1934 ACT FILE NO. 001-15264

         [Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.]

         [Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.]

         [If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-              ]

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date   April 18, 2005       

By                 /s/    Liu Qiang                     
Name: Liu Qiang
Title: Company Secretary

Contents

2

Financial Summary

3

Corporate Information

4

Corporate Profile

5

Directors, Supervisors and Senior Management Profile

9

Chairman's Statement

15

Report of Corporate Governance

20

Management's Discussion and Analysis of Financial Condition
    and Results of Operations

29

Report of the Directors

41

Report of the Supervisory Committee

44

International Auditors' Report

45

Consolidated Profit and Loss Account

46

Consolidated Balance Sheet

48

Balance Sheet

50

Consolidated Statement of Changes in Equity

52

Consolidated Cash Flow Statement

54

Notes to the Financial Statements

111

Supplementary Information

Financial Summary

Year ended December 31,

Consolidated

Pro forma
Combined

2004

2003

2002

2001

2000

Profit and Loss account

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Turnover

32,313,076

23,245,858

16,792,766

15,987,913

17,664,069

Cost of goods sold

21,464,189

16,439,534

13,349,514

11,646,250

11,040,061

Gross profit

10,848,887

6,806,324

3,443,252

4,341,663

6,624,008

Other revenues

708,158

580,171

522,875

621,570

606,869

Expenses related to other revenues

592,630

512,220

459,777

587,722

446,828

Other revenues, net

115,528

67,951

63,098

33,848

160,041

Selling and distribution expenses

647,532

549,432

501,829

335,227

259,101

General and administrative expenses

1,220,902

1,047,461

733,803

1,074,411

1,245,083

Research and development expenses

132,635

173,359

131,941

144,048

309,477

Other expenses (income), net

3,383

25,543

16,089

(136,320)

16,024

Operating profit

8,959,963

5,078,480

2,122,688

2,958,145

4,954,364

Finance costs

408,992

451,411

490,614

549,410

708,233

Operating profit after finance costs

8,550,971

4,627,069

1,632,074

2,408,735

4,246,131

Share of profit (loss) of

    jointly controlled entities

(3,953)

1,193

(254)

(125)

1,007

Profit before income taxes

8,547,018

4,628,262

1,631,820

2,408,610

4,247,138

Income taxes

2,079,538

918,862

183,393

756,820

1,589,475

Profit after income taxes

6,467,480

3,709,400

1,448,427

1,651,790

2,657,663

Minority interests

243,540

157,370

46,822

63,713

134,666

Profit for the year

6,223,940

3,552,030

1,401,605

1,588,077

2,522,997

Profit distribution to owner

N/A

N/A

N/A

4,722

106,352

Dividend

1,944,778

1,060,788

472,496

178,498

N/A

Summary of the Group's assets and liabilities for the five years is set out below:  

Consolidated

Pro forma
Combined

as of

as of

as of

as of

as of

December
31,

December
31,

December
31,

December
31,

December
31,

2004

2003

2002

2001

2000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Total assets

48,980,363

35,078,295

31,919,964

33,397,511

23,308,217

Total liabilities

20,585,137

16,335,954

16,396,017

19,301,426

18,282,118

Total Net assets

28,395,226

18,742,341

15,523,947

14,096,085

5,026,099

- 2 -

Corporate Information

Registered name

(Chinese characters)

Name in English

Aluminum Corporation of China Limited

First registration date

September 10, 2001

Registered address

No. 12B Fuxing Road
Haidian District, Beijing
People's Republic of China
100814

Place of business

No. 12B Fuxing Road
Haidian District, Beijing
People's Republic of China
100814

Principal place of
  business in Hong Kong

Unit 3103, 31/F., Office Tower,  
Convention Plaza
1 Harbour Road
Wanchai, Hong Kong

Authorised
  representative

Xiao Yaqing

Company Secretary

Liu Qiang

Department for
  corporate
  information
  and inquiry

Secretarial Office of the Board

Telephone for
  corporate
  information and
  inquiry

8610 6398 5654

Share registrar and
  transfer office

Hong Kong Registrars Limited
Rooms 1901 - 5
19/F.,Hopewell Centre
183 Queen's Road East
Hong Kong

Depositary

The Bank of New York
Corporate Trust Office
101 Barclay Street
New York, New York 10286
USA

Places of listing

The Stock Exchange of Hong Kong Limited
(the "Hong Kong Stock Exchange")

New York Stock Exchange, Inc ("NYSE")

Name of share

Chalco

Stock code

2600 (HK)  
ACH (US)

Principal banker

China Construction Bank
Industrial and Commercial Bank of China

Auditors

PricewaterhouseCoopers
Certified Public Accountants
22/F., Prince's Building
Central, Hong Kong

Legal advisers

as to Hong Kong law:
Baker & McKenzie
14/F., Hutchison House
10 Harcourt Road
Central, Hong Kong

as to United States law:
Baker & McKenzie
14/F., Hutchison House
10 Harcourt Road
Central, Hong Kong

as to PRC law:
Haiwen & Partners
Room 1711, Beijing Silver Tower
No. 2 Dong San Huan North Road
Chao Yang District, Beijing
People's Republic of China

- 3 -

Corporate Profile

Aluminum Corporation of China Limited ("Chalco" or the"Company") was established as a joint stock limited company incorporated in the People's Republic of China (the "PRC") on September 10, 2001, with Aluminum Corporation of China ("Chinalco"), Guangxi Investment(Group) Co., Ltd.  ("Guangxi Investment"), formerly known as Guangxi Development and Investment Co., Ltd., and Guizhou Provincial Materials Development and Investment Corporation ("Guizhou Development") acting as the promoters. Thereafter, the Company completed a debt-for-equity swap, pursuant to which China Cinda Asset Management Corporation ("China Cinda"), China Orient Asset Management Corporation ("China Orient") and China Development Bank also became the shareholders of Domestic Shares of the Company. The Company successfully offered its H Shares and American Depositary Shares ("ADSs") in Hong Kong and New York, respectively, and its ADSs and H Shares were listed on the New York Stock Exchange, Inc. and the Hong Kong Stock Exchange on December 11 and 12, 2001, respectively (the "Global Offering"). Alcoa International (Asia) Limited ("Alcoa") is a strategic investor shareholder of the Company. The Company together with its subsidiaries and jointly controlled entities are herein referred to collectively as the "Group".

The Group is the largest producer of alumina and primary aluminum in the PRC. The Group is primarily engaged in the production, sales and research of alumina and primary aluminum through its principal assets in the following branches and subsidiaries:

*

Shanxi branch (mainly producing alumina products)  ;

*

Zhongzhou branch (mainly producing alumina products)  ;

*

Henan branch (mainly producing alumina / primary aluminum products)  ;

*

Guangxi branch (mainly producing alumina / primary aluminum products)  ;

*

Guizhou branch (mainly producing alumina / primary aluminum products)  ;

*

Qinghai branch (mainly producing primary aluminum products)  ;

*

Shandong branch (mainly producing alumina products)  ;

*

Zhengzhou Research Institute (provision of research and development services)  ;

*

Shandong Aluminum Company Limited (mainly producing alumina / primary aluminum products);

*

Shanxi-Huaze Aluminum & Power Company Limited (mainly producing primary aluminum products).

The business scope of the Group includes bauxite mining, alumina refining and primary aluminum smelting. Its principal products include alumina, primary aluminum, gallium and carbon.

- 4 -

Directors, Supervisors and Senior Management Profile

Directors

Executive Directors

Xiao Yaqing, 45, is the Chairman and Chief Executive Officer of the Company. Mr. Xiao is the Chairman of the Remuneration and Nomination Committee under the Board of the Company and is the President of Chinalco. Mr. Xiao graduated from Central South University of Technology in 1982 and majored in pressure processing. Mr. Xiao is a professor-grade senior engineer. Mr. Xiao has abundant academic achievement and more than twenty years of extensive practical experience in the fields of metallic materials and management. He has been the engineer, department head, deputy chief engineer and chief engineer of Northeast Light Alloy Fabrication Plant. He has also been the General Manager of Northeast Light Alloy Corporation Limited, the factory manager of Southwest Aluminum Fabrication Plant, the Chairman and General Manager of Southwest Aluminum (Group) Co., Ltd. and the Deputy General Manager of Chinalco.

Xiong Weiping, 48, an Executive Director and the President of the Company. He has been employed by the Company since 2001. Mr. Xiong has a Ph.D. degree in mining engineering and completed post-doctoral research in economics. He has academic achievements and practical experience in economics and corporate management. He is a professor and a supervisor of Ph.D students. He was formerly the Vice President of Central South University of Technology and Deputy General Manager of China Copper, Lead and Zinc Group Company, the Deputy General Manager of Chinalco and the Senior Vice President of the Company.

Luo Jianchuan, 41, is an Executive Director and Senior Vice President of the Company, He has been employed by the Company since 2001. Mr. Luo is a senior engineer with about 20 years of experience in nonferrous metal import and export trading management and extensive professional experience in trading and management. Mr. Luo formerly served as the engineer of the Lead and Zinc Bureau under China Non-ferrous Metals Industry Corporation, the Manager of Haikou Nanxin Industry & Commerce Corporation, Assistant to General Manager of Jinpeng Mining Development Corporation, the Deputy General Manager and General Manager of Xinquan Corporation, Assistant to General Manager of China Non-Ferrous Metals Industry Trading Group Corporation, the Deputy Chief of the Trading Division of China Copper, Lead & Zinc Group Corporation, the General Manager of China Aluminum International Trading Corporation Limited and the General Manager of Chalco's Marketing Sales Division.

Chen Jihua, 37, is an Executive Director, Vice President and Chief Financial Officer of the Company. He has been employed by the Company since 2001. Mr. Chen holds a Master's degree from Central University of Finance and Banking. Mr. Chen has participated in a wide range of corporate and financial management projects. He formerly served as the Executive Manager of the International Finance Department of China Chengxin Securities Rating Company Limited, the Chief Financial Officer with Red Bull Vitamin Beverages Company Limited and China Operations of ALJ Group of Saudi Arabia. He also formerly served as the Chief Financial Officer with Jitong Network Communications Company Limited.

- 5 -

Directors, Supervisors and Senior Management Profile (Continued)

Non-Executive Directors

Chen Xiaozhou, 41, is a Non-executive Director of the Company. Mr. Chen is the Vice President of China Cinda. Mr. Chen graduated from Hangzhou University in 1983 with a Bachelor's degree in economics and obtained a Master's degree in economics from the Graduate School of the Head Office of the People's Bank of China in 1988. Mr. Chen previously served in various positions in China Construction Bank before he was transferred to the investment banking department of China Cinda in 1999.

Joseph C. Muscari, 58, is a Non-executive Director of the Company. Mr. Muscari is the Executive Vice President of Alcoa. He is also the Group President of Alcoa for hard package, aluminum foil and the Asian Regions, and is responsible for the operations and development planning of the above mentioned businesses of Alcoa both worldwide and in the Asian regions. He is also a member of the Executive Council of Alcoa. Mr. Muscari graduated in 1968 from the New Jersey Institute of Technology with a Bachelor's degree in industrial engineering. He obtained a Master of Business Administration degree from the University of Pittsburgh in 1969. In 1994, he received an honorary doctorate in law from Salem-Teikyo University.

Independent Non-Executive Directors

Chiu Chi Cheong Clifton, 50, is an Independent Non-executive Director and the Chairman of the Audit Committee of the Company. Mr. Chiu was appointed as the Independent Non-executive Director of the Company in 2001. Mr. Chiu holds a Master of Business Administration degree and is a U.S. certified public accountant with extensive experience in international finance, securities and accounting. He serves as the Vice Chairman of the Takeover and Mergers Panel of the Hong Kong Securities and Futures Commission and was formerly the Vice Chairman of the Main Board and Growth Enterprise Market Listing Committees of The Stock Exchange of Hong Kong Limited. Mr. Chiu is also the Managing Director of Harvester (Holdings) Company Limited and is the Director of Shenzhen Expressway Company Limited.

Wang Dianzuo, 69, is an Independent Non-executive Director of the Company. Mr. Wang was appointed as the Independent Non-executive Director of the Company in 2001. Mr. Wang is a professor in ore dressing. Mr. Wang was formerly the President of the Central South University of Technology, the President of the Beijing General Research Institute for Non-ferrous Metals. Mr. Wang has served as the Vice Chairman of Chinese Academy of Engineering. Mr. Wang is also a part-time professor at Central South University of Technology, Northeastern University and Beijing University of Science and Technology. He has also been elected as a member of Chinese Academy of Sciences, Chinese Academy of Engineering and Russian Academy of Engineering and as a foreign associate of the US National Academy of Engineering. Mr. Wang is also a senior consultant to many research institutions.

- 6 -

Directors, Supervisors and Senior Management Profile (Continued)

Kang Yi, 64, is an Independent Non-executive Director of the Company. Mr. Kang was appointed as an Independent Non-executive Director of the Company in 2004. Mr. Kang graduated in 1965 from Central South University of Technology in the expertise of the metallurgy of nonferrous metals, and is a professor-grade senior engineer. Mr. Kang is the Chairman of the China Non-ferrous Metals Industry Association. Mr. Kang once served as the factory manager of Qingtongxia Aluminum Plant, the Director of the Economic Committee of Ningxia Hui Nationality Autonomous Region, the Deputy General Manager of China Non-ferrous Metals Industry Corporation and the deputy head of the State Non-ferrous Metals Industry Bureau. Mr. Kang is now a member of the China Association for Science and Technology, the Chairman of Non-ferrous Metals Society of China and the Independent Non-executive Director of Jiangxi Copper Company Limited, Lanzhou Aluminum Corporation Limited and Baotou Aluminum Corporation Limited. Mr. Kang resigned as the Independent Non-executive Director of Lanzhou Aluminum Corporation Limited in March 2005.

Supervisors

Luo Tao, 51, is the Chairman of the Supervisory Committee of the Company and the Deputy General Manager of Chinalco. Mr. Luo is also a senior economist with extensive management experiences in human resources, labor relations and corporate management. Mr. Luo was formerly the Vice President of Beijing General Research Institute for Non-ferrous Metals, Deputy Director of the Department of Human Resources and Training of China Non-ferrous Metals Industry Corporation and Director of Department of Human Resources of the State Bureau of Non-ferrous Metals Industry.

Yuan Li, 46, is a Supervisor elected as the employee representative of the Company and the Deputy General Manager of the Corporate Culture Department of the Company. He has been employed by the Company since 2001. Mr. Yuan is an engineer with extensive administrative and managerial experiences. He formerly served as the Deputy Director of the General Management Office under the General Office of China Non-ferrous Metals Industry Corporation, head of the Department of Research and Survey as well as the chief of the Secretariat and an assistant inspector of the State Bureau of Non-ferrous Metals Industry and Deputy Director of the Department of Political Affairs and the Director of the Community Union Working Department of Chinalco.

Ou Xiaowu, 40, is a Supervisor of the Company and the Director of the Finance Department of Chinalco as well as a senior auditor. Mr. Ou formerly served as Director of the Department of Auditing in China Non-ferrous Metals Industry Corporation, Deputy Director of the Finance Department of China Copper, Lead and Zinc Corporation, and Director of General Affairs in Chinalco's Finance Department, and Deputy General Manager of Guizhou branch of the Company.

Other Senior Management Personnel

Zhang Chengzhong, 44, is a Vice President of the Company and has been employed by the Company since 2001. Mr. Zhang is a professor-grade senior engineer with extensive experience in alumina production and research. Mr. Zhang previously served as the Deputy Director and then the Director of the alumina production facility in Shanxi Aluminum Plant of the Company, the Deputy Director and then the Director of the research institute affiliated with the Shanxi Aluminum Plant as well as the Deputy Director and then the Director of the Shanxi Aluminum Plant.

- 7 -

Directors, Supervisors and Senior Management Profile (Continued)

Liu Xiangmin, 42, is a Vice President of the Company and has been employed by the Company since 2001. Mr. Liu graduated from Central South Institute of Mining and Metallurgy and majored in non-ferrous metal science. He is a professor-grade senior engineer and has extensive and professional experience in the fields of mettalurgy of non-ferrous metals and corporate management. Mr. Liu previously served as the Deputy Director and then Director of the Alumina branch of Zhongzhou Plant, the Deputy Manager of Zhongzhou Aluminum Plant, and the General Manager of Zhongzhou Branch of the Company.

Sun Zhaoxue, 42, is a Vice President of the Company and has been employed by the Company since 2001. Mr. Sun is a professor-grade senior engineer with extensive experience in the management of bauxite mining and production of alumina. He graduated from North China University of Science and Technology and majored in engineering management science. Mr. Sun formerly served as the Deputy Director and then Director of the Xiao Yi Mine of Shanxi Plant, the Deputy Manager and then Manager of Shanxi Plant, and the General Manager of Shanxi Branch of the Company. Mr. Sun is also serves as the Chairman of Shanxi-Huaze Aluminum-Power Company Limited.

Liu Qiang, 41, has been employed by the Company since 2001 and has been the Secretary to the Board since November 2003. Ms. Liu holds a Master's degree in English literature and is a professor-grade senior translator. She has extensive experience in the import and export of non-ferrous metals and analysis of the aluminum market. Ms. Liu formerly served as the Finance Manager of the Australian branch of, and Business Manager of the Aluminum Business Division of, China National Non-Ferrous Metals Import and Export Corporation; senior analyst for the Aluminum Industry and Market in the Information Division of China National Non-Ferrous Metals Trading Group; senior analyst for the Aluminum Industry and Market in the Information Division of China National Metals and Minerals Import and Export Corporation; and deputy manager of the Import and Export Division of China Aluminum International Trading Corporation Limited.

- 8 -

Chairman's Statement

"Maintaining market dominance
Enhancing enterprise value"

- 9 -

Chairman's Statement (Continued)

Dear Shareholders,

I am pleased to present the annual report of Aluminum Corporation of China Limited (the "Company") for the financial year ended December 31, 2004 and, on behalf of the Board and all of the employees of the Company, express my gratitude to all our shareholders for their support to the Company.

Financial Results

The consolidated turnover and other revenues of the Group in 2004 amounted to RMB33,021.2 million, representing an increase of 38.6% over the previous year. The consolidated profit for the year was RMB6,223.9 million, representing an increase of 75.2% from the previous year. Consolidated earnings per share reached RMB0.56, representing an increase of 64.7% over the previous year.

The Board of the Company proposed to declare a final dividend of RMB0.176 per share, totaling RMB1,944,778,000 for 2004 based on 11,049,876,153 shares in the total share capital as of March 28, 2005. The proposal to declare and pay this final dividend is to be submitted to shareholders at the Annual General Meeting scheduled on June 9, 2005 for review and approval.

Business Review

2004 was a remarkable year for the Company. Despite critical market challenges and pressure during the year, the Company not only achieved significant increase in business results but also reached the given targets for production, operation and development reforms.

*

Leveraging favorable opportunities in the product market, the Company optimized production arrangement and product mix to improve production and operation management, with an aim at advancing the schedule in the completion of greenfield projects of alumina. Despite the adverse impacts from frequent power shortages and transportation bottleneck, major products recorded a steady and high yield with increasing adaptability to market. In 2004, the Company produced 6,820,000 tonnes of alumina and 770,000 tonnes of primary aluminum, representing an increase of 12.7% and 1.1% over the previous year respectively.

*

The Company built and perfected the bauxite resource securing system, and by way of resource planning and the implementation of management methods, conducted investigating, evaluating, and integrating of internal resources. With expanded efforts in investigation of bauxite resources, the Company built a centralized system for resource development, management and ore supply. As a result, the Company managed to expand the scope of resources control, and duly adjusted the bauxite supply structure toward more reasonable source allocation. In 2004, the Company obtained an additional 120,000,000 tonnes of bauxite reserve, and added 4 new joint venture mines.

*

To speed up its overseas development strategy, the Company proactively explored resources in Brazil, Australia and Vietnam where the Company is going to embark on certain projects upon completion of preliminary work.

*

In May 2004, the Company entered into a non-binding framework agreement with Companhia Valedo Rio Doce of Brazil for establishment of a joint venture in Brazil. Subject to the satisfaction of certain prerequisites under the agreement, the joint venture will commence the feasibility study of establishing a new refinery, ABC Alumina Refinery, for alumina production in Brazil. Phase I of the project is expected to produce 1,800,000 tonnes of alumina per annum with an estimated total investment of US$1,000 million. Currently, the parties thereto have essentially agreed on significant business arrangements and started the feasibility study. The project is expected to commence construction in 2005 and put into operation in 2008.

- 10 -

Chairman's Statement (Continued)

*

The Chinese joint parties led by the Company successfully submitted a letter of registration to Queensland government in November 2004 for the bidding of the Aurukun project in Australia.

*

The Company is taking the lead to promote the Dak Nong project in Vietnam and is responsible for preparing the preliminary feasibility study report which is expected to be completed in a foreseeable period of time.

*

In line with the PRC's macroeconomic control policies and market demand, the Company sharpened its core competitive edges by focusing on core businesses to speed up its development. With increased investment in newly-established projects, expansion and technological renovation during 2004, the Company's production capacity of alumina and primary aluminum amounted to 6,470,000 tonnes and 830,000 tonnes, representing an increase of 9% and 12% respectively over the previous year. The Company proactively captured market opportunities in merger and acquisition of aluminium projects at low cost.

*

In January 2005, the Company entered into an agreement with Lanzhou Aluminum Plant concerning acquisition of shares in Lanzhou Aluminum Corporation Limited (the "Lanzhou Aluminum") for a consideration of RMB767,305,000. The Company holds a 28% interest (151,851,442 shares) in the total share capital in Lanzhou Aluminum, thus becoming its largest shareholder. Therefore, the Company's production capacity of primary aluminum is expected to increase by 160,000 tonnes.

*

In January 2004, the Company completed its H Shares placement, raising approximately RMB3.25 billion to finance its development goals.

*

The Company continued to advance the construction of its technological research and development system. Smooth progress of the National Engineering and Technology Research Center for aluminum smelting, backed by Zhengzhou Research Institute, enhanced the research and development capability and facilities of the Company. The research and development projects focusing on energy saving and consumption reduction, output and quality enhancement as well as long-term development achieved the following new progress:

*

completion of the implementation and industrialization of the production technology for the enhancement of alumina product quality;

*

industrialization of the technology for the enhancement of the life span of smelting pots and technology development of reinforced electrical currents; and

*

the significant breakthrough in development of anti-flotation technology for China's medium and low grade diasporite bauxite.

The Company stressed the importance of intellectual property right protection in 2004, the Company's applications for 39 patents of invention and 17 patents of new practical model were all granted protection approvals.

*

With implementation of the second three-year cost reduction plan, the Company promoted the management method of rationalization in production, and optimized technical and economic performance by way of energy saving, consumption reduction and waste elimination. The Company also carried out a system combining sampling and polling inspections to increase effective utilization ratio of equipments.

- 11 -

Chairman's Statement (Continued)

The Company set up a special panel to supervise business flows and control business risks focusing on construction of internal procedure control in accordance with the Section 404 of US Sarbanes-Oxley Act. The work towards an all-around improvement in management expertise is in progress.

The Company has established complete systems for occupational health and safety, environment protection and quality management which have been certified by the State's authorized accreditation institutions.

Product Market Reviews

In 2004, the strong growth in global economy significantly stimulated the consumption of metal, together with the improved structure of metal supply and demand leading to the continuous increase in metal prices. On the other hand, along with China's continuous fast-growing economy, aluminum products are playing an increasingly important role in the national economy.

Primary Aluminum Market

Driven by the booming global economy and the weak US dollar, the global consumption of primary aluminum is surging at the highest rate in the recent 20 years, resulting in the further increase of metal prices. For 2004, the average three-month primary aluminum futures price on the London Metals Exchange (the "LME") was US$1,723 per tonne (which had surged to US$2,000 per tonne, hitting a new high in 9 years), representing an increase of 20.3% over the previous year, where China still acted as an active support to market. In 2004, the domestic aluminum market experienced noticeable price fluctuations. During the first half year, aluminum prices continued to increase as driven by the international market. The three-month aluminum futures price on Shanghai Futures Exchange (the "SHFE") increased up to RMB19,300 per tonne, being the highest in the past decade. However, domestic aluminum prices recorded considerable fluctuations during the second half year due to the influence of the PRC's macroeconomic control. The annual average three-month futures price on SHFE in 2004 was RMB16,417 per tonne, representing an increase of 13.1% over the previous year.

The global aluminum output for 2004 recorded a moderate growth due to reduced aluminum production in North America. Total domestic primary aluminum output amounted to 6,670,000 tonnes, representing an increase of 20.0% over the previous year. China maintained an increasing consumption of primary aluminum in different industries to various extents. The total domestic primary aluminum consumption was approximately 6 million tonnes in 2004, representing an increase of 15.4% over last year.

Alumina Market

In 2004, due to the increasing production of primary aluminum in China, there was still an apparent difference between global demand and supply of alumina, causing alumina prices to remain at a high price. The price of alumina imported into China from international markets increased up to US$530 per tonne. The annual average price was US$348 per tonne, representing an increase of 42% from the previous year. In 2004, with the supply shortfall of domestic alumina amounting to nearly 50%, domestic alumina prices remained high and recorded the highest RMB5,300 per tonne. The annual average spot price of domestic alumina in 2004 was RMB4,053 per tonne, representing an increase of 43.9% from the previous year.

- 12 -

Chairman's Statement (Continued)

During the year, due to fewer production of global alumina projects and the continued rapid growth of global alumina consumption, the global alumina remained at a slight shortage situation. In 2004, the global alumina production volume reached approximately 57,840,000 tonnes, and the consumption volume reached approximately 58,120,000 tonnes. In China, both domestic output and demand of alumina products recorded continuous steady increase: the annual output of alumina products amounted to approximately 7,040,000 tonnes, representing an increase of approximately 15.2% over the previous year; while the demand for alumina was approximately 13,800,000 tonnes, representing an increase of 16.1% over the previous year. In 2004, China imported 5,870,000 tonnes of alumina, representing an increase of 4.6% over the previous year.

Future Development and Prospects of Businesses

In 2004, China's GDP growth rate reached 9.5%. China's economy is expected to continue its strong growth in 2005, with increasingly important contribution from industrial growth to the national economy. Also, the relationship between aluminum and the national economy is expected to become even stronger. The recovery of the global economy will further boost aluminum consumption and continue to support the high prices of aluminum and alumina. The PRC macroeconomic control is fostering a promising outlook for the development of the domestic aluminum industry step by step, also providing an opportune time for the Company's growth.

From the Company's perspective, the market situation will continue to be critical in 2005, and production operations continue to face many challenges, mainly including:

*

an increase in production cost resulting from the lasting increase in prices of raw materials and power;

*

continuing power shortages and transportation bottlenecks could cause difficulties in production and operation;

*

cancellation of tax refund for aluminium export out of PRC will decrease aluminium export from the PRC and result in intensified competition in the domestic aluminium market.

- 13 -

Chairman's Statement (Continued)

For this reason, the Company will take effective measures based on in-depth studies and analysis of the state's policies and the market environment. In 2005, the Company will continue to carry out various innovations to strengthen the management and advance technological progress, together with the Company's rapid growth and all-round success in various tasks, this will lay a solid foundation for the Company to become a first-class world enterprise. The Company's major targets in 2005 are as follows:

*

In addition to securing its advantageous position in the PRC, the Company will speed up construction of alumina and primary aluminum projects, put more efforts in exploitation of bauxite resources to increase its resource and market shares, and further expand financing channels to sharpen its core competitive edge.

*

The Company will place great emphasis on the importance of strategy and decision management by identifying differences from the world leading enterprises. In order to bring management performance to new heights, the Company will consolidate the bases of development in production and operation, marketing, financial control, quality management, risk control and staff caliber.

*

The Company will further reinforce production and operation based on its optimized on-site management, streamline work flows and improve the sampling system of equipment inspection. Also it will prepare and carry out operating plans and management contingency proposals, with emphasis on environmental protection and production safety.

*

Elaborating the crucial role of marketing in corporate operation, the Company will scrutinize market movements and strengthen its capabilities in market forecast, swift reaction and scientific decision making to lay out practicable measures. On the other hand, it will continue to refine its long-standing and steady sales channels and strengthen its sales networks. With flexible sales strategies and dealing modes, the Company aims at effective operation with a global presence by way of effective interaction between the domestic and overseas markets.

*

As for the financial budget management, the Company will improve its budget analysis system to follow up, analyze and monitor the whole process of budget implementation. Meanwhile, the Company will set up a corporate cost management mode and carry out cost objective management to promote application of information technology in financial management.

The Company is fully committed to reaching and fulfiling the targets set for 2005, aiming to upgrade corporate value and profitability so as to maximize the return to investors.

Xiao Yaqing
Chairman, Chief Executive Officer

March 28, 2005

- 14 -

Report of Corporate Governance

The Board and the senior management of the Company are of the opinion that during the year 2004, the Company has properly operated in accordance with the Code of Best Practice as set out in the listing rules of Hong Kong, the US Sarbanes-Oxley Act and the New York Stock Exchange "Corporate Governance Listing Standards" for listed companies to continuously improve the governance level of the Company.

The Board

A re-election for the Board was approved by the Annual General Meeting on June 7, 2004. The former second Board consisted of 8 Directors, of which 4 Executive Directors were Mr. Xiao Yaqing, Mr. Xiong Weiping, Mr. Luo Jianchuan and Mr. Chen Jihua, 2 Non-Executive Directors were Mr. Chen Xiaozhou and Mr. Joseph C. Muscari, and 2 Independent Non-Executive Directors were Mr. Chiu Chi Cheong, Clifton and Mr. Wang Dianzuo. Thereafter, in the Extraordinary General Meeting on September 28, 2004, Mr. Kang Yi was elected as an additional Independent Non-executive Director, whereby the members of the Board increased to 9 Directors. Mr. Xiao Yaqing is the Chairman of the Board. Apart from the resignation of Mr. Chen Xiaozhou from the Director the Company on 27 March 2005, the term of office for all Directors will expire on the close of the Annual General Meeting of the Company for 2006.

Each Director shall act in the interests of shareholders, and use his best endeavors to perform the duties and obligations for a Director as provided in all the applicable laws and regulations. Duties of the Board include: decision of the Company's business plan and investment scheme, preparation of the Company's profit distribution and loss recovery proposals, formulation of the Company's capital operation proposals, and implementation of resolutions approved by General Meetings etc.

The Company has appointed sufficient number of Independent Non-Executive Directors in accordance with the Listing Rules, including those with suitable professional qualifications such as expertise in accounting or financial management. The Company's 3 Independent Non-executive Directors are professionals in the fields of finance, resources and metallurgy, with extensive experience in these field. They have dedicatedly provided the Company with professional advice with respect to the steady operation and development of the Company. They also exercise supervision and coordination to safeguard interests of the Company and its shareholders.

In 2004, the Company held three Board meetings, with an average participation rate of 95.83%, in which, Mr. Xiao Yaqing, Mr. Xiong Weiping, Mr. Luo Jianchuan, Mr. Chen Jihua, Mr. Chen Xiaozhou, Mr. Joseph C. Muscari and Mr. Chiu Chi Cheong, Clifton all had a participation rate of 100% and Mr. Wang Dianzuo had a participation rate of 66.7%. Due to his late appointment in the Board, Mr. Kang Yi did not participate in any Board meeting in 2004. Details of the meetings are recorded by a designated officer, and all proposals approved in each meeting are filed into resolutions of the Board, which are archived in accordance with relevant laws and regulations. The principal activities of the Board in 2004 are as follows:

*

Review of the Company's annual business plan and budget;

*

Review of the Company's annual and interim results;

*

Review of annual profit distribution and final dividend distribution proposals;

*

Review of significant investments and merger/acquisition projects;

*

Review of the Company's remuneration scheme for Directors, Supervisors and senior management;

- 15 -

Report of Corporate Governance  (Continued)

*

Election of a new Chairman after expiration of the former Board, appointment of the Company's President, Vice President and secretary to the Board as well as members of three special committees, etc.

Audit Committee

An Audit Committee has been established under the Board. The Audit Committee's duties mainly include the review of the Company's financial reports, consideration of the appointment of independent auditors and approval of audit and audit-related services, and supervision over the Company's internal financial reporting procedures and management policies. The Committee comprised two Independent Non-executive Directors, Mr. Chiu Chi Cheong, Clifton and Mr. Wang Dianzuo, and one Non-executive Director, Mr. Chen Xiaozhou, in which Mr. Chiu Chi Cheong, Clifton was the Chairman of the Committee. At least two meetings of the Audit Committee are convened annually to review the accounting policies, control system adopted and the relevant financial issues, so as to ensure completeness, fairness and accuracy of the Company's financial statements and other relevant information. In 2004, the Audit Committee held three meetings with an average participation rate of 66%, in which, the participation rates for Mr. Chiu Chi Cheong, Clifton, Mr. Wang Dianzuo and Mr. Chen Xiaozhou were 100%, 0% and 100% respectively. From March 28, 2005, the Audit Committee is revised to comprise 3 Independent Non-executive Directors. Mr. Chen Xiaozhou, who has resigned as of March 27, 2005, will be replaced by Independent Non-Executive Director, Mr. Kang Yi. In 2004, the Audit Committee reviewed the Company's annual and interim financial reports, considered the reports concerning the Company's internal control, and submitted its audit reports and related advice. Details of the meetings are recorded by a designated officer, and all proposals approved in each meeting are archived in accordance with relevant regulations.

Remuneration and Nomination Committee

A Remuneration and Nomination Committee has been established under the Board. Duties of the Remuneration and Nomination Committee include: review of the Company's remuneration policy and assessment on performance of the Directors and senior management. The Committee consists of two Executive Directors, namely Mr. Xiao Yaqing and Mr. Xiong Weiping and one Independent Non-executive Director Mr. Wang Dianzuo. Mr. Xiao Yaqing serves as the Chairman. The Committee convened three meetings, mainly focusing on the following tasks:

*

preparation of remuneration policies for Directors and senior management;

*

approval of terms in service contracts of Directors;

*

assessment of achievement and performance of Executive Directors and senior management;

*

nomination of candidates of Executive Director for the new Board;

Details of the meetings were recorded by a designated officer, and all proposals approved in each meeting were archived in accordance with the relevant laws and regulations.

Mr. Chiu Chi Cheng and Mr. Kang Yi re-elected as the members of the Remuneration and Nomination Committee at the board meeting on 28 March 2005.

- 16 -

Report of Corporate Governance  (Continued)

Planning and Development Committee

A Planning and Development Committee has also been established under the Board. The Committee consists of Executive Directors, Mr. Xiong Weiping and Mr. Luo Jianchuan, and Independent Non-executive Director, Mr. Wang Dianzuo. Mr. Wang Dianzuo is the Chairman of the Committee. Duties of the Committee include review and evaluation of the Company's development, financial budget, investment, business operation and strategic plan of annual investment returns. The Committee properly performed its duties in accordance with the rules of procedures.

Supervisory Committee

The Supervisory Committee of the Company consists of 3 members, of which one supervisor is elected from the staff as a representative of the employees. The Supervisory Committee is responsible for supervision over the Board and its members and senior management, so as to prevent them from abusing their authorities and violating the legal interests of shareholders, the Company and its staffs. In 2004, the Supervisory Committee convened 3 meetings, at which the Company's financial position and legal compliance of corporate operations as well as work performance of the senior management were reviewed. The Committee has complied with the principle of creditability to proactively perform their functions.

General Meeting

General Meeting is the highest authority of the Company. It provides a good opportunity for direct communications and build a sound relationship between the Board and the shareholders of the Company. Therefore, the Company attaches much importance to the meetings. In 2004, the Company convened two General Meetings respectively on June 7 and September 28 in the Meeting Room, 15/F, Block B, Tongtai Building, No. 33, Finance Street, Xicheng District, Beijing. The meetings mainly reviewed and approved the following:

*

the Report of the Directors, Report of Supervisory Committee and Consolidated Financial Report for 2003;

*

the profit distribution and final dividend distribution proposals for 2003;

*

the remuneration proposal of 2004 for the Company's Directors and Supervisors;

*

the re-election scheme of the Board and the Supervisory Committee;

*

the by-election of Mr. Kang Yi as Independent Non-executive Director, etc.

On the whole, all resolutions were approved with a rate of 99.99%.

- 17 -

Report of Corporate Governance  (Continued)

President Meeting

The Company convenes regular President meetings, which are hosted by the President and attended by senior management, including department heads from the Company's headquarters. The Company's operation, implementation of investment projects and financial issues are considered and determined at the meetings. The Company's management including managers of branches, subsidiaries and department heads from the headquarters will convene a work meeting semi-annually in order to review the operational performance of the previous six months and to make concrete decisions for operations for the following six months. The meetings have facilitated coordination, communication and implementation of the Company's various operations.

Corporate Management and Internal Control

In 2004, the Company achieved a smooth operation under its business mode of "integrated operations under centralized management". By implementing centralized management over five areas of finance, marketing, human resources, investment, research and development, the Company has effectively shared resources and exercised efficient control over expenses. Furthermore, the Company has also established management systems for occupational health, safe environment and ISO9000.

The Board and senior management attached much importance to the establishment and perfection of the internal control system. The Company has set up a special panel and a project management committee for all-round system establishment and comprehensive perfection in corporate internal control in accordance with Article 404 of the Sarbanes Oxley Act, which is required and expected to be completed before the end of 2006.

Information Disclosure and Disclosure Committee

Great importance has been attached by the Company to the information disclosure on an accurate, timely, fair, justified and open basis in compliance with disclosure requirements in the Listing Rules. All discloseable information (including annual and interim results) shall be subject to approval of the Company's Disclosure Committee with the President as its Chairman or a representative authorised by the Committee. For the purpose of discloseable financial statements and the relevant information, the Chief Financial Officer shall confirm that the Company's results and financial position have been reflected on a true and fair basis under relevant accounting principles and requirements.

Compliance and Exemption of Corporate Governance Standards Imposed by New York Stock Exchange

New York Stock Exchange ("NYSE") has based on its listing rules imposed a series of corporate governance listing standards for companies listed in the NYSE (Section 303A). However, NYSE provides that listed companies that are foreign private issuers, subject to certain limitations and conditions, are permitted to follow "home country" practice in lieu of the provision of Section 303A. One of the conditions is that a listing foreign private issuer must disclose any significant ways in which their corporate governance practices differ from those followed by U.S. companies under NYSE listing standards.

The Company has compared the material corporate governance standards generally adopted by the companies incorporated in the People's Republic of China (the "PRC") and Section 303A, as follows:

- 18 -

Report of Corporate Governance  (Continued)

A majority of independent directors

NYSE requires that the board of a listed company must comprise a majority of independent directors. There is no identical corporate governance requirement in the PRC. The Company, in view of its business operation and long-term business development, determined to maintain its board of directors with three independent directors and six non-independent directors.

Nominating committee and Compensation Committees

NYSE requires that a listed company must have a nominating committee and a compensation committee composed entirely of independent directors. The committees must have written charters that addresses the committees' purposes and responsibilities. The Compensation Committee is responsible to (i) review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO's performance in light of those goals and objectives, and, either as a committee or together with the other independent directors (as directed by the board), determine and approve the CEO's compensation level based on this evaluation; and (ii) make recommendations to the board with respect to non-CEO executive officer compensation, and incentive-compensation and equity-based plans that are subject to board approval. The Nominating Committee must be to identify individuals qualified to become board members, consistent with criteria approved by the board, and to select, or to recommend that the board select, the director nominees for the next annual meeting of shareholders. Both committees must have an annual performance evaluation.

The Company has established a Compensation and Nominating Committee, composed of three independent non-executive directors and two executive directors to be responsible for the foregoing corporate governance functions. The Company believes that the current Committee complies with the common corporate governance requirement in the PRC and can function effectively.

Corporate Governance Committee

NYSE requires that a listed company must have a corporate governance committee composed entirely of independent directors. According to Section 303A, the corporate governance committee shall be co-established with the nominating committee and have a written charter. The corporate governance committee is responsible for developing and recommending to the board a set of corporate governance guidelines applicable to the corporation; and overseeing the evaluation of the board and management. The Committee must have an annual performance evaluation.

As most other companies incorporated in the PRC, the Company believes that corporate governance matters are critical and shall be carried out by the board. The Company accordingly does not maintain a corporate governance committee.

Investor Relations

The Company has established a designated department for investor relations, which is responsible for matters concerning investor relations and has formulated the "Investor Management Measures" to regulate the relationships with the investors. The Company's management maintains close communications with investors, analysts and the media by various means including roadshows, individual interviews, meetings and investors' visits to the Company, thereby further increasing investors' recognition of the Company.

As at December 31, 2004, the market capitalization of shares held by the public was RMB16,100,000,000. For details of class shareholders and the total shareholding, please refer to page 33.

- 19 -

Management's Disussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our financial statements together with the accompanying notes, included elsewhere in this annual report. The financial statements have been prepared in accordance with accounting principles generally accepted in Hong Kong ("HK GAAP"), which differ in certain material respects from the generally accepted accounting principles in the United States ("U.S. GAAP"). A discussion of the material differences is contained under the heading "Supplementary Information".

Overview

The Group is engaged principally in alumina refining and primary aluminum smelting operations. We organise and manage our operations according to the following business segments:

*

Alumina segment, which consists of mining and purchasing bauxite and other raw materials, refining bauxite into alumina, and selling alumina both internally to the Group's primary aluminum smelters and externally to customers outside the Group. This segment also includes the production and sales of alumina hydrate, alumina chemicals and gallium.

*

Primary aluminum segment, which consists of procuring alumina and other raw materials, supplemental materials and electricity, smelting alumina to produce primary aluminum and other aluminum, and selling substantially all primary aluminum products to external customers. In addition, this segment includes production and sales of carbon products.

*

Corporate and other services segment, which includes the headquarters' operations, research conducted by the Group's research institutes and provision of the Group's research and development services to third parties.

Results of Operations

The Group's profit amounted to RMB6,223.9 million for the year ended December 31, 2004, representing an increase of RMB2,671.9 million, up 75.2%, from the previous year's RMB3,552.0million. The increase was mainly attributable to a significant increase in prices of the Group's principal products such as alumina and primary aluminum and the increased external sales volume of alumina.

- 20 -

Management's Disussion and Analysis of Financial Condition and Results of Operations (Continued)

Revenues

The Group's total revenues amounted to RMB33,021.2 million for the year ended December 31, 2004, representing an increase of RMB9,195.2 million, up 38.6%, from the previous year's RMB23,826.0 million. Total revenues include sales of goods and other revenues. Sales of goods accounted for 97.6% and 97.9% of the Group's total revenues for the years ended December 31, 2003 and 2004, respectively. The Group's sales of goods increased by 39.0% from RMB23,245.9 million for the year ended December 31, 2003 to RMB32,313.1 million for the year ended December 31, 2004, representing an increase of RMB9,067.2 million. The increase was primarily due to the increase in selling prices of the Group's principal products such as alumina and primary aluminum, and a growth in external sales volume of alumina was also a major contributor to the increased revenue of the Group. For 2004, the Group's average external selling price for alumina reached RMB3,229.7 per tonne (tax excluded, similarly hereinafter), representing an increase of RMB822.0 per tonne or 34.1% from RMB2,407.7 per tonne for the previous year. The Group's average external selling price for primary aluminum reached RMB13,756.3 per tonne, representing an increase of RMB1,295.8 per tonne or 10.4% from RMB 12,460.5 per tonne of the previous year. The Group's external sales volume of alumina increased from 4,219,600 tonnes of 2003 to 4,870,200 tonnes of 2004, representing an increase of 650,600 tonnes or 15.4% from the previous year. The Group's external sales volume of primary aluminum increased by 13,700 tonnes or 1.8% from746,900 tonnes for the year ended December 31, 2003 to 760,600 tonnes for the year ended December 31, 2004.

Cost of Sales

The Group's total cost of sales increased by RMB5,024.7 million or 30.6% from RMB16,439.5 million in 2003 to RMB 21,464.2 million in 2004. The increase was mainly attributable to a growth in external sales volume of alumina, and the increased unit production costs of primary aluminum and alumina caused by the increase in raw material prices.

Selling and Distribution Expenses

The Group's selling and distribution expenses increased by RMB98.1 million from RMB549.4 million in 2003 to RMB647.5 million in 2004, up 17.9%, which was primarily attributable to the increase in transportation and loading fee and packaging fee by RMB79.1 million.The increase was mainly attributable to the fact that transportation fee increased approximately by RMB56.2 million due to an increase of 15.4% in sales volume of alumina. The rise in transportation fee constituted the increase in the expenses for transportation by RMB16.2 million.

- 21 -

Management's Disussion and Analysis of Financial Condition and Results of Operations (Continued)

General and Administrative Expenses

General and administrative expenses increased by RMB173.4 million from RMB 1,047.5 million in 2003 to RMB1,220.9 million in 2004, up 16.6%. The increase was mainly due to the increase of RMB94.8 million in relevant taxes other than income tax causing by the expanded business, the increase of RMB30.9 million in remuneration and welfare expense for management members under the Group's incentive plan as a result of desirable fulfilment of operating objectives for 2004, as well as the increase of RMB13.4 million in insurance premiums as the Company spent more in the property insurance to strengthen its capability against force majeure risks.

Research and Development Expenses

The Group's research and development expenses decreased by RMB40.8 million or 23.5% from RMB 173.4 million in 2003 to RMB132.6 million in 2004. The decrease was primarily due to the fact that the Company put the previous years' research results into practice and conducted meticulous verification for some of the research topics, resulting in a slow down of some of the research projects. The Group will continue to properly invest in the research and development.

Other Income / Expenses

The Group's expenses (net of other income) changed from a net expense of RMB 25.54 million in 2003 to a net expense of RMB3.38 million in 2004. This was attributable to the fact that the Company entered into an agreement with a financial institution in 2004, pursuant to which, the Company paid off the loans of prior years at one go and thus interests of RMB9.78 million were reduced and exempted. Also, the income from foreign exchange increased by RMB10.85 million derived from the increased deposit denominated in foreign currency as a result of excercising placing right in January 2004.

Operating Profit

The Group's operating profit increased by RMB3,881.5 million from RMB5,078.5 million in 2003 to RMB8,960.0 million in 2004, up 76.4%. The Group's operating profit as a percentage of sales of goods increased from 21.8% in 2003 to 27.7% in 2004, mainly attributable to the increase in selling price of alumina, however, the surging in the price of raw materials and energy partially offset the increase.

Finance Costs

The Group's finance costs decreased by RMB42.4 million, or 9.4%, from RMB 451.4 million in 2003 to RMB409 million in 2004. The decrease was mainly attributable to the repayment of part of short-term loans and the adjustment of loan structure for operating capital which lowered the average interest rate.

- 22 -

Management's Disussion and Analysis of Financial Condition and Results of Operations (Continued)

Income Taxes

The Group's income tax expense increased from RMB 918.9 million in 2003 to RMB2,079.5 million in 2004, which was mainly attributable to the increased profit of the Group. The Group's effective income tax rate was 24.3% in 2004, which was lower than the statutory tax rate of 33.0%. This was mainly because three branches of the Company situated in Guizhou Province, Pingguo County and Qinghai Province in the western region of the PRC were entitled to a preferential income tax rate of 15.0% in connection with the national policy to develop the western region. Certain of the Group's plants are also entitled to preferential income tax treatment for the purchase of domestically-produced equipment in investment projects, resulting in the expenses in income tax decreased by RMB208.9 million.

The effective income tax rate of the Company in 2004 increased by 4.4% as compared to 2003, mainly attributable to a subsidiary of the Company in Shandong Province which ceased to be entitled to an income tax rate of 15.0% as enjoyed in prior years and its rate of income tax in 2004 resumed to 33.0% under the notice from the tax authorities by the end of 2004. Thus, the expenses of income tax increased by RMB202.5 million in 2004. Meanwhile, the Company had been granted approval from the State Tax Bureau of the PRC for consenting the Company to use the tax losses from prior years in 2003, which led to the decrease of income tax by RMB142.3 million in 2003. The two factors mentioned above are the main reasons accounting for the effective income tax rate in 2004 being higher than that in 2003.

Minority Interests

Minority interests increased from RMB 157.37 million in 2003 to RMB243.54 million in 2004 primarily due to the increase in the profit in Shandong Aluminum Company Limited, a subsidiary of the Company in which the Company has minority interests.

Net Profit for the Year

As a result of the foregoing, the Group's net profit for the year increased by 75.2% from RMB 3,552.0 million in 2003 to RMB6,223.9 million in 2004.

- 23 -

Management's Disussion and Analysis of Financial Condition and Results of Operations (Continued)

Discussion of Segment Operations

Revenue by Segment

Alumina Segment

Sales of Goods

The Group's total sales of goods of alumina segment increased by RMB7,990.8 million, up 51.7% from RMB15,459.2 million in 2003 to RMB23,450.0 million in 2004.

The Group sold alumina products to its smelters and to other domestic smelters. Revenues from the external sales of alumina in 2004 rose by RMB6,896.4 million, up 55.9% as compared with 2003, mainly due to an increase in selling price and external sales volume of alumina. Selling price of alumina in 2004 increased by 34.1% to RMB3,229.7 per tonne from RMB 2,407.7 per tonne in 2003, mainly due to the increase in price of alumina driven by the strong demand of alumina in the PRC. The external sales volume of alumina increased by 15.4% to 4,870,200 tonnes in 2004 from 4,219,600 tonnes in 2003, mainly attributable to the fact that the Company's production capacity of alumina increased to 6.47 million tonnes in 2004 from 5.95 million tonnes in 2003 and that the productivity of existing production line was improved. Revenues from the sales of alumina to the Group's smelters in 2004 rose by RMB1,094.5 million, up 34.9% from 2003, primarily due to the increase in the Group's selling price. The Group's internal sales volume was approximately 1,485,400 tonnes, basically equivalent to the previous year. The proportion of the Group's internal sales volume of alumina to the total sales volume of alumina dropped from 25.2% in 2003 to 23.4% in 2004.

Cost of Goods Sold

The total cost of goods sold in the alumina segment of the Group in 2004 increased by RMB3,493.8 million, up 36.4% as compared with that of 2003. The increase was mainly attributable to the growth in sales volume of alumina products. In addition, due to the increase in price of raw materials, the unit production cost of alumina products increased. Particularly for the second half of 2004, there were significant increases in prices of materials such as bauxite, coal, electricity and energy sources, resulting in the significant increase in alumina production cost. As the rationalization mode of management was adopted by various factories of the Company in their productions, the Group's operations achieved further improvement in technical and economic index than that of 2003. Consumption rate decreased continuously, offsetting the influences imposed by the rising prices of certain raw materials. Also, the Company procured large volume of raw materials under a concentrated and unified mechanism, the influence exerted by the inflated raw material prices has been partially offset. In order to address the increasing price of bauxite and strengthen the procurement and management of bauxite, the Company established Bauxite Branch at the beginning of 2005 so as to centralize the procurement and allocation of bauxite resources.

Operating Profit

Total operating income of alumina segment increased by 83.4% from RMB 5,109.5 million in 2003 to RMB9,371.6 million in 2004. The proportion of operating income of the alumina segment to the Company's sales of goods increased from 33.1% in 2003 to 40.0% in 2004.

- 24 -

Management's Disussion and Analysis of Financial Condition and Results of Operations (Continued)

Primary Aluminum Segment

Sales of Goods

The Group's total sales of goods for the primary aluminum segment increased by RMB2,148.5 million to RMB12,994.1 million in 2004, up 19.8% over 2003. This was mainly attributable to an increase in the average selling price of primary aluminum as well as the adjustment in product mix which increase the production of higher value-added aluminum products, leading to the increase in sales value. The sales volume of ordinary aluminum ingots in 2004 is basically close to that of previous year, whereas sales of other aluminum increased by 10.8% over last year.

Cost of Goods Sold

The total cost of goods sold for the Group's primary aluminum segment increased by 26.5% from RMB9,884.0 million in 2003 to RMB12,501.8 million in 2004, mainly due to the increase in the production cost of primary aluminum. As the Group's internal sales of alumina were carried out in line with market price, the price of alumina increased significantly in 2004, resulting in the significant increase of 10.7% in the unit production cost of primary aluminum. Resulting from the increase by 10.6% of power tariff in the second half of 2004, the unit production cost of primary aluminum increased by 4.1%. Meanwhile, the Company improved the production facilities continuously, renovated some of the low efficiency aluminum production lines, leading to the greater improvement in production effectiveness. The management mode of rationalization was applied in production which prevented unnecessary consumption and lowered the material consumption for each tonne of primary aluminum, offsetting the impact imposed by the rising prices of certain raw materials.

Operating Profit (Loss)

The primary aluminum segment recorded a loss of RMB32.2 million as compared with the profit of RMB445.2 million in 2003. This is mainly attributable to a higher growth in the unit production cost than that in the selling price of primary aluminum.

Based on the Group's careful analysis of the current operation of primary aluminum, the history data and the prospect, the directors believe that the slight loss in the primary aluminum segment for the year falls within their estimation. Accordingly, the Company will not change its strategy of "Develop aluminium selectively". In view of the escalating domestic demand for primary aluminum, the Company will continue to align its product mix to improve cost effectiveness and reduce unit consumption level, so as to further improve operating profit from the primary aluminum segment.

Corporate and Other Services Segment

The Group's corporate and other services segment reflected the expenses of the Company's corporate segment and research and development services and product sales of the Group's research institute to external customers. This segment recorded an operating loss of RMB76.91 million for the year ended December 31, 2004, basically the same as the losses of RMB78.34 million of last year.

- 25 -

Management's Disussion and Analysis of Financial Condition and Results of Operations (Continued)

Working Capital, Liabilities and Capital Commitments

Working Capital

As of December 31, 2004, the Group's current assets amounted to RMB14,356.6 million, representing an increase of RMB5,718.0 million over RMB8,638.6 million of 2003.

-

the Group's inventories amounted to RMB5,231.9 million, representing an increase of RMB1,106.1 million over the previous year's RMB4,125.8 million. The increase was mainly attributable to the increase in the price and reserve volume of raw materials, resulting in the increase in inventories of raw materials by RMB1,081.9 million.

-

the Group's account receivables amounted to RMB1,786.8 million, representing an increase of RMB998.9 million as compared with RMB787.9 in 2003. Of which, bills receivables amounted to RMB1,524.2 million, representing an increase of RMB1,121.3 million over previous year. Trade receivables amounted to RMB262.6 million, representing a decrease of RMB122.4 million from RMB 385 million last year.

Current Liabilities

As of December 31, 2004, the Group's current liabilities amounted to RMB13,193.5 million, representing an increase of RMB2,922.1 million as compared with RMB10,271.4 million in 2003. The increase was mainly attributable to certain amount of premium charged by the Company to customers engaged in the Company's long-term contract of alumina and the prepayment made by some of the customers, resulting in the increase in account received in advance amounted to RMB810.8 million. Due to the increase of projects of capital expenditure, the construction payable increased by RMB824.7 million. Income tax increased as a result of the corresponding increase in the profit of the Company. The Company has been approved by the State to settle and pay its income tax aggregately. According to the requirement of tax laws, in general, income tax of a year shall be paid before 30 April in the following year. Thus, income tax payable increased by RMB513.9 million as of December 31, 2004.

Our gearing ratio (the ratio of total liabilities to the sum of total liabilities and owner's equity) decreased to 30.5% as of December 31, 2004 from 34.9% as of December 31, 2003, which is mainly attributable to an increase in retained earnings.

- 26 -

Management's Disussion and Analysis of Financial Condition and Results of Operations (Continued)

The Group's net current assets amounted to RMB1,163.1 million as of December 31, 2004. This represented an increase of RMB2,795.9 million over the net current liabilities as of December 31, 2003 which was to RMB1,632.8 million. The increase was mainly attributable to the improvement in financing sources and capital structure under the prudent financial policies of the Company.

Capital Expenditures and Capital Commitments

As of December 31 2004, the Group's capital expenditures amounted to RMB10,282.3 million, which mainly consists of the investment of 280,000 tonnes Alumimun poject in the establishment of the aluminum project of an associated company Shanxi Huaze Aluminum and Electricity Co., Ltd.  (chinese characters), together with the project of 800,000 tonnes of alumina project in Shanxi, the project of 700,000 tonnes of alumina project in Henan and the project of 300,000 tonnes of alumina project in Zhongzhou as well as the project of technological renovation for the Company's production plants etc. At present, those projects are in smooth progress and the expected results will be reached.

As of December 31, 2004, the Group's capital commitments amounted to RMB8,696.9 million, which mainly consists of the Company's proposed investment in the greenfield and brownfield projects of alumina and primary aluminum production lines. Major projects include alumina projects in Shanxi, Henan and Zhongzhou as well as aluminum projects in Guizhou, Qinghai and Shanxi, together with the projects of technological renovation for outdated equipments.

By virtue of its credit standing and the domestic capital availability, the Group is able to finance its capital expenditure projects and related expenditures through cash generated from operating activities, short-term and long-term borrowings and the proceeds from its global offering.

In light of its long-term development strategy of "Prioritize alumina first, develop aluminum selectively, and boost aluminum fabrication", the Group expects to gradually expand the production capacity of alumina and primary aluminum by investment in new production lines and acquisition of domestic aluminum production lines in good operations. The Group will strive to explore market share and enhance its market competitiveness, so as to improve operating results for better return to shareholders.

Cash and Cash Equivalents

Cash and cash equivalents of the Group as of December 31, 2004 (including foreign currency-denominated deposits) totaled RMB6,223.8 million, comprising US dollars 55.54 million and HK dollars 250,000.

Net Cash Flow from Operating Activities

Net cash from operations increased by 37.7% from RMB6,002.5 million for the year of 2003 to RMB8,265.2 million for the year of 2004. The increase was primarily the result of the increase of the Company's operating profit. Of the net cash from operating activities, RMB456.3 million was used for interest payment and RMB1,736.2 million was used for PRC income tax payment.

- 27 -

Management's Disussion and Analysis of Financial Condition and Results of Operations (Continued)

Cash Flows from Investing Activities

The Group's cash outlays for capital expenditure projects amounted to RMB5,352.8 million and RMB8,972.4 million in 2003 and 2004 respectively. The capital expenditure in 2004 contributed to the increase of 520,000 tonnes of alumina production capacity.

Cash Flows from Financing Activities

Net cash inflows from financing activities amounted to RMB4,418.0 million in 2004, which was mainly derived from the proceeds of RMB3,250.7 million from the issue of shares in January 2004, additional bank loans of RMB1,884.5 million and the payment of dividends for 2003 amounting to RMB1,060.8 million. The Group has also established standby credit facilities with domestic banks for an aggregate of RMB32,798.0 million to finance any capital shortfall related to its alumina and primary aluminum projects and for relevant working capital purposes.

Foreign Exchange Rate Risk

The Group conducts its business primarily in Renminbi.

Renminbi is not a freely convertible currency. The restrictions on foreign exchange imposed by the PRC government may result in the material differences between future exchange rate and the current exchange rate or historical exchange rate. The changes in the exchange rate of Renminbi will impact our ability in carrying out operations related to foreign exchange. Those changes will also impact our ability in payment of dividend in HK dollars and in payment of dividend of American Depository Shares in US dollars. The Company believes that it is able and will be able to obtain sufficient foreign exchange to implement the above-mentioned operations.

- 28 -

Report of the Directors

The Board submits to the Company and its subsidiaries (the "Group") the report together with the audited financial statements for the year ended December 31, 2004.

Principal Activities

The principal activities of the Group are the production and sales of alumina and primary aluminum.

Financial Summary

The Consolidated Profit and Loss Account of the Group for the year ended December 31, 2004 are set out on page 45 of the Financial Statements. A summary of the results and of the assets and liabilities of the Group for the last five financial years is set out on page 2.

The pro forma combined results of the Group for each of the years ended December 31, 2000 and the pro forma combined assets and liabilities of the Group as of December 31, 2000 are extracted from the prospectus for the initial public offering of the Company's H Shares dated November 30, 2001 (the "Prospectus").

The consolidated assets and liabilities as of December 31, 2001 and the pro forma combined results of the Group for the year then ended are extracted from the 2001 annual report. The consolidated assets and liabilities as of December 31, 2002 and the results of the Group for the year ended December 31, 2002 are extracted from the 2002 annual report. The consolidated assets and liabilities as of December 31, 2003 and the results of the Group for the year ended December 31, 2003 are extracted from the 2003 annual report.

The pro forma combined results and the pro forma combined assets and liabilities have been prepared on a combined basis as if the current group structure had been in existence throughout the periods and as if the relevant operations and business were transferred to the Group.

Dividend

The Board proposed to declare a final dividend of RMB0.176 per share, being in total RMB1,944,778,000 based on 11,049,876,153 total issued shares of the Company as of March 28, 2005. The profit distribution plan proposed by the Board will be submitted to the shareholders for review and approval at the Annual General Meeting for 2004.

Reserves

Movements in the reserves of the Group and of the Company during the year are set out in the consolidated statement of changes in equity on page 50 and Note 28 to the financial statements.

Property, Plant and Equipment

Details of the movements in property, plant and equipment of the Group and of the Company are set out in Note 16 to the financial statements.

Distributable Reserves

Pursuant to Article 147 of the Company's Articles of Association, where the financial statements prepared in accordance with PRC accounting standards differ from those prepared under accounting principles generally accepted in Hong Kong, distributable profit for the relevant accounting period shall be deemed to be the lesser of the amounts shown in the two different financial statements. Distributable reserves of the Company (before the 2004 dividends) as of December 31, 2004, calculated based on the above principle, amounted to approximately RMB6,423 million.

- 29 -

Report of the Directors (Continued)

Use of Proceeds

As of December, 2001, the net proceeds from the Global Offering amounted to approximately RMB3,303 million. As of December 31, 2004, approximately RMB688.5 million was used to settle the current portion of the long-term liabilities and RMB2,614.8 million was used for capital expenditures. The proceeds was all used up at the end of 2004. In January 2004, the Company's net proceeds from its new H Share placement amounted to RMB3,251 million. RMB562 million was used for capital expenditures. The net amount of raising fund was approximately RMB2,689 million, which remained unused are currently deposited with banks.

Designated Deposits and Overdue Time Deposits

As of December 31, 2004, the Group had not placed any designated deposits with any financial institution in the PRC, nor had it failed to collect any time deposits upon maturity during the year.

Taxation

In February 2004, a notice was issued by the State Tax Bureau clarifying the tax matters in relation to the treatment of the Company's taxation for the year ended December 31,2001. For details please refer to Note 11 to the financial statements.

Pre-emptive Rights

Under the Articles of Association of the Company and the laws of the PRC, no pre-emptive rights exist that require the Company to offer new shares to its existing shareholders in proportion to their shareholdings.

Donations

Donations made by the Company during the year amounted to approximately RMB 4,225,000.

Litigation and Contingent Liabilities

(a)

Litigation

As of December 31, 2004, the Group has no significant pending litigation.

(b)

Compensation with regard to the formation of an equity joint venture

Details regarding the 50/50 equity joint venture to be jointly established by the Company and Alcoa are set out in Note 31(b) to the financial statements.

Directors, Supervisors and Senior Management

The Directors and Supervisors during the year were:

Executive Directors

Mr. Xiao Yaqing

appointed on June 7, 2004

Mr. Xiong Weiping

appointed on June 7, 2004

Mr. Luo Jianchuan

appointed on June 7, 2004

Mr. Chen Jihua

appointed on June 7, 2004

Mr. Guo Shengkun

appointment expired on June 7, 2004

Mr. Liang Zhongxiu

appointment expired on June 7, 2004

Mr. Yin Yufu

appointment expired on June 7, 2004

- 30 -

Report of the Directors (Continued)

Non-executive Directors

Mr. Chen Xiaozhou

appointed on June 7, 2004, resigned on March 27, 2005

Mr. Joseph C. Muscari

appointed on June 7, 2004

Mr. Wu Weicheng

appointment expired on June 7, 2004

Independent non-executive Directors

Mr. Chiu Chi Cheong
Clifton

appointed on June 7, 2004

Mr. Wang Dianzuo

appointed on June 7, 2004

Mr. Kang Yi

Appointed on September 28, 2004

Supervisors

Mr. Luo Tao

appointed on June 7, 2004

Mr. Yuan Li

appointed on June 7, 2004

Mr. Ou Xiaowu

appointed on June 7, 2004

Brief biographical details of Directors, Supervisors and Senior Management are set out on pages 5 to 8.

In accordance with Articles 95 and 117 of the Company's Articles of Association, all Directors and Supervisors were appointed for a three-year term. At the expiry of the term of office, the term is renewable upon re-election. The first Board and Supervisory Committee will resign from their offices in advance at the close of the Annual General Meeting to be held on June 7, 2004, and the second Board and Supervisory Committee had come into effect upon an approval at such Annual General Meeting.

Due to his engagements in other positions, Mr. Chen Xiaozhou, a non-executive director, resigned from his office as a director of the Company on 27 March 2005. Mr. Shi Chun Gui has been recommended as a candidate for the position of non-executive director of the Company previously assumed by Mr. Chen, Mr. Shi's appointment is subject to approval by the Annual General Meeting to be held on 9 June 2005. Biographical details of Mr. Shi are as follows:

Mr. Shi Chungui, 65, is currently a member of the Expert Consultant Committee of China Xinda Asset Management Company Limited. Mr. Shi graduated from Dongbei University of Finance and Economics in 1964, majoring in Accounting. He is a senior economist and owns extensive experience in finance and governmental and corporate management. Mr. Shi had served as a Deputy Head of Qinghuangdao Commerce Bureau, a Deputy Mayor of Qinghuangdao Municipal Government, the Manager of Hebei province branch of China Construction Bank, the Manager of Bejing city branch of China Construction Bank, a Deputy General Manager of China Construction Bank, and a Vice President of China Xinda Asset Management Company Limited.

Directors' and Supervisors' Service Contracts and Remuneration

Each of the Directors and Supervisors has entered into a service contract with the Company for a term of three years. No Director or Supervisor has entered into a service contract with the Company which is not terminable by the employer within one year without payment of compensation (other than statutory compensation). Details of the Directors' and Supervisors' remuneration and the five highest paid individuals in the Company are set out in Note 7 to the financial statements contained in this report. There were no arrangements under which a Director or Supervisor of the Company had waived or agreed to waive any remuneration in respect of the year ended December 31, 2004.  

- 31 -

Report of the Directors (Continued)

In addition to fixed remuneration, the Directors, Supervisors and senior management are entitled to discretionary bonus totaling RMB12 million. Out of the total annual discretionary bonus, approximately RMB2.2 million in total will be provided to Directors and Supervisors and RMB9.8 million in total will be provided to senior management. Payments of the discretionary bonus are subject to approval by the shareholders of the Company at the forthcoming Annual General Meeting to be held on June 9, 2005.

The Company proposed to pay an estimated RMB7,800,100 as housing subsidy to relevant Directors and senior management staffs of the Company. A total amount of RMB4,196,900 and RMB3,603,200 were paid to two Directors and two senior management staff respectively. The housing subsidy distributed to Directors will be put into effect after the approval by the shareholders of the Company at the Annual General Meeting to be held on June 9, 2005.

As of December 31, 2004, no stock appreciation rights have been granted under the Stock Appreciation Rights Plan adopted by the Company.

Interests of Directors, Chief Executives and Supervisors in Shares of the Company

During the year ended December 31, 2004, none of the Directors or Chief Executives or Supervisors or their respective associates had any interests in the Company or any associated corporations (within the meaning of the SFO) which are (a) required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (b) required to be recorded in the register kept by the Company pursuant to Section 352 of the SFO;  (c) required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies.

During the year ended December 31, 2004, none of the Directors or Chief Executives, Supervisors, senior management or their spouses or children under the age of 18 was given the right to acquire shares or debentures of the Company or any associated corporations (within the meaning of the SFO).

Interests of Directors and Supervisors in Contracts

During the year ended December 31, 2004, none of the Directors or Supervisors had a material interest, directly or indirectly, in any contract of significance to which the Company or its subsidiaries was a party.

Employees, Pension Plans and Welfare Fund

The Group had approximately 68,615 employees as of December 31, 2004. The remuneration package of the employees includes salary, bonuses and allowances. Employees also receive welfare benefits including medical care, housing subsidies, child care and education, retirement and other miscellaneous items.

In accordance with applicable PRC regulations, the Group currently joins pension contribution plans organized by provincial and municipal governments, under which each of the Group's plants is required to contribute to the pension fund an amount equal to a specified percentage of the sum of its employees' salaries, bonuses and various allowances. The amount of contribution as a percentage of the employees' salary varies from plant to plant, ranging from 18.0% to 22.9%, depending in part on the location of the plant and the average age of the employees. The Company also contributes to a welfare fund for its employees. The contributions of the Company to this welfare fund are made at rates ranging from 5% to 10% of the Company's after-tax profit. The Company had not paid retirement benefits to its employees as of December 31, 2004.

- 32 -

Report of the Directors (Continued)

Share Capital Structure

The share capital structure of the Company as of December 31, 2004 was as follows:

As of December 31, 2004

Shareholders of
Domestic Shares or H Shares

No. of shares

Percentage in issued share capital

(in millions)

(%)

Shareholders of Domestic Shares

Chinalco

4,656.3

42.14

China Cinda

1,610.3

14.57

China Orient

602.2

5.45

China Development Bank

554.9

5.02

Guangxi Investment

196.8

1.78

Guizhou Development

129.4

1.17

Shareholder of H Shares

Alcoa

884.2

8.00

Other shareholders in the public

2,415.7

21.87

Share capital changes of the Company are set out in Note 28 to the financial statements.

- 33 -

Report of the Directors (Continued)

Substantial Shareholders

So far as the Directors are aware, as of December 31, 2004, the persons other than Directors, Chief Executives or Supervisors of the Company who have interests or short positions in the shares or underlying shares of the Company which are discloseable under Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance (the "SFO") are as follows (the interests in shares and short positions disclosed herein are in addition to those disclosed in respect of the Directors, Chief Executives and Supervisors):

Name of
substantial
shareholders

Class
of shares

Number of
shares held

Capacity

Type of
interest

Percentage in
the relevant
class of
share capital

Percentage
in total
share capital

Chinalco

Domestic Shares

4,656,261,060

Beneficial owner

corporate

60.08%

42.14%

China Cinda

Domestic Shares

1,610,332,210

Beneficial owner

corporate

20.78%

14.57%

China Orient

Domestic Shares

602,246,135

Beneficial owner

corporate

7.77%

5.45%

China
    Development
    Bank

Domestic Shares

554,940,780

Beneficial owner

corporate

7.16%

5.02%

Alcoa Inc.

H Shares

884,200,000

Interest of controlled corporation

corporate

30.55%

8.00%

Alcoa

H Shares

884,200,000

Beneficial owner

corporate

30.55%

8.00%

Repurchase, Sale or Redemption of the Company's Shares

The Company did not redeem any of its shares during 2004. Neither the Company nor any of its subsidiaries purchased or sold any of its shares during 2004.

- 34 -

Report of the Directors (Continued)

Management Contracts

No contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or existed during the year.

Major Customers and Suppliers

The largest customer and the five largest customers of the Group's alumina accounted for 4.3% and 17.7%, respectively, of the Group's total sales amount of alumina for the year ended December 31, 2004. All of these major customers during the year were domestic aluminum smelters.

The largest customer and the five largest customers of the Group's primary aluminum accounted for 6.6% and 17.5%, respectively, of the Group's sales amount of primary aluminum for the year ended December 31, 2004.

The amount of raw materials (including bauxite) provided by the largest supplier and the five largest suppliers of the Group's alumina segment accounted for 1.9% and 7.9%, respectively, of the Group's total cost of raw materials for the alumina segment.

The amount of raw materials provided by the largest supplier and the five largest suppliers of the Group's primary aluminum segment accounted for 8.3% and 18.3%, respectively, of the Group's total cost of raw materials for the primary aluminum segment.

None of the Company's Directors or their respective associates (as defined in the Listing Rules of Hong Kong Stock Exchange) or the existing shareholders, which, to the knowledge of the Directors of the Company, holding more than 5% of the Company's issued share capital, has any interests in the Group's five largest customers or five largest suppliers of the alumina segment or the primary aluminum segment at any time during 2004.

- 35 -

Report of the Directors (Continued)

Connected Transactions

Transactions between the Company and its connected persons or their respective associates (as defined in the Hong Kong Listing Rules) are governed by and have to comply with the requirements for disclosure under the Hong Kong Listing Rules. The following table sets out the annual limits for the connected transactions in respect of which a waiver has been granted by the Hong Kong Stock Exchange as compared to the amounts incurred by the Group in 2004. The Company had the following connected transactions based on consolidated calculation for the year ended December 31, 2004:

Transactions

Consolidated
Consideration
(For the year ended
31 December
2004)
(in RMB millions)

Comparison
with Consolidated
Consideration
in 2004
(percentage
to turnover or
Consolidated
Consideration
in RMB millions)

Proposed
Annual limits
(% to turnover or
transaction amount
in RMB millions)

Expenditure:

1.

Social Welfare and Logistics Services

927

2.9%

4%

Provision of social welfare and logistics services by
    Chinalco to the Company

2.

Mutual Provision of Production Supplies and
    Ancillary Services

509

1.6%

5%

Provision of production supplies and ancillary
  services by Chinalco to the Company

3.

Purchase of Minerals

125

0.4%

1.5%

Supply of bauxite and limestone by Chinalco to the
  Company

4.

Engineering Design and Other Services

946

2.9%

6.7%

Provision of engineering design and other services
    by Chinalco to the Company

5.

Land Rental paid to Chinalco

226

-

250

6.

Buildings Rental paid to Chinalco

9

-

12

7.

Aluminum Ingots Sales Agency

-

-

2

Sale of aluminum ingots and alumina by Guizhou
    Development as agent for the Company

8.

Factory and Asset Rental

4

-

11

Shanxi Carbon Factory

- 36 -

Report of the Directors (Continued)

Transactions

Consolidated
Consideration
(For the year ended
31 December
2004)
(in RMB millions)

Comparison
with Consolidated
Consideration
in 2004
(percentage
to turnover or
Consolidated
Consideration
in RMB millions)

Proposed
Annual limits
(% to turnover or
transaction amount
in RMB millions)

Revenue

1.

Mutual Provision of Product Supplies and Ancillary
    Services

1,055

3.3%

12.0%

Provision of product supplies and ancillary services
    by the Company to Chinalco

2.

Engineering Design and Other Services

-

-

3.5

Annual revenue from the provision of engineering
    design and other services by the Group

3.

Buildings Rental paid by Chinalco

1

-

5

4.

Aluminum Ingots and Alumina Supply

-

-

126

Supply of aluminum ingots and alumina to
    Guangxi associate

5.

Primary Aluminum Supply

698

2.2%

7.8%

Supply of primary aluminum to Xinan Aluminum

As application has been made by the Company, a waiver has been granted by the Hong Kong Stock Exchange to the Company from strict compliance with the general requirements of the rules of connected transaction in the Listing Rules of Hong Kong Stock Exchange in respect of the connected transactions set out above.

The Independent Non-executive Directors have reviewed the above transactions and have confirmed that:

1.

the transactions were conducted in the ordinary and usual course of the Company's business;

2.

the transactions were entered into on terms that are fair and reasonable and in the interests of the shareholders of the Company as a whole; and

3.

the transactions were entered into on normal commercial terms or, where there was no available comparison, on terms no less favorable than those available to and from independent third parties; and

4.

in accordance with the terms of the agreements governing such transactions.

- 37 -

Report of the Directors (Continued)

The auditors of the Company have reviewed such transactions and have provided a letter to the Company stating that:

1.

the transactions had been approved by the Company's Directors;

2.

the transactions were entered into in accordance with the pricing policies of the Company and its subsidiaries;

3.

the transactions were entered into in accordance with the terms of the agreements governing such transactions; and

4.

such transactions, where applicable, did not exceed the relevant annual limits as agreed with the Hong Kong Stock Exchange.

In view of the adjustment made by relevant local authorities of the PRC in the standard land price and the increases of land use tax in 2004 by the relevant local authorities, Chinalco had to pay the tax authorities an extra amount of RMB66,000,000 in respect of such adjustment. On January 11, 2005, after arm-length negotiations between the Company and Chinalco, the Company agreed to bear the annual tax increment beginning from January 1, 2004, pursuant to which, the payment of the rental for land use right by the Company increased from RMB173,000,000 to RMB239,000,000. The Company had applied and recommended to the Hong Kong Stock Exchange for the amendment of maximum amount of annual land use right payable by the Company be adjusted from RMB200,000,000 to RMB250,000,000. Such connected transaction has been disclosed in the announcement dated January 20, 2005.

On February 28, 2003, the Company together with Guangxi Investment (the connected party of the Company) and and China Minmetals Non-ferrous Metals Co., Ltd.  (Chinese Characters)  ("China Minmetals") established Guangxi Huayin Aluminum Co., Ltd.,  (the "JV Co."), to invest in the production of alumina. The Company and other investors have decided, subject to obtaining the relevant governmental approvals, to increase the total investment of the JV Co. While waiting for the relevant approval documents, the advance made by the Company to the JV Co. as operating capital amounted to RMB49,500,000. Such connected transaction has been disclosed in the announcement dated January 27, 2005.

In October 2003, Shandong Aluminum Company Limited ("Shandong Aluminum"), a subsidiary of the Company and an A share listed company, signed an agreement to purchase two rotary kilns from Shandong Aluminum Company, a wholly-owned subsidiary of Chinalco, the controlling shareholder of the Company. The purchase price was determined by a professional valuer in the PRC. The purchase was approved by the independent shareholders of Shandong Aluminum at a general meeting duly convened to approve the purchase in accordance with the requirements of the Shanghai Stock Exchange Listing Rules and the transaction was completed in March 2004.

Proposed Application to Issue A Shares in the PRC

On 28^th March, 2005, the board of Directors resolved that the Company would apply (i) to the China Securities Regulatory Commission for the issue of a maximum of 1,500,000,000 A Shares to the PRC public, and (ii) to the Shanghai Stock Exchange for the listing of the A Shares on the Shanghai Stock Exchange. Such resolution is subject to approval by the Company's shareholders at the Annual General Meeting, which will be held on 9^th June, 2005.

- 38 -

Report of the Directors (Continued)

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

1.

approximately RMB1,974 million will be used to fund an alumina brownfield project of the Company's Henan branch;

2.

approximately RMB538 million will be used to fund an alumina production-line project of the Company's Zhongzhou branch;

3.

approximately RMB1,724 million will be used to fund an alumina brownfield and environmental enhancement project of the Company's Guizhou branch;

4.

approximately RMB450 million will be used to invest in Shanxi-Huaze Aluminum and Power Company Limited, which investment is expected to be used to fund and develop its aluminum and power generating project;

5.

approximately RMB2,000 million will be used to fund the third phase of an alumina brownfield project of the Company's Guangxi branch;

6.

approximately RMB98 million will be used to fund a greenfield project of pseudoboehmite production of the Company's Shandong branch;

7.

approximately RMB105 million will be used to fund a greenfield project of zeolite production of the Company's Shandong branch;

8.

approximately RMB150 million will be used to fund a limestone improvement project of the Company's Shanxi branch;

9.

approximately RMB150 million will be used to fund an alumina improvement project of the Company's Shanxi branch.

Significant Events

1.

The Company had additionally issued 549,976,000 H Shares on January 6, 2004, raising an amount of approximately RMB3,251,000,000.

2.

The Board was re-elected and the second Board was successfully appointed on June 7, 2004.

3.

The amendments to the Articles of Association was approved at the Annual General Meeting of the Company on June 7, 2004.

4.

Mr. Kang Yi was elected as the Independent Non-executive Director of the Company in the Extraordinary General Meeting on September 28, 2004.

The Code of Best Practice

During the year ended December 31, 2004, the Company was in compliance with the Code of Best Practice as set out in appendix 14 of the Listing Rules.

- 39 -

Report of the Directors (Continued)

Audit Committee

The power and written terms of reference in relation to the authorities and duties of the Audit Committee were prepared and adopted in accordance with and with reference to "Guidelines of Effective Operation for Audit Committee" published by the Hong Kong Institute of Certificated Public Accountants and Rule 10A-3 of The Securities Exchange Act of 1934. For details, please refer to page 16.

Auditors

The financial statements have been audited by PricewaterhouseCoopers who have retired and, being eligible, offer themselves for re-appointment. The Company did not change its auditors in any of the four preceding financial years.

By order of the Board
Xiao Yaqing
Chairman

Beijing, the PRC
March 28, 2005

- 40 -

Report of the Supervisory Committee

Dear Shareholders,

On behalf of the Supervisory Committee of Aluminum Corporation of China Limited, I would like to submit to the Annual General Meeting a report on the work of the Supervisory Committee in the past year.

The Supervisory Committee was approved to be set up at the Annual General Meeting held on June 7, 2004. Three supervisors were re-appointed and comprised the second Supervisory Committee.

1.

Meeting Convened During the Reporting Period

The 7^th plenary conference of the first Supervisory Committee was held on March 29, 2004, at which the 2003 Report of the Supervisory Committee, the 2003 Financial Report and the 2003 Profit Distribution Plan, etc., were approved.

The first plenary conference of the second Supervisory Committee was held on June 7, 2004, at which the Chairman of the second Supervisory Committee was elected and the planning of work for the next Supervisory Committee was set.

2.

Principle duty of the Supervisory Committee

The Supervisory Committee will proceed with its work, perform its duties and focus on a number of issues, such as how to adapt to the Company's development, how to enhance its operating transparency and standardization, how to raise corporate profile of creditability in the capital market. In particular, it will focus on how to effectively protect interests of investors, especially the medium and minority investors, and how to further improve the Company's corporate governance structure, etc.

During the term of the Supervisory Committee, the Company has made breakthrough in various aspects:

On January 6, 2004, the Company successfully completed the placement of shares in Hong Kong. It has made the highest record in the placement of H Shares on the Stock Exchange of Hong Kong in terms of financing amount and shareholders' subscription. On January 19, 2005, the Company acquired Lanzhou Aluminum Corporation Limited., a listed company in the PRC. The Company's fast growth has attracted investors both in domestic and overseas capital markets, which in turn posed a new requirement to the Supervisory Committee.

The Company is currently implementing internal controls and procedures for financial reporting and making necessary preparations to ensure compliance with Section 404 of the Sarbanes-Oxley Act by not later than the end of 2006.

The Company's ERP project activated in 2004, together with the capital system of Nine Stellar Treasury System newly put into practice in January 2005, have improved the management mode of the Company.

- 41 -

Report of the Supervisory Committee (Continued)

The Supervisory Committee mainly carried out the following works:

1.

Inspection of Implementation of Resolutions of the General Meetings

Members of the Supervisory Committee attended each of the Board meetings and general meetings as observers. No objection has been made to the Report of the Directors and proposals submitted to the general meetings for consideration. The Supervisory Committee exercised supervision and inspection on implementation of the general meetings' resolutions by the Board, the Directors and senior management. The Supervisory Committee is of the opinion that the Directors and management of the Company have diligently performed their duties in compliance with resolutions of the general meetings. It has overcome various difficulties such as the repeated increases in the price of raw materials and fuel, limited supply of electricity and frequent power failure as well as inadequate transportation. The indices of income from principal businesses and return on net asset not only surpassed the target set for the year, but also created historical records. No violation of any laws or regulations or Articles of Association nor any act which jeopardizes the interests of the Company and shareholders up to present has been found in the conduct of the Company's Directors and senior management.

2.

Inspection of Legal Compliance of the Company's Operations

The Supervisory Committee exercised supervision on a regular basis over the legal compliance and rationality of the Company's operation and management. It has also exercised supervision over work performance of the Company's Directors, President and senior management. The Supervisory Committee is of the opinion that the Company's operation is sound and rational, and is in compliance with all applicable laws, regulations and rules. The members of the Board, executive officers and senior management of the Company have faithfully performed their duties with diligence, and accomplished the mission entrusted by the shareholders.

3.

Inspection of the Company's Daily Operating Activities

The Supervisory Committee exercised supervision over the Company's operating activities. The Supervisory Committee is of the opinion that the Company has established an improved internal control system, and has made great progress in the formulation and implementation of its internal work procedures, thus effectively controlled its exposure to various operating risks. The Company's operation is in compliance with the PRC laws and regulations, Articles of Association and its internal work procedures.

- 42 -

Report of the Supervisory Committee (Continued)

4.

Inspection of the Company's Financial Position

The Supervisory Committee verified cautiously the Company's 2004 final financial statements, and supervised and inspected the Company's implementation of relevant financial policies and legislation as well as details on the Company's assets, financial income and expenditure and connected transactions. It was of the opinion that the operating results achieved by the Company were true, the expenses were reasonable and all the connected transactions were entered into on a fair basis. Information on the significant events of the Company over the past year has been disclosed in accordance with relevant regulations. No act which jeopardizes the interests of the Company was discovered. The Supervisory Committee approved the Company's financial audit report presented by PricewaterhouseCoopers, the international auditors.

5.

Inspection of the Use of Proceeds

The Supervisory Committee exercised inspection over the use of the raised proceeds. After the Company received proceeds raised from the listing of its stocks, the Board has been observing its undertakings as stated in the Prospectus, and has effectively used the proceeds in a manner responsible to the shareholders. The use of proceeds recorded satisfactory performance. The Supervisory Committee is of the opinion that up to the present, the projects including Pingguo Alumina II, Zhongzhou 300kt ore-dressing Bayer process, Guizhou Technique Improvement, etc, have been implemented in accordance with the statements and progresses as set out in the Prospectus. The above projects have contributed income and profit to the Company.

Confronted by the intensifying competition in the PRC aluminum industry and the changing market, the Company is facing various competitive pressures and development opportunities. In order to protect the legal interests of the Company and shareholders, the Supervisory Committee will continue to faithfully perform its duties and enhance its supervision in order for the Company to better perform and become a stronger player in the increasingly competitive landscape.

By Order of the Supervisory Committee
Luo Tao
Chairman of the Supervisory Committee

Beijing, the PRC
March 28 , 2005

- 43 -

International Auditors' Report

INTERNATIONAL AUDITORS' REPORT TO THE SHAREHOLDERS OF

ALUMINUM CORPORATION OF CHINA LIMITED

(a joint stock company incorporated in the People's Republic of China with limited liability)

We have audited the financial statements on pages 45 to 110 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.

Respective responsibilities of Directors and auditors

The Company's Directors are responsible for the preparation of financial statements which give a true and fair view. In preparing financial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently.

It is our responsibility to form an independent opinion, based on our audit, on those financial statements and to report our opinion solely to you, as a body, and for no other purpose.   We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Basis of opinion

We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Institute of Certified Public Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the circumstances of the Company and of the Group, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion the financial statements give a true and fair view of the state of affairs of the Company and of the Group as of December 31, 2004 and of the Group's profit and cash flows for the year then ended and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, March 28, 2005

- 44 -

Consolidated Profit and Loss Account

For the year ended December 31, 2004

Year ended
December 31,

2004

2003

Note

RMB'000

RMB'000

Turnover

2

32,313,076

23,245,858

Cost of goods sold

21,464,189

16,439,534

Gross profit

10,848,887

6,806,324

Other revenues

2

708,158

580,171

Expenses related to other revenues

3

592,630

512,220

Other revenues, net

115,528

67,951

Selling and distribution expenses

4

647,532

549,432

General and administrative expenses

5

1,220,902

1,047,461

Research and development expenses

132,635

173,359

Other expenses, net

6

3,383

25,543

Operating profit

8,959,963

5,078,480

Finance costs

10

408,992

451,411

Operating profit after finance costs

8,550,971

4,627,069

Share of (loss)profit of jointly controlled entities