China Aluminum International Engineering : CONNECTED TRANSACTION ANNOUNCEMENT FORMATION OF THE JOINT VENTURE COMPANY

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CHALIECO

中鋁國際工程股份有限公司

China Aluminum International Engineering Corporation Limited

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

(Stock Code: 2068)

CONNECTED TRANSACTION ANNOUNCEMENT

FORMATION OF THE JOINT VENTURE COMPANY

The board of directors (the "Board") of China Aluminum International Engineering Corporation Limited (the "Company") announced that Changsha Engineering & Research Institute Limited for Nonferrous Metallurgy ( 長 沙 有 色 冶 金 設 計 研 究 院 有 限 公 司) ("Changsha Institute"), a wholly-ownedsubsidiary of the Company, and Chinalco Environmental Protection and Energy Conservation Co., Ltd. (中鋁環保節能集團有限公司) ("Chinalco Environmental Protection") entered into a joint venture agreement (the "JV Agreement") in relation to the formation of Chinalco Environmental Protection and Energy Conservation Technology (Hunan) Co., Ltd. (中鋁環保節能科技（湖南）有限公司) (the "JV Company") on 30 October 2019. Pursuant to which, the registered capital of the JV Company is RMB50,000,000, in which Changsha Institute and Chinalco Environmental Protection will own 49% and 51% equity interests in the JV Company, respectively.

JV AGREEMENT

Date of Agreement

30 October 2019

Parties

Changsha Institute and Chinalco Environmental Protection

Name of the JV Company

Chinalco Environmental Protection and Energy Conservation Technology (Hunan) Co., Ltd. (subject to the final approval of the company registration authority)

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Scope of Business of the JV Company

Subject to the final verified by the company registration authority, the scope of business of JV Company mainly includes development, marketing, transfer, consultancy and exchange service of environmental-friendly energy saving technology; consultancy, design, construction, development and construction and operation management of environmental- friendly engineering; social stability risk assessment of construction project; environmental assessment; energy assessment service; professional consultancy service of project cost; rural and urban planning establishment; construction and management of industry park and ancillary facilities project; environmental monitoring of construction project; environment inspection; environmental protection monitoring; relevant technological services of research and development, manufacturing and sales of environmental-friendly energy saving equipment.

Capital Structure and Contribution

The registered capital of the JV Company shall be RMB50,000,000. With respect to the registered capital of the JV Company, Changsha Institute shall contribute RMB500,000 in cash and intangible assets with a value of RMB24,000,000 (19 patents), a total amount of RMB24,500,000, representing 49% of the registered capital of the JV Company; Chinalco Environmental Protection shall contribute RMB25,500,000 in cash, representing 51% of the registered capital of the JV Company.

Within 30 working days from the date of business incorporation of the JV Company, Chinalco Environmental Protection shall fully pay the capital contribution in cash to the bank account of the JV Company. The contribution of assets made by Changsha Institute was assessed by China Alliance Appraisal Co., Ltd., the valuation institution approved by both parties, with the appraised value amounted to RMB24,000,000, and shall be paid to the JV Company within 30 working days from the date of business incorporation of the JV Company, or process the title change procedures for the JV Company. The capital contribution subscribed by Changsha Institute in cash shall be simultaneously paid to the bank account of the JV Company within 30 working days thereof.

Liability for default

Shareholders shall timely make their respective subscribed capital contribution. A capital contribution made in full no later than 10 days as prescribed is deemed as fully paid on time. If shareholders make their capital contribution over 10 days as prescribed, shareholders shall pay other shareholders who have made the capital contribution in full and on time a default penalty at a daily rate of 0.0001% of the unpaid amount of their respective capital contribution payable starting from the eleventh day until the payment is made in full. Other shareholders shall share the aforesaid default penalty in proportion to their respective paid capital contribution.

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Organization structure of the JV Company

A board of directors with 5 directors will be set up in the JV Company. Among which, Chinalco Environmental Protection and Changsha Institute will nominate 3 persons, 1 person, respectively and 1 Employee Representative Director, and the candidates will be elected in general meetings. The directors serve for a term of 3 years and shall be subject to re-election. The board of directors consists of 1 chairman, which is served by the director nominated by Chinalco Environmental Protection through election in the board meeting.

The JV Company does not have a supervisory board but has one supervisor recommended by Changsha Institute.

BASIS ON DETERMINING THE CONSIDERATION

The total registered capital is determined with reference to the expected capital requirement according to the actual operation of the JV Company and the intended development and operation of the JV Company.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

1. Keep abreast of the industry development trend and implement development strategies of the Company
   Given the rapid development of environmental protection industry in China over recent years, a large number of environmental protection companies are emerging in a bloom. For the environmental protection industry, companies are generally in small size and the market is fragmented. Along with new opportunities brought about by stricter environmental protection policy, companies from other industries rapidly tap into the environmental protection segment by way of merger and acquisition, which became an industry development trend. By forming a regional environmental protection and energy conservation company, Changsha Institute and Chinalco Environmental Protection not only can keep abreast of the industry development trend, but also are able to capitalize on the Company's advantages in engineering design and technological research and development of environmental protection and energy conservation.
2. Integrated internal resources with an aim to strengthen and expand the environmental protection industry
   Over more than 60 years of development, Changsha Institute has gained stronger technical expertise and greater market reputation in the environmental protection and energy conservation industry. However, owing to the market's diversification and fragmentation feature, Changsha Institute is unable to expand the environmental protection and energy conservation business rapidly on its own. With the formation of the JV Company, Changsha Institute and Chinalco Environmental Protection are able to create the engineering and technical team of environmental protection and energy conservation industry, obtain the construction qualifications of environmental protection and energy conservation projects, tap into the environmental protection and energy conservation market, and strengthen the environmental protection and energy conservation industry in a speedy manner.

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LISTING RULES IMPLICATIONS

As at the date of this announcement, China Aluminum Group directly and indirectly holds 76.50% of the existing issued share capital of the Company, and is a controlling shareholder of the Company and thus a connected person thereof. At the same time, China Aluminum Group directly holds 100% equity interests in Chinalco Environmental Protection and is a controlling shareholder of Chinalco Environmental Protection. Therefore, for the purposes of Chapter 14A of the Listing Rules, Chinalco Environmental Protection constitutes a connected person of the Company. Accordingly, the JV Agreement and the transactions thereunder constitute the connected transactions of the Company under Chapter 14A of the Listing Rules.

As each applicable percentage ratio of the transactions calculated pursuant to Chapter 14A of the Listing Rules exceeds 0.1% but less than 5%, the JV Agreement is subject to reporting and announcement requirements but is exempted from circular and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

CONFIRMATION FROM DIRECTORS

The resolution in relation to the above transactions was considered and approved by the Board. Since Mr. WANG Jun and Mr. LI Yihua have held positions in China Aluminum Group and its subsidiaries, they have material interests in the JV Agreement and the transactions hereunder and they are therefore abstained from voting on the board resolutions approving the JV Agreement and the transactions above-mentioned hereunder. Save for the above, none of the other directors has an interest in the transaction.

Directors (including independent non-executive Directors) are of the view that the transactions under the JV Agreement were at arm's length negotiations, and were entered into on normal commercial terms or better terms in the ordinary course of business, and the terms of the JV Agreement are fair and reasonable and are in the interests of the Company and its Shareholders as a whole.

GENERAL INFORMATION

Information on the Company

The Company is a leading technology, engineering service and equipment provider in the non-ferrous metals industry in the PRC, capable of providing full business-chain integrated engineering solutions throughout various stages of the non-ferrous metals industry chain. The Group is primarily engaged in engineering design and consultancy, engineering and construction contracting, equipment manufacturing and trading.

Information on China Aluminum Group

China Aluminum Group is a state-owned enterprise incorporated under the laws of the PRC in 2001. China Aluminum Group is a controlling shareholder of the Company and directly and indirectly holds approximately 76.50% of the issued share capital of the Company. China Aluminum Group is principally engaged in mineral resources development, smelting and processing of non-ferrous metal, relevant trading and engineering and technical services and so forth.

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Information on Changsha Institute

Changsha Institute is a company incorporated in the PRC with limited liability and a wholly- owned subsidiary of the Company. Changsha Institute primarily engages in surveying engineering, engineering geological survey, hydrogeological survey, geotechnical engineering, foundation and infrastructure engineering, geological disaster control projects and so forth.

Information on Chinalco Environmental Protection

Chinalco Environmental Protection is a company incorporated in the PRC with limited liability and a wholly-owned subsidiary of China Aluminum Group, the controlling shareholder of the Company. Chinalco Environmental Protection primarily engages in engineering contracting, technology development, technical consultation, technical services and other businesses in the fields of environmental protection, energy saving, new energy and comprehensive utilization of resources.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

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Beijing, the PRC, 30 October 2019

As at the date of this announcement, the non-executive directors are Mr. WANG Jun and Mr. LI Yihua; the executive directors are Mr. WU Jianqiang, Mr. ZONG Xiaoping, Mr. WU Zhigang and Mr. ZHANG Jian; and the independent non-executive directors are Mr. GUI Weihua, Mr. CHEUNG Hung Kwong and Mr. FU Jun.

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