081,236

1,249,194

Finance costs

444,548

476,100

439,897

109,948

366,908

45,465

Operating income after finance costs

2,487,942

1,655,678

4,626,068

8,800,102

9,714,328

1,203,729

Share of (loss)/income of jointly

    controlled entities

(125)

(254)

1,193

(3,953)

372

46

Share of income of an associated company

-

-

-

-

26,947

3,339

Income before income tax

2,487,817

1,655,424

4,627,261

8,796,149

9,741,647

1,207,114

Income taxes

833,500

190,921

920,159

2,161,086

2,495,213

309,189

Income after income tax

1,654,317

1,464,503

3,707,102

6,635,063

7,246,434

897,925

Attributable to:

Equity holders of the Company

1,590,604

1,417,681

3,549,732

6,391,523

7,022,422

870,167

Minority interest

63,713

46,822

157,370

243,540

224,012

27,758

1,654,317

1,464,503

3,707,102

6,635,063

7,246,434

897,925

Dividends

178,498

472,496

1,060,788

1,944,778

2,364,673

293,013

Basic and diluted net earnings per share

0.19

0.13

0.34

0.58

0.64

0.08

Basic and diluted net earnings per ADS

18.55

13.35

33.83

57.89

63.55

7.87

U.S. GAAP

Operating income

3,071,545

2,434,333

5,368,520

9,214,004

10,360,542

1,283,803

Net income

1,727,763

1,493,582

3,797,175

6,622,916

7,229,167

895,785

Basic and diluted net earnings per share

0.22

0.14

0.36

0.60

0.65

0.08

Basic and diluted net earnings per ADS

22.00

14.00

36.16

59.99

65.42

8.11

Segment Operating Income (Loss):

HK GAAP

Alumina

2,095,769

1,388,712

5,099,164

9,333,353

10,312,306

1,277,825

Primary aluminum

1,217,439

1,143,658

434,862

(43,875)

231,940

28,741

Corporate and other services

(25,680)

(57,933)

(78,337)

(76,906)

(48,438)

(6,002)

Unallocated

(330,649)

(311,729)

(359,443)

(281,431)

(306,604)

(37,992)

Inter-segment elimination

(24,389)

(30,930)

(30,281)

(21,091)

(107,968)

(13,378)

Total operating income

2,932,490

2,131,778

5,065,965

8,910,050

10,081,236

1,249,194

Years Ended December 31,

2001

2002

2003

2004

2005

2005

RMB

RMB

RMB

RMB

RMB

USD⁽²⁾

(restated⁽¹⁾)

(restated⁽¹⁾)

(restated⁽¹⁾)

(restated⁽¹⁾)

(in thousands)

BALANCE SHEET DATA

HK GAAP

Bank balances and cash

4,495,922

2,342,254

2,596,440

6,223,763

7,597,727

941,455

Total current assets

12,013,524

8,557,975

8,638,566

14,356,588

16,962,670

2,101,891

Total non-current assets

21,689,959

23,691,565

26,768,304

35,201,481

42,047,209

5,210,182

Total assets

33,703,483

32,249,540

35,406,870

49,558,069

59,009,879

7,312,073

Total short-term loans (including

    current portion of long-term

    loans and bonds)

5,477,549

5,103,274

4,617,130

4,522,568

3,732,978

462,563

Short-term bonds

-

-

-

-

1,970,840

244,212

Total long-term loans (excluding

    current portion of long-term loans)

5,391,861

4,949,298

5,412,628

7,391,663

9,690,493

1,200,775

Equity attributable to the shareholders

14,325,376

15,769,314

18,985,410

27,566,795

32,644,439

4,045,060

U.S. GAAP

Total assets

31,113,431

29,770,888

33,244,024

47,260,826

55,525,980

6,880,372

Total long-term loans (excluding

    current portion of long-term loans)

5,391,861

4,949,298

5,412,628

7,391,663

9,690,493

1,200,775

Shareholders' equity

11,671,874

13,170,960

16,634,499

25,436,606

30,720,995

3,806,391

Number of shares

8,122,482

10,495,863

10,499,900

11,040,835

11,049,876

11,049,876

Years Ended December 31,

2001

2002

2003

2004

2005

2005

RMB

RMB

RMB

RMB

RMB

USD⁽²⁾

(restated⁽¹⁾)

(restated⁽¹⁾)

(restated⁽¹⁾)

(restated⁽¹⁾)

(in thousands)

Other Financial Data:

HK GAAP

Net cash generated from

    operating activities

1,940,969

2,671,759

6,002,506

8,265,203

8,590,208

1,064,436

2

Net cash used in investing activities

(2,575,617)

(3,780,812)

(5,395,259)

(9,055,830)

(8,821,208)

(1,093,059)

Net cash generated from (used in)

financing activities

3,108,087

(868,513)

(306,892)

4,417,950

1,604,964

198,875

Capital expenditure

Alumina

2,610,109

3,357,576

4,013,419

5,398,997

5,369,606

665,362

Primary aluminum

793,096

865,360

1,635,826

5,257,407

2,793,892

346,199

Corporate and other services

27,638

49,304

47,259

76,841

124,811

15,466

Unallocated

177,657

29,930

33,030

208,411

129,623

16,062

Total capital expenditure

3,608,500

4,302,170

5,729,534

10,941,656

8,417,932

1,043,089

----------------------------------------

(1)

Restatement of the financial information for the years ended December 31, 2001, 2002, 2003, and 2004 has been made pursuant to the adoption of the new/revised standards and interpretation of HKFRSs as set forth in Note 2(a) to our audited financial statements.

(2)

Translated solely for the convenience of the reader into U.S. dollars at the noon buying rate prevailing on December 31, 2005 of US$1.00 to RMB8.0702.

The following table sets forth, for the periods indicated, the noon buying rate in New York for cable transfers payable in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York in Renminbi per U.S. dollar:

Noon Buying Rate

Period

Period End

Average⁽¹⁾

High

Low

(expressed in RMB per US$)

2000

8.2774

8.2784

8.2799

8.2768

2001

8.2766

8.2772

8.2786

8.2676

2002

8.2800

8.2772

8.2800

8.2699

2003

8.2767

8.2771

8.2800

8.2765

2004

8.2765

8.2768

8.2773

8.2764

2005

8.0702

8.1940

8.2765

8.0702

    November

8.0804

8.0840

8.0877

8.0796

    December

8.2765

8.2765

8.2767

8.2765

2006

    January

8.0608

8.0654

8.0702

8.0040

    February

8.0415

8.0512

8.0616

8.0415

    March

8.0167

8.0349

8.0505

8.0167

    April

8.0165

8.0143

8.0248

8.0040

    May (through May 25)

8.0235

8.0112

8.0255

8.0020

___________________________

(1)

Determined by averaging the rates on the last business day of each month during the respective period, except for monthly averages, which are determined by averaging the rates on each business day of the month.

3

We are subject to various changing competitive, economic, political and social conditions in China as well as factors relating to the alumina and aluminum industry. These changing conditions and factors entail certain risks, which are described below.

*

We price our alumina and primary aluminum products by reference to international and domestic market prices, import cost of alumina, and changes in supply and demand in the domestic market. Each of these factors may fluctuate beyond our control. Historically, the international market prices for alumina and primary aluminum products have been volatile. Because most of our costs are fixed and we may not be able to respond quickly to any sudden decrease in alumina or primary aluminum prices, any significant fluctuation in international market prices could materially adversely affect our business, financial condition and operating performance.

*

Our plans to upgrade and expand our alumina and primary aluminum plants and to improve and upgrade our internal control and management system will require capital expenditures of approximately RMB14,000 million in 2006. See "Item 4. Information on the Company - Property, Plants and Equipment - Our Expansion and Profit Improvement Plan." We may also need further funding for debt servicing, working capital, investments, potential acquisitions and joint ventures and other corporate requirements. We cannot assure you that cash generated from our operations will be sufficient to fund these development plans, or that our actual capital expenditures and investments will not significantly exceed our current planned amounts. If either of these conditions arises, we may have to seek external financing to satisfy our capital needs. Our ability to obtain external financing at reasonable costs is subject to a variety of uncertainties. Failure to obtain sufficient external funds for our development plans could adversely affect our business, financial condition and operating performance.

*

Our planned expansion, cost reduction and technical improvement projects could be delayed or adversely affected by, among other things, failures to receive regulatory approvals, difficulties in obtaining sufficient financing, technical difficulties, or human or other resource constraints. Moreover, the cost of these projects may exceed those originally contemplated. Costs savings and other economic benefits expected from these projects may not materialize as a result of any such project delays, cost overruns or changes in market circumstances. Failure to obtain intended economic benefits from these projects could adversely affect our business, financial condition and operating performances.

*

Our business has grown rapidly. Our ability to manage growth effectively will require us to continue to implement and improve our operational, financial and management systems, continue to develop the management skills of our managers, and continue to train, motivate and manage our employees. Failure to manage our growth effectively could adversely affect our operating performance. In addition, we are in the process of conducting feasibility studies to establish an overseas joint venture company with Companhia Vale do Rio Doce, or CVRD, to produce alumina in Brazil. We have also participated in the bidding for bauxite mining projects in Australia and have been shortlisted as the only developer to explore overseas bauxite resources. Further, we entered into the memorandum of understanding with the Vietnam National Coal-Mineral Industries Group, or "VINACOAL" regarding the proposed establishment of joint venture companies to engage in the development of local bauxite resources. Due to the increase of energy prices in the global market and uncertainty of future market conditions, we could encounter unforeseen problems due to our unfamiliarity with local laws and regulations. We cannot assure you that our overseas expansion or investments will be successful or that we will not suffer foreign exchange losses in connection with our overseas investments.

*

We face competition from both domestic and international primary aluminum producers. Our principal competitors in the primary aluminum business are domestic smelters, some of which are expanding their production capacity. These smelters pose competitive challenges to our primary aluminum operations in production costs, product quality and price. We also face increasing competition from international primary aluminum suppliers as China continues to open up its aluminum industry to international trade.

4

After China's accession to the WTO on December 11, 2001, competition from international suppliers of alumina may increase as tariff and non-tariff barriers for imported alumina are significantly reduced. The standard tariff on imports of alumina into China has been reduced from 18% as of December 31, 2001 to its current level of 5.5% as of January 1, 2006. Intensified competition may result in reductions in our prices or sales volume and may have a material adverse effect on our financial condition and operating performance. If we are not successful in reducing our costs, we may not be able to maintain or increase our current share of China's primary aluminum market or continue to achieve profitability.

*

We rely heavily on coal as our energy and fuel source required during our production process. As we significantly increase our production capacities, coal required for our production substantially increases accordingly. If our coal suppliers are not able to supply the amount of coal required for our production due to general short supply of coal or any other reason, we may be forced to reduce production output or suspend operation of our production in which case our financial condition and results of operation may be materially adversely affected.

*

Prior to 2004, the export of primary aluminum enjoyed a 15% tax refund. Since January 1, 2005, the export tax refund was cancelled and exports of primary aluminum have been subject to a 5% export tax. The abolishment of export tax refund and the imposition of export tax affected the allocation of domestic and export sales by aluminum producers in China and resulted in an increase in domestic sales. The increase in domestic sales further intensified the competition in domestic primary aluminum market, where we conduct most of our primary aluminum business. Intensified domestic competition could have a material adverse effect on the price and margins of our products and market share.

*

Bauxite is the most important raw material for alumina production. We obtain our bauxite from three major sources, including our own mines, jointly operated mines, and other suppliers, which primarily consist of small independent mines. See "Item 4. Information on the Company - Business Overview - Business Operations - Alumina - Raw Materials - Bauxite." Each of these sourcing methods could affect the security or cost of supply. The average price of bauxite supplied by small independent mines in 2005 has increased 7.3% as compared with 2004, primarily due to increasing demand. If we are unable to obtain a steady supply of key raw materials externally and internally at a competitive price, our operating performance may be adversely affected.

*

The smelting of primary aluminum employs an electrolytic reduction process that requires a large and continuous supply of electricity. Interruptions of electricity supply can result in lengthy production shutdowns, increased costs associated with restarting production and waste of production in progress. In extreme cases, interruptions of electricity supply can also cause damage to or destruction of the equipment and facilities. If this occurs, our operation may be adversely affected.

*

Electricity cost is the principal production cost component of our primary aluminum production. All of our seven smelters benefit from various policies that allow them to purchase electricity at reduced prices. However, despite such preferential treatment, our electricity prices are expected to continue to be higher than those of major international primary aluminum producers. Our electricity costs increase due to severe shortage of electric power in recent years. In 2005, the electricity shortage led to an increase of average electricity price by approximately 5.9% compared with 2004, which in turn caused our unit production cost for primary aluminum to increase by approximately 1.9%. If any other preferential treatment policies are cancelled by the PRC government or not renewed upon expiration, or if electricity prices or charges were to increase for any reason, it would increase our unit production cost for primary aluminum and have an adverse effect on our financial condition and operating performance.

*

Our alumina products are mainly delivered by rail or truck, and our primary aluminum products are transported to our customers mostly by rail. If we are unable to make on-time delivery due to transportation problems, or if the costs of transportation continue to rise, our operating performance will be significantly affected.

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*

A main objective of our research and development projects is to develop new methods and processes to improve efficiency in the refining of bauxite with relatively low alumina-to-silica ratios. A potential decline in China's supply of bauxite with high alumina-to-silica ratios, failure to achieve technological improvements or to implement such improvements in commercial applications could impede our efforts to reduce unit production costs and to compete with major international producers.

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The bauxite reserve data on which we base our production, turnover and expenditure plans are estimates we have developed internally and may be inaccurate. There are numerous uncertainties inherent in estimating quantities of reserves, including many factors beyond our control. If these estimates are inaccurate or indicated tonnages are not recovered, it could have a material adverse effect on our business, financial condition and operating performance.

*

We rely on short-term borrowings as part of our financing needs. If we fail to achieve timely rollover, extension or refinancing of our short-term debt, we may be unable to meet our obligations in connection with debt service, accounts payable and/or other liabilities when they become due and payable. In addition, we may be exposed to changes in interest rates. If interest rates increase substantially, our results of operations could be adversely affected.

*

Our primary sources of funding are cash generated by operating activities, prepayments and deposits from customers, short-term and long-term bank borrowings, proceeds from shares offerings and proceeds from short-term bond offerings. In 2005, we required our customers to make prepayments or deposits for purchases of alumina. The total amount of prepayments and deposits was approximately RMB1,571.9 million as of December 31, 2005. We have relied on prepayments and deposits received from customers as a source of our liquidity. In the event that demand for alumina declines, we may not be able to require such prepayments and deposits from customers, in which case this source of liquidity would not be available to us.

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Chinalco, a state-owned enterprise, as of December 31, 2005 owned 42.14% of our issued share capital and is our largest shareholder. The interests of Chinalco may conflict or even compete with our interests and the interests of our public shareholder. Chinalco may take actions that favor the interests of its subsidiaries, associates and other related entities over our interests and the interests of our public shareholders. In addition, Chinalco and some of its subsidiaries and associates provide a range of services to us, including engineering and construction services, social services, land and property leasing and supply of raw and supplemental material. Some of the services Chinalco provides to us, such as educational and medical care services for our employees, would be difficult to obtain from other sources. Our cost of operations could increase if Chinalco were unable to perform its agreement to provide such services to us.

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Chinalco has substantial financial obligations relating to the businesses, operations and personnel that it retained in the reorganization. While Chinalco generates significant operating turnover and receives government support, it may also rely on dividends received from us as a means of funding these obligations. Subject to the relevant provisions of the PRC Company Law and our articles of association, Chinalco may seek to influence the amount of dividends we pay out in order to satisfy its cash flow requirements. Any resulting increase in our dividend payout would reduce funds available for reinvestment in our businesses.

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Our alumina and primary aluminum production operations are subject to environmental protection laws and regulations in China, which impose such penalties as waste discharge fees, fines or closure of non-compliant plants. Each of our alumina and primary aluminum production plants has implemented a system to control its emissions and to oversee compliance with PRC environmental regulations. The PRC government, however, has taken steps and may take additional steps, towards more rigorous enforcement of applicable laws, and/or adoption of more stringent environmental standards. If the PRC national or local authorities enact additional regulations or enforce existing or new regulations in a more rigorous manner, we may be required to make additional environmental expenditures, which could have an adverse impact on our financial condition.

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*

We may experience major accidents in the course of our operations, which may cause significant property damage and personal injuries. Significant industry-related accidents and natural disasters may cause interruptions to various parts of our operations, or could result in property or environmental damage, increase in operating expenses or loss of turnover. The occurrence of such accidents and the resulting consequences may not be covered adequately, or at all, by the insurance policies we carry. In accordance with customary practice in China, we do not carry any business interruption insurance or third party liability insurance for personal injury or environmental damage arising from accidents on our property or relating to our operations other than our automobiles. Losses or payments incurred may have a material adverse effect on our operating performance if such losses or payments are not fully insured.

*

We are also subject to a number of risks relating to the PRC, including the following:

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The central and local PRC governments continue to exercise a substantial degree of control and influence over the aluminum industry in China and shape the structure and characteristics of the industry by means of policies in respect of major project approval, preferential treatments such as tax incentives, electricity pricing, and safety, environmental and quality control. If the PRC government changes its current policies or the interpretation of those policies that are currently beneficial to us, we may, to some extent, face pressure on profit margins and significant constraints on our ability to expand our business operations or to maximize our profitability.

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Under current PRC regulatory requirements, the construction of new alumina refineries, the expansions of primary aluminum plants and mining projects in excess of RMB500 million require PRC government approval. If any of our important projects required for our growth or cost reduction are not approved, or not approved on a timely basis, our financial condition and operating performances could be adversely affected.

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Substantially all of our business, assets and operations are located in China. The economy of China differs from the economies of most developed countries in many respects. The economy of China has been transitioning from a planned economy to a market-oriented economy. Although in recent years the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the PRC government. In addition, the PRC government continues to play a significant role in regulating industry by imposing industrial policies. It also exercises significant control over China's economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Some of these measures benefit the overall economy of China, but may have a negative effect on us.

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On September 4, 2005, the China Securities Regulatory Commission, or CSRC, promulgated the Circular on Distributing the Measures for the Administration of the Share-Trading Reform of Listed Companies, or the Circular. According to the Circular, the holders of non-tradable shares in A share companies have the right to request the board of directors to convene meetings with the tradable shareholders to discuss a plan through which the non-tradable shares may become tradable. In order to make the non-tradable shares become tradable, the holders of non-tradable shares may be required to pay certain consideration under such reform in the form of, among others, complimentary shares to holders of tradable shares. We have investments in A share companies which are regulated by the Circular. We may suffer adverse consequences in terms of, among others, dilution of our shareholdings in A share companies in which we invest as a result of such reform.

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Since 1994, the conversion of Renminbi into foreign currencies, including Hong Kong and U.S. dollars, has been based on rates set by the People's Bank of China, or PBOC, which are set daily based on the previous day's PRC interbank foreign

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exchange market rate and current exchange rates on the world financial markets. On July 21, 2005, PBOC announced a reform of its exchange rate system and revalued the Renminbi . Under the reform, Renminbi is allowed to trade against a basket of foreign currencies. Any further appreciation of Renminbi in the future will increase the cost of our export sales, reduce our account receivables denominated in foreign currencies and adversely affect our financial condition and results of operations. On the other hand, any devaluation of Renminbi may adversely affect the value of, and dividends payable on, our H shares and ADSs in foreign currencies since we receive our turnover and denominate our profits in Renminbi. Our financial condition and operating performance may also be affected by changes in the value of certain currencies other than Renminbi in which our earnings and obligations are denominated. In particular, a devaluation of the Renminbi could increase the portion of our cash flow required to satisfy our foreign currency-denominated obligations.

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Since 1979, many new laws and regulations covering general economic matters have been promulgated in China. Despite this activity to develop the legal system, China's system of laws is not yet complete. Even where adequate law exists in China, enforcement of existing laws or contracts based on existing law may be uncertain and sporadic, and it may be difficult to obtain swift and equitable enforcement or to obtain enforcement of a judgment by a court of another jurisdiction. The relative inexperience of China's judiciary in many cases creates additional uncertainty as to the outcome of any litigation. In addition, interpretation of statutes and regulations may be subject to government policies reflecting domestic political changes.

See also "Item 4. Information on the Company - Business Overview," "Item 5. Operating and Financial Review and Prospects," "Item 7. Major Shareholders and Related Party Transactions - Related Party Transactions," "Item 8. Financial Information" and "Item 11. Quantitative and Qualitative Disclosures About Market Risks."

ITEM 4.

INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT OF THE COMPANY

We were incorporated as a joint stock limited company under PRC laws on September 10, 2001. Our scope of business includes bauxite mining, the production of alumina, primary aluminum and ancillary products, and provision of engineering and construction services. Pursuant to a reorganization agreement effective as of July 1, 2001 among Chinalco, Guangxi Investment, Guizhou Development and us and a mining rights agreement between Chinalco and us, substantially all of Chinalco's alumina and primary aluminum production operations, operations of the Research Institute, as well as mining operations and mining rights of bauxite mines and other related assets and liabilities were transferred to us upon our formation.

We are currently the largest producer of alumina and primary aluminum in terms of production and sales volume in China, one of the fastest growing major aluminum markets in the world. Alumina and primary aluminum are our principal products. Alumina is refined from bauxite through a chemical process and is the key raw material for producing primary aluminum, which in turn is a widely used metal and the key raw material for aluminum fabrication. In addition to alumina and primary aluminum, we also produce and sell a comparatively small amount of alumina chemical products, including alumina hydrate and alumina based industrial chemical products, carbon products, including principally carbon anodes and cathodes, and gallium.

We produced approximately 7,181,000 tonnes of alumina, 2,030,000 of which was used internally by our smelters, and approximately 937,000 tonnes of alumina chemical products, including alumina hydrate and alumina based industrial chemical products in 2005, representing approximately 49.0% of all alumina products consumed in China during that year, making us the second largest producer of alumina in the world. Our alumina production has increased rapidly in the past few years, and we expect to continue to capture the growth in China's alumina market through ongoing

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expansion. From 2001 to 2005, our annual alumina production grew from 4,700,000 tonnes to 7,800,000 tonnes.

Our primary aluminum production of 1,051,600 tonnes in 2005 accounted for approximately 14.9% of China's domestic primary aluminum consumption for 2005. From 2001 to 2005, our annual primary aluminum production grew from 710,000 tonnes to 1,051,600 tonnes.

Our key operating assets include four integrated alumina and primary aluminum production plants, another two alumina refineries and three primary aluminum smelters, including Lanzhou Aluminum, which is our 28% owned associated company, in addition to the integrated production plants and one research institute, which also produces a small amount of products on a pilot run basis. Most of our refineries are located in reasonable proximity to abundant bauxite reserves and, as of December 31, 2005, had annual production capacities ranging from 800,000 to 2,200,000 tonnes. Our primary aluminum smelters had annual production capacities ranging from 56,000 to 403,700 tonnes as of December 31, 2005. According to the China Non-ferrous Metals Industry Association, our smelters in Guizhou and Qinghai are the largest and the second largest smelters in China, respectively, in terms of production capacity. Since December 31, 2004, all of our production facilities have been granted ISO9001:2000, OHSAS 18001:1999 and GB/T 28001-2001 accreditations.

We entered into a number of acquisition and joint venture agreements with partners in China and overseas to further increase our alumina and primary aluminum production capacities. In January 2005, we entered into an agreement with Lanzhou Aluminum Plant to acquire 151,851,442 shares, or 28% of the total issued share capital of Lanzhou Aluminum for a consideration of RMB767.3 million, which was completed in March 2005. Lanzhou Aluminum owns one primary aluminum smelting plant with total production capacity at approximately 160,000 tonnes per annum. For more details, see "-Business Overview - Production Facilities." Lanzhou Aluminum had since become our associated company whose results of operations are not consolidated into our audited financial statements. See Note 10(b) to our audited financial statements.

On July 31, 2005, we entered into a Supplemental Agreement with Guangxi Aluminum Development and Investment Stock Co., Ltd., or Guangxi Associate, and China Minmetals Non-ferrous Metal Co., Ltd., or China Minmetals, to increase the total investment of the joint venture company, Guangxi Huayin Aluminum Co., Ltd., from RMB10 million to RMB8,491.0 million, of which 25% will be contributed by shareholders in proportion to their equity interest held in the joint venture company and the remaining 75% will be financed by bank loans. We, Guangxi Associate and China Minmetals are responsible for contribution of RMB701.0 million, RMB721.5 million and RMB701.0 million, respectively. See "- Property, Plants and Equipment - Our Expansion and Profit Improvement Plan."

On December 6, 2005, we entered into a joint venture agreement with Shanxi Guanlv Co., Ltd. to establish a joint venture company, Shanxi Huasheng Aluminum Company Ltd. The joint venture company is expected to have an annual production capacity of primary aluminum of approximately 220,000 tonnes. The joint venture company is expected to have a total investment of RMB2,379.4 million and a registered capital of RMB1,000 million. Upon completion of the capital contribution, we will hold 51% equity interest in the joint venture company.

In March 2006, we entered into a share transfer agreement with Liaoning Fushun Aluminum Factory to acquire 100% equity interest held by it in Liaoning Fushun Aluminum Co., Ltd., or Funshun Aluminum, with an annual production capacity of 140,000 tonnes for a consideration of RMB500 million. Funshun Aluminum's primary business is the production of primary aluminum and carbon products. As of February 28, 2006, Funshun Aluminum had an asset value of RMB1,270 million and net assets of approximately RMB503 million.

On April 17, 2006, we entered into a joint venture agreement with Guizhou Wujiang Hydropower Development Co. Ltd. to establish a joint venture company, Chalco Zunyi Alumina Co., Ltd. Upon completion of the capital contribution, we will hold 67% equity interest in the joint venture company. The joint venture company is expected to have an annual production capacity of alumina of approximately 800,000 tonnes. The joint venture company is expected to have a total investment of RMB4,250.0 million and a registered capital of RMB1,400.0 million.

On May 19, 2006, we entered into a Sale and Purchase Agreement with Jiaozuo Wanfang Group to acquire 29% of the issued share capital, or 139,251,064 State-owned legal person shares held by Jiaozuo Wanfang Group in the issued share capital of Jiaozuo Wanfang Aluminum Manufacturing Co., Ltd. ("Jiaozuo Wanfang"). Jiaozuo Wanfang has an annual production capacity of 272,000 tonnes of primary aluminum. Jiaozuo Wanfang is a joint stock limited company established in the PRC, the shares of which are listed on the Shenzhen Stock Exchange of the PRC. The total consideration payable by us for the acquisition of Jiaozuo Wanfang is RMB247.0 million. Completion of the sale and purchase is subject to, among other things, approval by the relevant government authorities, including China Securities Regulatory Commission, and registration of the acquired shares in favor of us. Pursuant to the Acquisition and subject to PRC Government's approval, we will become the largest shareholder of Jiaozuo Wanfang upon completion of the acquisition.

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In addition, we have entered into the following non-binding letters of intent for potential acquisitions and joint venture opportunities to further expand our primary aluminum production capacities:

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we entered into a letter of intent to establish a joint venture with Baiyin Nonferrous Metal (Group) Co., Ltd., or Baiyin Nonferrous, and Baiyin Ibis Aluminum Co., Ltd., or Baiyin Ibis, on December 10, 2005. Baiyin Nonferrous will contribute 127,000 tonnes of primary aluminum smelting and supporting facilities owned by Baiyin Ibis as capital contribution and hold 49% equity interest in the joint venture and we will hold 51% equity interest in the joint venture. The joint venture will have an annual production capacity of 127,000 tonnes of primary aluminum.

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we entered into a letter of intent to acquire 60% equity interest of a subsidiary held by Shandong Huasheng Jiangquan Group in January 2006. The subsidiary has an annual production capacity of 100,000 tonnes of primary aluminum. The subsidiary also has other supporting facilities and two 135MW coal-fired generators.

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we entered into a letter of intent to acquire 51% equity interest in Zunyi Aluminum Co., Ltd., with Wujiang Hydropower Development Corporation Ltd., the People's Government of Zunyi County and Zunyi Aluminum Co., Ltd. in January 2006. Zunyi Aluminum Co., Ltd. has an annual production capacity of 113,000 tonnes of primary aluminum.

To secure the bauxite supply, we continued to participate in overseas development projects in 2005. We entered into a non-binding Framework Agreement with CVRD on May 24, 2005. We are in the process of conducting feasibility studies with CVRD for the proposed establishment of a joint venture company, ABC - Aluminum Brasil China S/A, to produce alumina in Barcarena, State of Para, Brazil. See "-Business Overview - Production Facilities - Alumina."

We submitted a letter of intent to bid for the development of bauxite resources in Aurukun, Australia to the Queensland government in October 2005. We further submitted a non-binding preliminary development proposal to the Queensland government in January 2006. In March 2006, the Queensland government confirmed that we were shortlisted as the only developer invited to submit a final proposal. See "-Business Overview - Raw Materials - Alumina."

In addition, we participated in a mining project under cooperation by the PRC and Vietnam governments to explore bauxite resources in Dak Nong province in Vietnam. In December 2005, we entered into a non-binding memorandum of understanding with VINACOAL regarding the proposed establishment of joint venture companies to explore bauxite resources in Dak Nong province in Vietnam. We expect to commence feasibility studies of this project in 2006. See "-Business Overview - Production Facilities - Alumina."

Our capital expenditures in 2003, 2004 and 2005 were RMB5,729.5 million, RMB10,941.7 million and RMB 8,417.9 million (US$1,043.1 million), respectively. We currently expect our capital expenditures to be approximately RMB14,000.0 million in 2006. For details of our capital expenditures and our future plan, please see "-Our Expansion and Profit Improvement Plan" and "Item 5 -Operating and Financial Review and Prospects - Capital Expenditures".

Our principal executive office is currently located at No. 12B Fuxing Road, Haidian District, Beijing, People's Republic of China 100814. Our contact telephone number is (86)10 6398 5654. Our web site is www.chalco.com.cn. Information contained on our website does not constitute part of this annual report.

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We and Alcoa agreed in 2001 to develop a long-term strategic relationship. The key components of this relationship involve an investment in our company, and the formation of a joint venture company, or Guangxi Pingguo JV, to own and operate our Pingguo facilities. To establish this strategic relationship, we and Alcoa entered into:

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a strategic investor subscription agreement, dated November 5, 2001, or Subscription Agreement, pursuant to which Alcoa agreed to purchase our shares in our initial global share offering in December 2001 at the initial public offering price an amount of shares that would constitute 8.0% of our outstanding share capital immediately following the global offering; and

*

a memorandum of understanding, or the MOU, dated November 12, 2001, which sets forth the basis on which we propose to form the Guangxi Pingguo JV to own and operate the alumina and primary aluminum production facilities at our Guangxi plant.

The primary aspects of our strategic relationship with Alcoa are described below.

Under the Subscription Agreement, as long as Alcoa maintains a strategic stake in our shares, it will be entitled to certain key rights as our strategic partner, including:

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the right to appoint one director to our board of directors;

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the right of first refusal to participate in any future projects we may contemplate undertaking with a foreign partner in bauxite mining, alumina refining or primary aluminum smelting in China; and

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the opportunity to establish a second equity joint venture with us so long as we and Alcoa agree that the initial joint venture company at the Guangxi plant represents a successful beginning to our strategic relationship.

In addition, Alcoa has given us the right of first refusal to participate in any future projects Alcoa may contemplate undertaking with a domestic partner in the PRC in bauxite mining, alumina refining or primary aluminum smelting. Subject to exceptions described under "- Joint Venture at Our Guangxi Plant" below. Should Alcoa wish to sell our H shares or ADSs in the future, we have undertaken to register such H shares or ADSs for sale with the U.S. Securities and Exchange Commission, or the SEC.

Alcoa currently holds approximately 8.0% of our issued share capital.

The MOU sets forth the basis on which we and Alcoa intend to form a limited liability equity joint venture company as equal 50% shareholders at our Guangxi plant for the purpose of mining bauxite, refining alumina and smelting aluminum. The term of the Guangxi Pingguo JV is proposed to be 50 years.

In April 2004, we received a notification from the NDRC regarding their approval on March 29, 2004 for the establishment of the Guangxi Pingguo JV. For further information, see "Item 4. Information of the Company - Our Facilities - Guangxi Plant".

According to the MOU, the board of directors of the Guangxi Pingguo JV will consist of six directors, of which we will appoint three and Alcoa will appoint the other three. The chairman of the board of directors is to be elected from among the directors that we appoint. The vice-chairman is to be elected from among the directors appointed by Alcoa. The day-to-day management of the Guangxi Pingguo JV will be the responsibility of a general manager nominated by Alcoa and appointed by the board of directors of the Guangxi Pingguo JV.

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Pursuant to the Subscription Agreement, as amended, if the final joint venture agreement for the Guangxi Pingguo JV is not executed within eight months from closing of our global offering or if all necessary relevant PRC government approvals for the Guangxi Pingguo JV are not obtained within twelve months from the closing of our global offering due to the failure of a party to abide by the terms of the MOU, the defaulting party would be obliged to pay US$7.5 million (equivalent to RMB62.1 million) to the other party as compensation and the restrictions on Alcoa's ability to sell our shares will terminate. We continue to work closely and actively with Alcoa to seek the opportunity of establishing a joint venture. As of December 31 2005, we have not made any claim against Alcoa nor has Alcoa made any claim against us for compensation under the Subscription Agreement, as amended.

In December 2001, we completed our global initial public offering in which 2,749,889,968 H shares were listed on the Hong Kong Stock Exchange and 409,646,400 H shares in the form of ADSs were sold in the United States and listed on the NYSE under the symbol "ACH".

On January 6, 2004, we placed 549,976,000 additional H shares, par value of RMB1.00 each, to certain independent professional and institutional investors who are non-U.S. persons outside the United States pursuant to Regulation S of the U.S. Securities Act of 1933 at a price of HK$5.658 per H share. The net proceeds amounted to RMB3,251.0 million. As of December 31, 2005, RMB1,837 million from our H Share placement was used for capital expenditures.

Pursuant to the shareholders' resolution passed on June 9, 2005, we entered into a placing agreement with J.P. Morgan Securities Ltd., CLSA Limited and China International Capital Corporation Hong Kong Securities Limited in relation to the placing (the "Placing") of an aggregate of 644,100,000 H Shares in the share capital of our Company at a price of HK$7.25 per H Share on May 9, 2006. The Placing Shares comprise (i) 600,000,000 new H Shares to be allotted and issued by the Company and (ii) 44,100,000 H Shares to be converted from the same number of existing State-owned domestic shares that are to be allocated from Chinalco to the National Social Security Fund Council (the "NSSF") of the PRC, in reliance upon U.S. Securities Act of 1933. The Placing Shares represent approximately 5.83% of the existing issued share capital of our Company and approximately 5.53% of the issued share capital of our Company as enlarged by the issue of the new H Shares.

The estimated net proceeds from the placement of the 600,000,000 new H shares of our Company will be approximately HK$4,247,000 (equivalent to RMB4,243,000). The net proceeds from the placement of the 44,100,000 shares will be paid directly to the NSSF pursuant to the placing arrangement. We intend to use the net proceeds arising from the Placement for the funding of possible acquisition of domestic primary aluminum projects and for general working capital purposes.

The Placing shares were listed on the Hong Kong Stock Exchange on May 19, 2006. Our total share capital increased to 11,649.9 million shares from 11,049.9 million shares, and the percentage of our listed share capital to our total share capital increased from 29.87% to 33.85%.

On June 9, 2005, the annual general shareholders' meeting passed a resolution for us to submit application to (i) the CSRC for an approval to issue a maximum of 1,500,000,000 A shares, representing approximately 19.35% of our domestic share capital currently in issue to the PRC public, including PRC individual investors, PRC institutional investors and qualified foreign institutional investors, and (ii) the Shanghai Stock Exchange for the listing of the A shares on the Shanghai Stock Exchange. The annual general shareholders' meeting held on May 10, 2006, resolved to extend the authorization for the Proposed A Share Offering for one more year until June 9, 2007, based on the same terms as approved on June 9, 2005. We are currently in the process of preparing such application materials.

The amount to be raised from the Proposed A shares Offering is currently expected to be not more than RMB8,000 million. The net proceeds are principally to be used to:

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fund an alumina brownfield project of our Henan branch;

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fund an alumina production-line project of our Zhongzhou branch;

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fund an alumina brownfield and environmental enhancement project of our Guizhou branch;

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invest in Shanxi Huaze to fund and develop its primary aluminum and power generating project;

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fund the third phase of an alumina brownfield project of our Guangxi branch;

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fund a greenfield project of pseudoboehmite production of our Shandong branch;

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fund a greenfield project of zeolite production of our Shandong branch;

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fund a limestone improvement project of our Shanxi branch; and

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fund an alumina improvement project of our Shanxi branch.

The use of proceeds from the Proposed A Shares Offering on the projects to be invested, the priority of the proposed investments and the amounts to be invested, as approved by the CSRC and authorized by the shareholders at the annual general meeting, is subject to adjustment and finalization by our board of directors by reference to the then budgeted financing needs of such projects and the relevant industry and regulatory approval requirements and other circumstances. If the proceeds from the Proposed A Shares Offering are insufficient to fund all or any of the intended projects, the directors intend to fund the deficit with internal resources. Any balance of the proceeds will be used to satisfy our general working capital requirements.

On May 25, 2005, we obtained the approval from the PBOC to issue short-term bonds up to an aggregate principal amount of RMB5,000 million. On June 15, 2005, we issued 20,000,000 units of short-term bonds with a par value of RMB100 per unit for an aggregate principal amount of RMB2,000 million at an offer price of RMB97.16 per unit to institutional investors in the PRC banking industry with a maturity period of 365 days. The proceeds amounted to RMB1,943 million. The bonds are traded on the PRC interbank debenture market from June 16, 2005. Under the PBOC approval, we are able to issue additional short-term bonds with an aggregate principal amount amounting to RMB3,000 million before the annual general meeting dated May 10, 2006. The board of directors has passed a resolution regarding the issuance of additional short-term bonds and the terms and conditions of such offering pending shareholders' approval at the annual general meeting dated May 10, 2006. The proceeds from the short-term bonds offering are used for purchase of raw materials and import of alumina.

We manage our operations according to our two principal business segments. Our alumina segment includes the production and sale of our alumina-related products, namely, alumina and alumina chemical products, including alumina hydrate, alumina based industrial chemical products and gallium. Our primary aluminum segment includes the production and sale of our primary aluminum-related products, namely, primary aluminum (including both ingots and other primary aluminum products) and carbon products. External sales of our alumina and primary aluminum segments accounted for approximately 61.6% and 38.1%, respectively, of our total turnover in 2005. Alumina is refined from bauxite through a chemical process and is the key raw material for producing primary aluminum, which in turn is a key raw material for aluminum fabrication.

Our alumina segment products consist primarily of alumina, which accounted for approximately 91.9% of our total alumina segment output based on total production volume in 2005. Other alumina segment products consist primarily of alumina chemical products, including alumina hydrate, alumina based industrial chemical products and gallium. Alumina chemical products are used in the production of chemical, pharmaceutical, ceramic and construction materials. In the process of refining bauxite into alumina, we also produce small amounts of gallium, which is a related product and a high-value rare metal with special uses in the electronics and telecommunications industries.

Our most important primary aluminum product is ingots, which accounted for approximately 85.0% of our total primary aluminum output in 2005. Our standard ingots are 20-kilogram remelt ingots used for general aluminum fabrication primarily for the auto, construction, power and consumer goods industries. Other than ingots, we also produce a small amount of high value-added and high-margin primary aluminum, such as electrical aluminum and aluminum alloys used for special industrial applications. In 2005, we continued to adjust our product mix to increase the production of high value-added primary aluminum, such as increasing the production of aluminum alloys by approximately 20.0% compared to 2004, to realize the higher margin of such products. Our primary aluminum plants produce carbon products (principally carbon anodes and cathodes) used in smelting operations.

13

The carbon we produce supplies substantially all of the carbon products required for our smelters. We also sell some of our carbon products to external smelters.

Since 2003, we have started to recycle scrap materials for our primary aluminum production. In 2005, our Shandong Plant used recycled materials to produce approximately 23,000 tonnes primary aluminum products. At present, only our Shandong Plant has the capability to produce primary aluminum products from recycled materials.

The following table sets forth the production capacity of alumina and primary aluminum for each of our plants for 2005:

2005

Production Capacity

Plant

Alumina

Primary Aluminum

(in thousand tonnes) ⁽¹⁾

Guangxi plant

850.0

139.5

Zhongzhou plant

1,360.0

-

Qinghai plant

-

367.0

Shanxi plant

2,200.0

-

Guizhou plant

800.0

403.7

Henan plant

2,050.0

56.0

Shandong plant

1,050.0

75.0

Shanxi Huaze

-

280.0

Lanzhou Aluminum⁽²⁾

-

160.0

Research Institute

20.0

18.0

Total

8,330.0

1,499.2

------------------------------

(1)

Our production capacity takes into account designed capacity and subsequent modifications. Designed capacity is based on various assumptions including down time for ordinary maintenance and repairs and assumptions as to ore grade of bauxite used.

(2)

Lanzhou Aluminum is our associated company owned as to 28% of its equity interest whose results of operations are not consolidated into our financial statements. Production capacity presented above represents 100% of Lanzhou Aluminum's smelting capacity. See Note 10(b) to our audited financial statements.

The following table sets forth, for the periods indicated, information relating to our production volumes of the alumina segment and primary aluminum segment products:

Years Ended December 31,

Production Volume by Product

2003

2004

2005

(in thousand tonnes, except Gallium)

Alumina segment

    Alumina

5,632.0

6,351.0

7,181.0

    Alumina chemical products

415.0

469.0

937.0

    Gallium (in tonnes)

5.6

23.0

22.2

Primary aluminum segment

    Primary aluminum ⁽¹⁾⁽²⁾

762.0

770.0

1,051.6

    Carbon

556.3

623.0

672.0

------------------------------

(1)

Including ingots and other primary aluminum products.

(2)

Lanzhou Aluminum is our associated company owned as to 28% of its equity interest whose results of operations are not consolidated into our financial statements. Production volumes for 2005 presented above included 126,000 tonnes which represent 100% of Lanzhou Aluminum's production volumes. See Note 10(b) to our audited financial statements.

Alumina

14

Alumina is produced from bauxite, an aluminum-bearing ore, by a chemical refining process. The production process to be used for producing alumina is determined by the mineral composition of the bauxite used. The production process generally includes the sintering process, the Bayer process, the hybrid Bayer-sintering process or the ore-dressing Bayer process. Most of the bauxite found in China is diasporite bauxite of a particular mineralogy, with high alumina content but relatively higher silica content, resulting in low alumina-to-silica ratios. The Bayer process cannot efficiently refine such bauxite unless the alumina-to-silica ratio of the bauxite is raised sufficiently prior to refining. Refining low alumina-to-silica ratio bauxite generally requires the use of either the sintering process or the hybrid Bayer-sintering process that we have developed and improved upon to enable the efficient processing of diasporite bauxite generally found in China.

Alumina is converted into primary aluminum through a smelting process using electrolytic reduction. This 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 moulds to produce foundry ingots or further refined to form fabricating ingots. Most of the primary aluminum we produce is in the form of ingots.

There are two methods commonly used to produce primary aluminum, the "pre-bake" reduction process and the "soderberg" reduction process. Most modern aluminum production facilities adopt the pre-bake reduction. As of December 31, 2005, all of our primary aluminum capacity used pre-bake anode reduction pot-lines. In the pre-bake reduction process, the anodes are pre-formed in a separate facility where the pollutants can be contained. The cells themselves are enclosed with removable panels, so that the waste gases produced can be extracted using large exhaust fans. These gases are then treated and purified to reduce emissions of dust and fluoride to acceptable levels.

Our total annual production capacity for alumina products was approximately 8,330,000 tonnes as of December 31, 2005. In 2005, our actual production of alumina products was approximately 7,181,000 tonnes of alumina and approximately 937,000 tonnes of alumina chemical products. In 2005, we supplied approximately 2,030,000 tonnes, of which approximately 193,000 tonnes were supplied to Lanzhou Aluminum, our 28% owned associated company, to our own smelters, and sold the rest to other domestic smelters. All of our alumina chemical products in the alumina segment we produced in 2005 were sold externally, either domestically or exported for chemical, pharmaceutical and other uses.

The following table sets forth the annual production capacity, alumina production output, alumina chemical products production output and the utilization rate of each of our alumina refineries and our Research Institute as of December 31, 2005:

As of December 31, 2005

Alumina

Chemical

Annual

Alumina

Products

Production

Production

Production

Utilization

Capacity ⁽¹⁾

Output

Output

Rate ⁽²⁾ (%)

Production Process

(in thousand tonnes, except percentages)

Shanxi plant

2,200.0

1,439.0

18.0

68.5

Hybrid Bayer-sintering

Henan plant

2,050.0

1,607.0

113.0

82.0

Hybrid Bayer-sintering

Shandong plant

1,050.0

850.0

575.0

112.4

Sintering

Guizhou plant

800.0

936.0

10.0

117.8

Hybrid Bayer-sintering

Zhongzhou plant

1,360.0

1,449.0

150.0

113.7

Sintering and Bayer

Guangxi plant

850.0

900.0

38.0

108.8

Bayer

Research Institute (3)

20.0

-

33.0

103.5

Bayer

Total

8,330.0

7,181.0

937.0

93.8

------------------------------

15

(1)

Our production capacity takes into account designed capacity and subsequent modifications. Capacity is based on various assumptions, including down time for ordinary maintenance and repairs and assumptions as to ore grade of bauxite used. Our production capacity includes additional capacities resulting from the completion of new projects in 2005, including 800,000 tonnes in Shanxi plant, 700,000 tonnes in Henan plant and 300, 000 tonnes in Zhongzhou plant.

(2)

The capacity utilization rate is derived from the summation of (i) the production output of alumina chemical products multiplied by a quotient based on alumina content in these alumina chemical products and (ii) the production output of alumina divided by production capacity of a particular plant. Rates greater than 100% reflect the higher productivity obtained through the use of higher-grade bauxite than originally contemplated in capacity calculations.

(3)

The alumina chemical products production facilities of our Research Institute are test facilities for research and development purposes. These products are sold commercially, and such sales are included in our total turnover.

To secure future bauxite supply, we have participated in several overseas projects in Brazil, Australia and Vietnam. On May 24, 2004, we entered into a non-binding Framework Agreement with CVRD, a corporation duly organized and existing under the laws of the Federative Republic of Brazil, for the establishment of a joint venture company, ABC Refinery, producing alumina in Barcarena, State of Para, Brazil, adjacent to the existing facilities of Alumina do Norte do Brasil, also known as Alunorte in Brazil. We further entered into the first and second Amendment to the Framework Agreement on November 12, 2004 and January 10, 2005, respectively, to set forth the details and schedule of ABC Project.

It is intended that ABC Refinery will be owned by the joint venture company and shall be established as a first class alumina refinery with high competitiveness globally. The intended alumina capacity of the initial phase of ABC Refinery will be 1,800,000 tonnes per year, and may reach a final capacity of 7,20,000 tonnes per year through phased expansions. The proposed development of the ABC Refinery will involve a series of related transactions involving mining, transportation, shipping and port developments. The total investment for the initial phase of the proposed project is estimated to be US$1,000 million.

We and CVRD have reached agreement on certain essential issues in relation to the ABC Project, including the purchase prices of the alumina produced by ABC Refinery in the future. Pursuant to the Amendments, CVRD has produced a preliminary feasibility studies on March 1, 2005 for our review. We are in the process of conducting feasibility studies with CVRD.

We participated in a mining project under cooperation by the PRC and Vietnam governments to explore bauxite resources in Dak Nong province in Vietnam. In December 2005, we entered into a non-binding memorandum of understanding with VINACOAL regarding the proposed establishment of joint venture companies to explore the bauxite resources in Dak Nong province in Vietnam. We expect to commence feasibility studies of this project in 2006.

We submitted a letter of intent to bid for the development of bauxite resources in Aurukun, Australia to the Queensland government in October 2005. We further submitted a non-binding preliminary development proposal to the Queensland government in January 2006. In March 2006, the Queensland government confirmed that we were shortlisted as the only developer invited to submit a final proposal. See "-Business Overview - Raw Materials - Alumina."

We operate seven primary aluminum production facilities, including Lanzhou Aluminum, located in seven provinces in China. Four of these seven smelter plants are integrated with alumina refining operations and are self-sufficient with respect to alumina supply. In addition, our Research Institute also operates a test plant that produces primary aluminum in connection with its research and development.

Two of the seven primary aluminum production facilities, Shanxi Huaze and Lanzhou Aluminum, were added in 2005. Shanxi Huaze has an annual production capacity of approximately 280,000 tonnes and produced 32,400 tonnes of primary aluminum since its completion of construction in 2005 and contributed 2.3% of our total primary aluminum production output in 2005. Lanzhou Aluminum has an annual production capacity of approximately 160,000 tonnes and produced 126,000 tonnes of primary aluminum in 2005 since the completion of our acquisition of its 28% equity interest

16

in March 2005. Lanzhou Aluminum is our associated company whose results of operations are not consolidated into our audited financial statements. See Note 10(b) to our audited financial statements.

The total production capacity for primary aluminum production of all seven of our smelters, including Lanzhou Aluminum, and our Research Institute in 2005 was 1,499,200 tonnes. In 2005, we, including Lanzhou Aluminum, produced approximately 1,051,600 tonnes of primary aluminum. Lanzhou Aluminum, however, is our associated company owned as to 28% of its equity interest whose results of operations are not consolidated into our audited financial statements.

The following table sets forth the annual production capacity, output of aluminum products, the utilization rate and the smelting equipment used in each of our aluminum smelters and our Research Institute as of December 31, 2005:

As of December 31, 2005

Annual

Production

Aluminum

Utilization

Plant

Capacity⁽¹⁾

Output

Rate ⁽²⁾ (%)

Smelting Equipment

Qinghai plant

367.0

353.8

96.4

60 kA pre-bake

Guizhou plant

403.7

232.3

57.5

160 kA & 186kA pre-bake

Guangxi plant

139.5

139.9

100.3

160kA &320kA pre-bake

Shanghai plant

75.0

100.4

133.9

85kA pre-bake

Henan plant

56.0

52.0

92.9

85kA pre-bake

Shanxi Huaze

280.0

32.4

11.6

300kA pre-bake

Lanzhou Aluminum(3)

160.0

126.0

78.8

200kA & 75kA pre-bake

Research Institute (4)

18.0

14.8

82.2

140 kA & 280kA pre-bake

Total

1,499.2

1,051.6

70.1

------------------------------

(1)

Production capacity takes into account designed capacity, subsequent modifications and down time for ordinary maintenance and repairs. Our production capacity includes new projects completed in 2005, including 56,000 tonnes in Qinghai plant, 170,000 tonnes in Guizhou plant, 280,000 tonnes in Shanxi Huaze and 160,000 tonnes in Lanzhou Aluminum.

(2)

The capacity utilization rate is determined by dividing the production output of a particular plant by that plant's production capacity.

(3)

Lanzhou Aluminum is our associated company owned as to 28% of its equity interest whose results of operations are not consolidated into our audited financial statements. See Note 10(b) to our audited financial statements. As we exercise significant influence over Lanzhou Aluminum, 100% of its annual production capacity and its production volume are included in the table above.

(4)

The primary aluminum production facilities of our Research Institute are experimental facilities for research and development purposes. Primary aluminum produced at the smelter is sold commercially, and such sales are included in our total turnover.

Bauxite is the principal raw material for the production of alumina. On average, our refineries consume 1.8 tonnes of bauxite to produce one tonne of alumina. We used approximately 11,300,000 tonnes, 13,600,000 tonnes and 15,800,000 tonnes of bauxite in our alumina production in 2003, 2004 and 2005, respectively. In 2005, bauxite cost represented approximately 21.3%, as compared to 19.0% in 2004 of our per unit alumina production costs.

Supply. The predominant use of bauxite is for alumina production. We are the largest alumina producer in China and expect to remain so for the foreseeable future. Therefore, we intend to use our dominant market position to obtain bauxite on favorable terms. Except for our Shandong Plant, 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 bauxite from mines close to our refineries to save transportation costs. We procure our bauxite supply principally from three sources:

*

our own bauxite mining operations;

17

*

jointly operated mines; and

*

purchases from other suppliers, which principally include small independent mines and, to a lesser extent, mines operated by Chinalco and imports.

We purchase bauxite from a number of suppliers. We are not dependent on any single supplier or small group of suppliers for our bauxite requirements. We endeavor to explore new bauxite reserves and streamline our bauxite procurement system to support the growth of our alumina production. We established a bauxite mine branch located in Zhengzhou, Henan, on March 25, 2005 to centralize the procurement and make effective allocation of bauxite resources among our plants. According to the establishment proposal, the mine branch will manage five bauxite mines, with total controllable bauxite reserves of 1,488,100,000 tonnes, currently owned by us and supply to our Henan Branch, Zhongzhou Branch, Shandong Branch or Shanxi Branch. In 2005, we increased our bauxite reserves by 1,000 million tonnes as compared to 2004.

The following table sets forth, for the periods indicated, the proportion of our bauxite requirements supplied by our three sources:

Years Ended December 31,

2003

2004

2005

Percentage

Percentage

Percentage

of Our

Total

of Our Total

Total

of Our Total

Total

Total

Bauxite

Bauxite

Bauxite

Bauxite

Bauxite

Bauxite

Supply

Supply (%)

Supply

Supply (%)

Supply

Supply (%)

(in thousand

(in thousand

(in thousand

tonnes)

tonnes)

tonnes)

Our owned mines

1,923.0

17.0

2,237.3

16.4

2,988.1

18.9

Jointly operated mines

1,799.3

15.9

2,501.3

18.4

3,854.8

24.4

Other suppliers

7,572.0

67.1

8,889.4

65.2

8,949.6

56.7

Total

11,294.3

100%

13,628.0

100%

15,792.5

100%

The following table sets forth information regarding our own mines:

Year Ended December 31, 2005

Annual

Production

Bauxite

Mine

Location (Province)

Capacity

Production

(in thousand tonnes)

Pingguo

Guangxi

1,790

1,846

Xiaoyi

Shanxi

300

408

Guizhou No. 2

Guizhou

150

119

Guizhou No. 1

Guizhou

100

57

Mianchi

Henan

200

207

Yangquan

Shandong

-

3

Xiaoguan

Henan

-

5

Luoyang

Henan

100

219

Total

2,640

2,864

Owned Mines. We currently have eight open-pit mines. As of December 31, 2005, these mines had approximately 214,900,000 tonnes of aggregate proven and probable bauxite reserves as such terms are defined by the SEC. This amount of bauxite reserves would be sufficient to sustain our mining operations in excess of 30 years assuming an annual mining output of 5,000,000 tonnes. As none of our mines produce bauxite for external sales, we are assured of full access to the bauxite produced by our own mines. In 2005, we sourced approximately 18.9% of our bauxite from mines that we own and operate.

The respective terms of the mining rights permits are the shorter of the estimated working life of the mine and 30 years beginning 2001. In addition to mining rights permits, in order to operate

18

these mines, we are required to have land use rights over the land relating to these mines. We lease land use rights relating to all these mines from Chinalco pursuant to a land use rights leasing agreement that we entered into upon our formation. Chinalco's land use rights relating to over 90% of our mining properties are for 50-year terms beginning on July 1, 2001. The remaining land use rights relating to the mines we own and operate are for shorter terms, some as short as eight years. All of our land use rights leases end on the expiry date of the mining rights or the end of the actual mine life, whichever is earlier. Both the land use rights and their leases are renewable.

Jointly Operated Mines. We currently jointly operate 16 bauxite mines. Jointly operated mines are generally operated pursuant to long-term contractual arrangements in which we typically contribute resources such as funding, equipment, labor and management, and the other parties contribute land and/or mining rights and certain personnel resources. The other parties are also typically responsible for obtaining all relevant certificates or approvals in respect of the lands. Generally, we are able to control the mining operations of our jointly operated mines, including determination of production schedules as well as the amounts and grades of bauxite produced. As of December 31, 2005, we have obtained mining rights certificates for all of our 16 jointly operated mines.

Jointly operated mines are typically smaller than our own mines but larger than the small independent mines in terms of reserves and production scales. Our 16 jointly operated mines had approximately 24,500,000 tonnes in the aggregate of proven and probable bauxite reserves as such terms are defined by the SEC. Security of supply from jointly operated mines is contingent upon the extension or renewal of the joint operation arrangements and mining rights upon their expiration. Accordingly, we view our jointly operated mines, as a group, to be a stable, long-term source of our bauxite supply, although the particular mines comprising this group are likely to change. Jointly operated mines supplied 24.4% of our bauxite needs in 2005.

Other Suppliers. In addition to our own mines and our jointly operated mines, we also source bauxite from other suppliers. A majority of other suppliers are small independent mines. However, we also secure a small portion of bauxite from Chinalco and overseas. Bauxite secured from other suppliers accounted for 56.7% of our total bauxite supply in 2005.

*

Small Independent Mines. We purchase bauxite directly from small independent mines or through local distributors that procure bauxite from these mines. Small independent mines are not affiliated with us and generally have annual bauxite production capacities not exceeding 200,000 tonnes. These mines have historically been our important source of bauxite. The average price of bauxite from small independent mines increased by 7.3% from 2004 to 2005.

*

In addition, we also source a small portion of bauxite from Chinalco and from other overseas suppliers.

Bauxite Procurement. A mineral resource department in our headquarters is responsible to control and coordinate the supply of our bauxite, mainly 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 decide the amount of bauxite that we wish to source from our own mines, and allocate the remaining requirements among the jointly operated mines and other suppliers. Given the increasing price of bauxite supplied by external independent mines resulting from high market demand, our management or operational control of our own mines and jointly operated mines generally allows us to adjust the procurement levels from these sources during the course of the year to accommodate market conditions.

Alumina-to-Silica Ratio. The production method for alumina refining is determined by the mineral composition of the bauxite, as measured by reference to 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, an efficient application of the Bayer process requires bauxite with an alumina-to-silica ratio of 10:1 or higher, while the sintering process can refine bauxite with an alumina-to-silica ratio as low as 4:1. The average alumina-to-silica ratio of the proven and probable reserves of our own mines is 7:1.

Prices. There is neither governmental regulation of bauxite prices nor an official trading market for bauxite in China. We negotiate and agree on bauxite prices with our suppliers, based on ore

19

quality, mining costs, market conditions, transportation costs and various governmental taxes or levies, including a resource tax imposed by local governments. Because we procure bauxite from three different sources, our total bauxite cost is influenced by the following factors:

*

the cost of our own mining operations;

*

the terms of our operational arrangements with respect to our jointly operated mines; and

*

the market conditions relating to purchases from small independent mines.

An average of approximately 2.0 tonnes of alumina and 14,500 kWh of electricity were required to produce one tonne of primary aluminum. Alumina and electricity, the two principal ingredients in the smelting process in terms of volume and cost, accounted for approximately 42.2% and 31.2%, respectively, of our unit primary aluminum production costs in 2005. We also require carbon anodes, carbon cathodes and sodium fluoride in the smelting process.

Alumina is the main raw material in the production of primary aluminum. Our Shandong, Henan, Guizhou and Guangxi smelters have historically sourced all or substantially all of the alumina they required from their respective integrated refineries. Our Qinghai plant, Shanxi Huaze and Lanzhou Aluminum, which do not have alumina refining operations on site, have obtained alumina internally from our own alumina refineries. Pursuant to a notice issued by the Ministry of Commerce of the PRC on October 13, 2004 and effective from January 1, 2005, the PRC government prohibits domestic aluminum smelters whose annual production volume is lower than 100,000 tonnes from directly importing alumina to China for aluminum processing or refinery purposes. We are among a few companies in the PRC that are currently qualified to import alumina directly for our primary aluminum production. As imported alumina will usually be cost effective, we believe our competitiveness is as a result enhanced. The following table sets forth, for the periods indicated, the amount of alumina consumed by each of our smelters:

Years Ended December 31,

Plant

2003

2004

2005

(in thousand tonnes)

Guizhou plant