Aluminum of China (ALMMF) Risk Analysis

As of December 31, 2022, our largest shareholder, Chinalco, directly owned 29.43% of our issued share capital and indirectly owned an additional 2.47% of our issued share capital through its controlled entities. The interests of Chinalco may conflict or even compete with our interests and those of our public shareholders. Chinalco may take actions that are in the interest of its subsidiaries, associates and other related entities to our detriment. For example, Chinalco may seek to influence our decision as to the amount of dividends we declare and distribute. Any increase in our dividend payout would reduce funds otherwise available for reinvestment in our businesses and thus may adversely affect our future prospects and financial condition. In addition, we enter into transactions with related parties, including Chinalco and its subsidiaries and associates, which provide a range of services to us, including engineering and construction services, social services, land and property leasing as well as the supply of raw and supplemental materials. See "Item 7. Major Shareholders and Related Party Transactions – B. Related Party Transactions" for detailed information. It would be difficult to find an alternative source for some services that we receive from Chinalco. Our cost of operations may increase if Chinalco, its subsidiaries and associates are unable to continue providing such services to us. In January 2019, Yunnan SASAC transferred its 51% equity interest in Yunnan Metallurgical Group Co., Ltd. to China Copper, a wholly-owned subsidiary of Chinalco, with no consideration. As Yunnan Aluminum, an affiliated company of Yunnan Metallurgical Group Co., Ltd., competes with us in the business segments of alumina and primary aluminum, Chinalco, as the indirect controlling shareholder of Yunnan Aluminum and our direct controlling shareholder, issued a letter of undertakings on non-competition to us, according to which Chinalco undertook to start in 2019 planning the integration of the businesses in which Yunnan Aluminum and we compete with each other, and address such business competition within five years. In July 2022, we entered into a shares transfer agreement and agreed to acquire shares representing approximately 19% of the total issued share capital of Yunnan Aluminum. The shares transfer was completed in November 2022 and we currently hold 29.10% of the total issued share capital of Yunnan Aluminum. The financial results of Yunnan Aluminum have been consolidated into the financial statements of our Company. The aforesaid transaction has resolved the competition between Chinalco and our Group. However, the competition between our Group and Yunnan Aluminum has not been fully resolved. In light of this, our Company issued a letter of undertakings on non-competition to Yunnan Aluminum, according to which our Company undertook to appropriately resolve the issue of horizontal competition with Yunnan Aluminum within five years from 2019. For further details, please see "Item 4. Information on the Company – A. History and Development of the Company." While we intend to closely monitor Chinalco's planning and implementation of such business integration and make timely public disclosure about significant progress made, due to the uncertainties involved in such business integration, however, we cannot assure you that business competition between Yunnan Aluminum and us would be addressed without undue delays or at all, or the plan of such business integration or the implementation thereof would be viewed by you or other investors as most favorable to us or our shareholders.

Although we own shares representing 29.10% of total issued share capital at Yunnan Aluminum, we concluded that we exercise "de facto control" based on the following facts: (i) the percentage and concentration of our voting rights, (ii) the record of attendance to Shareholders' Meetings and the record of votes cast by the other shareholders; and (iii) the effective control exercised by us to direct Yunnan Aluminum's relevant activities. As some of these facts are out of our control, a change in the fact pattern that we assessed might derive in a loss of control over Yunnan Aluminum, leading to deconsolidation from an accounting perspective.

Our plans to upgrade and expand our production capacity will require substantial capital expenditures. For the years ended December 31, 2020, 2021 and 2022, our total capital expenditures were approximately RMB9.9 billion, RMB6.4 billion and RMB4.8 billion, respectively. We expect our estimated capital expenditures in 2023 to be a total of approximately RMB14.4 billion. See "Item 4. Information on the Company – D. Property, Plants and Equipment – Our Expansion" and "Item 5. Operating and Financial Review and Prospects – B. Liquidity and Capital Resources – Capital Expenditures and Capital Commitments" for details of our expansion and capital expenditures. We may also need additional funding for debt servicing, working capital, other investments, potential acquisitions and joint ventures and other corporate requirements. We may need to seek external financing, such as bank and other loans as well as bond offerings, to satisfy our capital needs if cash generated from our operations is insufficient to fund our capital expenditures or if our actual capital expenditures and investments exceed our plans. Our ability to obtain external financing at reasonable costs and on acceptable terms is subject to a variety of factors, such as our credit ratings, financial market conditions and our past or projected financial performance. Although we have been profitable in recent years, we cannot guarantee that we will not incur losses in the future, in which case the rating agencies may downgrade our credit ratings. In addition, if financial markets experience significant volatility and disruption, it may result in a decrease in the availability of liquidity and credit for borrowers and increase in interest rate or other financing cost. Failure to obtain sufficient funding at reasonable costs and on acceptable terms for our development plans could delay, reduce the scope of, or eliminate future activities or growth initiatives and adversely affect our business and prospects.

We may from time to time enter into joint ventures or make strategic investments to grow our business and operations. For example, we have participated in joint ventures and strategic investments in coal mining, in line with our development strategy to diversify and optimize our product offering and partially offset our future energy costs. In addition, we have acted as joint venture partner or strategic investor in certain projects which engage in primary aluminum and aluminum alloy manufacturing to diversify our product offering, strategically position ourselves along the industrial chain and facilitate our enterprise transformation and upgrade. If our joint ventures, strategic investments or other investments experience fluctuation in performance or incur losses, our business, financial condition and results of operations may be adversely affected. For further details of certain of our joint ventures and strategic investments, please see "Item 4. Information on the Company – A. History and Development of the Company" and "Item 4. Information on the Company – D. Property, Plants and Equipment – Our Expansion." In addition, our joint ventures and subsidiaries which operate coal mines have been facing increasing uncertainties. The coal price remained at a high level due to the tight supply of coal during 2022. However, if coal price decreases in the future, the business, financial condition and results of operations of these joint ventures which operate coal mines may be adversely affected.

Most of our assets and our subsidiaries are located in the PRC; most of our directors and officers reside within the PRC, and most of the assets of our directors and officers are located within the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside the PRC upon most of our directors or officers, including with respect to matters arising under applicable laws and regulations. Moreover, the PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States, the United Kingdom or most other Western countries, and Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, recognition and enforcement in the PRC or Hong Kong of judgments of a court in the United States and any of the other jurisdictions mentioned above in relation to any matter not subject to a binding arbitration provision may be difficult or impossible. Even if you sue successfully in a U.S. court or any of the other jurisdictions mentioned above, you may not be able to collect on such judgment against us or our directors and officers. In addition, the SEC, the U.S. Department of Justice and other U.S. authorities may also have difficulties in bringing and enforcing actions against us or our directors or officers in the PRC. Furthermore, class action lawsuits, which are available in the United States for investors to seek remedies, are generally uncommon in the PRC.

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

Demand for our products depends on the general economy and level of activity and growth in the industries where we operate or serve. Adverse development in economic and market conditions, such as a significant economic downturn or a downturn in the commodity sector or the financial markets, could have a material adverse effect on our business, financial condition, results of operations and the price of our ordinary shares or ADSs. Development of the relevant industries is subject to various factors, including but not limited to market fluctuations of prices of commodities, general political or economic conditions, technology development, government regulations and investment plans and changes in domestic and global production capacity, many of which are beyond our control. We are unable to predict cycles of the global and domestic economies. Concerns over inflation, energy costs, geopolitical issues, trade tensions, the availability and cost of credit, unemployment, consumer confidence, declining asset values, capital market volatility and liquidity issues have created difficult operating conditions for us in the past and may continue to do so in the future. For example, since 2018, there were continuing trade tensions between the U.S. and China, resulting in increased tariffs and escalating tensions between the two countries. On January 15, 2020, the two parties signed the China-U.S. phase-one economic and trade agreement. Since then, the PRC government and the U.S. government have granted tariff exemptions on certain goods. However, it is still unclear when future phase negotiations between the two countries will begin and whether there will be further trade agreements following such negotiations. It is also unclear if future disputes will occur or the two countries will be able to negotiate the issues to restore a mutually beneficial economic and trade cooperation. Future actions or escalations by either the U.S. government or the PRC government could have a material adverse effect on the business environment in general, global, Chinese and/or U.S. economic conditions and the stability of global, Chinese and/or U.S. financial markets, which in turn, may adversely affect our business, financial condition and results of operations. In addition, on November 12, 2020, the President of the United States signed Executive Order 13959 (as subsequently amended on January 13, 2021 and June 3, 2021, the "Executive Order"), which prohibits certain transactions in securities of certain entities listed in the annex to the Executive Order (each, a "Restricted Entity"). Currently, neither we nor Chinalco are on the list of Restricted Entities. However, if the Executive Order is further amended, or the Office of Foreign Assets Control of the U.S. Department of Treasury exercised its power pursuant to the Executive Order, to include us or Chinalco as a Restricted Entity in the future, U.S. persons as defined under the Executive Order may be prohibited from purchasing our securities. As a result, the value and liquidity of our ADSs may be materially and adversely affected, which may lead to significant volatility in our ADS trading price on the OTC Market. Furthermore, the PRC government has, from time to time, adjusted its monetary, fiscal and other policies and measures to manage the rate of growth of the economy or the overheating and overcapacity in certain industries or markets. As a result of the recovery of demand for aluminum globally and the short supply of aluminum caused by the energy crisis in Europe due to the ongoing Russia-Ukraine conflict, the average spot price of alumina on the Australian FOB increased by 9.7% to US$363 per tonne and the average international cash price for primary aluminum on the LME increased by 9.0% to US$2,703 per tonne in 2022. During the same period, the average spot price of alumina in the domestic market increased to RMB2,945 per tonne, representing an increase of 5.3% compared to 2021. Although the overall trend of the industries we are in was upward in 2022, there is no assurance that there will not be any further and significant fluctuations, which may materially and adversely affect our business, financial condition and results of operations. The Russia-Ukraine military conflict has caused, and continues to intensify, significant geopolitical tensions in Europe and across the world. The resulting economic sanctions imposed by the United States, the European Union, the UK and other countries may continue to significantly impact supply chains, lead to market disruptions including significant volatility in commodities' prices, and bring heightened near-term uncertainty to the global financial system. Escalation of the Russia-Ukraine conflict could lead to other additional impacts which may adversely affect our business, such as disruption of international trade flows, extreme market pricing volatility, with particular impact on the energy sector, industrial supply chains, shipping, and regulatory and contractual uncertainty, and increased geopolitical tensions around the world. These factors could disrupt the global markets in ways that are difficult to predict and estimate in advance as to their potential impact on our business, financial position, or operational results. As a result of the foregoing, the global and domestic economic conditions or any particular industry in which we operate or which we serve may grow at a lower-than-expected rate or even experience a downturn. Uncertainty about future economic conditions makes it challenging for us to forecast our results of operations, make business decisions and identify risks that may affect our business. If we are not able to timely and appropriately adapt to changes resulting from the difficult macroeconomic environment, our business, financial condition and results of operations may be materially and adversely affected.

Our operations consume substantial amounts of coal, the combustion of which generates significant greenhouse gas and other pollutants, and negatively contributes to climate change. A number of governments or governmental bodies have introduced or are contemplating legislative and regulatory changes in response to the potential impacts of climate change. These regulatory mechanisms may impact our operations directly or indirectly through our customers or supply chain. For example, the deepening of supply-side structural reform and the policy of "carbon dioxide peaking and carbon neutrality" have urged the industry in which we operate to optimize the energy consumption structure, reduce energy consumption, and develop deep-processing products with high added values. We may have to increase our capital expenditures in order to comply with such revised or new legislation or regulations, which may lead to higher costs of our products. Changes to our profit or loss may occur due to increased or decreased demand for our products and indirectly due to changes in costs of goods sold, which may adversely affect our results of operations and financial condition. In addition, we have invested in coal mining operations. Although revenues attributable to our energy segment accounted for only approximately 3.1% of our total revenues in 2022 (after elimination of inter-segment sales), we might still be affected by any change on the PRC thermal power industry, which have relied on coal as main source of fuel. The PRC thermal power industry may be affected by the development of alternative energy sources, climate change and global environmental factors. In particular, pursuant to the environmental protection goal set in China's 14th Five-Year Plan, the PRC government plans to continue to encourage the development of new energy sources from 2021 to 2025. As one of the PRC government's measures for encouraging utilizing new energy, on August 15, 2022, the NDRC, the National Bureau of Statistics, and the National Energy Administration issued the Notice on Further Improving the Relevant Work Concerning New Renewable Energy Consumption Not Included in the Total Energy Consumption Control, which provides that renewable energy sources, such as wind power, solar power, hydropower, are not included in the total energy consumption of the enterprises. As such, alternative energy industries may rapidly develop and gradually gain mainstream acceptance in the PRC and the rest of the world. If alternative energy technologies continue to develop and prove suitable for wide commercial application in the PRC and overseas, demand for conventional energy sources, such as coal, could be reduced. Such reduction in demand for coal could have a material adverse effect on the coal mining industry and, consequently, negatively affect our business, results of operations and financial condition.