China Aluminum International Engineering : MAJOR TRANSACTION THE PROVISION OF LETTERS OF MAKEUP OF SHORTFALL

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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)

MAJOR TRANSACTION

THE PROVISION OF LETTERS OF MAKEUP OF SHORTFALL

The letter from the Board is set out on pages 4 to 9 of this circular.

The transaction being the subject matter of this circular has been approved by written shareholders' approval pursuant to the Listing Rules and this circular is being despatched to the Shareholders for information only.

14 August 2020

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the

following meanings:

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LETTER FROM THE BOARD

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)

MAJOR TRANSACTION

THE PROVISION OF LETTERS OF MAKEUP OF SHORTFALL

INTRODUCTION

Reference is made to the announcement of the Company dated 2 July 2020 in relation to the provision of letters of makeup of shortfall for equity participating company, Yunan Ningyong Highway Co. Ltd., by the Company. The purpose of this circular is to provide you with, among other things, further information on the letters of makeup of shortfall and other information as required under the Listing Rules.

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LETTER FROM THE BOARD

The Ningyong Highway Project concerns with the Ning Lang-Yongsheng section and its ancillary facilities of the S37 Lugu Lake-Ning'er Expressway in Yunnan Province to be constructed under the cooperation between the people's government of Lijiang City and social capital. The project is located in Lijiang City, Yunnan Province with a total length of 100.694 km. The main route adopts the standard two-wayfour-lane highway design with a designed speed of 80 km/hour and a subgrade width of 25.5 m. In order to ensure the smooth progression of the construction of the Ningyong Highway Project in Yunnan Province, the entities designated by the people's government of Lijiang City and social investors consortium jointly contributed capital to establish Yunnan Ningyong Highway Co. Ltd. The project company (Yunnan Ningyong Highway Co. Ltd.) is operated using the BOT approach under the PPP model, which means Build-Operate-Transfer to the entities designated by the government. The construction period lasts for three to four years and the operation period is 30 years. During the construction period, the project company is responsible for the financing of the project and contracts the construction project to members of the consortium which have the qualification and competence in construction to construct the project; during the operation period, the project company will become the main entity and the operation and management team jointly established by Yunnan Communications Investment and the Company will be in charge of the operation of the project. When the actual operating income from the project during the operation period exceeds the sum of the principal repayable to the financial institutions, operating costs and tax payables in the current year, the excessive portion will be regarded as revenue of the project company. The distributable profit of the year will be shared between the government and the social capital in a proportion of 3:7 (in which Yunnan Communications Investment is entitled to 40% pursuant to its shareholding, and the Company and Sixth Metallurgical Company are entitled to 30% in total pursuant to their shareholding). As of now, Ningyong Highway is included in the project management database of China Public Private Partnerships Center under the Ministry of Finance. The investment agreement, licensed operation agreement and other relevant documents were signed and the project company was established and registered. Project capital of RMB1.267 billion in total was received, including registered capital of RMB100 million and capital reserve of RMB1.167 billion. Currently, construction contracts of the project are under the execution process.

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billion, including a loan of RMB1.2 billion expensed by the Borrower as at 31 October 2019, in respect of the Ningyong Highway Project. The Company hereby makes the following commitments/arrangements regarding the repayment of 42.86% of the project loan in the amount of RMB3 billion, including the loan of RMB1.2 billion as expensed:

(1) The Company will be responsible for procuring and assisting the Borrower to implement the Ningyong Highway Project fund on time and in full, and will be responsible for supervising the Borrower in utilizing the project loan from CCB Lijiang Branch in accordance with the loan contract to ensure that such project fund is applied to project construction in full;

(2) If Ningyong Highway Project exceeds the budget, the Company will be responsible for procuring and assisting the Borrower to raise the funds required for project construction to ensure the completion of such project; and

(3) For all of the loan contracts signed by the Borrower in respect of the application of the above project loan of up to RMB3 billion, including the loan of RMB1.2 billion as expensed, to CCB Lijiang Branch, if the Borrower fails to repay the loan on time in accordance with the provisions under the loan contracts or breaches other provisions under the loan contracts, the Company undertakes to make up 42.86% of the total debts, which shall not exceed RMB1,285,800,000, arising from each loan contract, including the loan of RMB1.2 billion as expensed, signed between the Borrower and CCB Lijiang Branch, to ensure the repayment of the above debt in full.

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of the Ningyong Highway Project, and made the following commitments/arrangements regarding the repayment of the project loan:

(1) The Company will proactively assist the Borrower to arrange and implement the Ningyong Highway Project fund on time and in full, and will be responsible for supervising the Borrower in utilizing the project loan from ICBC Yunnan Branch in accordance with the loan contract to ensure that such project fund is applied to project construction in full;

(2) The Company agreed that pledge guarantee to ICBC Yunnan Branch based on the proportion of the loan in respect of the toll right of the Ningyong Highway Project is provided. Upon the completion of such project, the Company will procure and assist the Borrower and ICBC Yunnan Branch to complete the relevant procedures for the registration of the pledge for the toll right; and

(3) During the effective period of the loan, if the Borrower 's debt repayment fund or the toll income from the Ningyong Highway Project are insufficient to repay the current loan principal and interests, the Company will make up the Borrower with its comprehensive income/fund at the percentage of 42.86%, which shall not exceed RMB2,143,000,000, to ensure the repayment of loan principal and interests to ICBC Yunnan Branch on time.

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LETTER FROM THE BOARD

BASIS FOR DETERMINING CONSIDERATION

The total investment of Ningyong Highway Project amounted to RMB15.297 billion, which was made up of self-owned capital and loan facilities. The self-owned capital amounted to RMB4.659 billion in total, among which, RMB16.62 million and RMB13.38 million were contributed by way of registered capital and RMB2.525 billion and RMB2.034 billion were contributed by way of capital reserve by Lijiang Travel Development and Investment Group Co., Ltd. and Lijiang Ningyong Highway Investment Co., Ltd., the relevant entities designated by the local government, respectively, amounting to a total contribution of RMB4.589 billion; RMB40 million was contributed by investment entities designated by Yunnan Communications Investment; and RMB30 million was jointly contributed by the Company and Sixth Metallurgical Company. The loan facilities amounted to RMB10.638 billion in total. According to the agreement, since the relevant entities designated by local government fulfill their contribution obligation on the basis of 30% of total investment, each of the social investors consortium shall take responsibilities for fund raising towards gap of capital of and provide credit enhancement for project company, Yunnan Ningyong Highway Co. Ltd. The committed portions of the Company and investment entities designated by Yunnan Communications Investment shall be 42.86% and 57.14% respectively.

FINANCIAL IMPACT OF THE PROVISION OF LETTERS OF MAKEUP OF SHORTFALL

The guarantees under Ningyong Letters of Makeup of Shortfall I and II will not have an immediate impact on the Company's earnings, assets and liabilities at the dates of the relevant agreements. However, if the Borrower fails to pay any guaranteed debt, or fails to comply with and perform its obligations and commitments under the loan contract, the Company, as the guarantor, shall assume a liability in the amount of up to RMB3,428,800,000. Such amount of liability will be included in the Group's statement of financial position.

Save as disclosed above, the Directors believe that the provision of guarantees under Ningyong Letters of Makeup of Shortfall I and II will not have any significant impact on the Group's earnings, assets and liabilities.

REASONS AND BENEFITS OF THE PROVISION OF LETTERS OF MAKEUP OF SHORTFALL

The Ningyong Highway Project constitutes an important part of the mid- to long-term highway network plan of Yunnan Province. The main route of the project starts from the Lower Renhe Village of Ninglang County, intendedly connects to the planned S37 Lugu Lake-Ning Lang section, and ends near Yongsheng south factory. It connects with the Yongsheng junction of Huali Expressway and with S37 Yongsheng-Binchuan Expressway section through Huali Expressway. During the construction period, the financial needs of Ningyong Highway Project mainly include construction and installation work costs, equipment and tool purchase costs, and other construction engineering costs. The Ningyong Highway Project is significant in terms of improving the highway network, enhancing channel capacity and strengthening road network

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LETTER FROM THE BOARD

connection in Yunnan Province. In addition, the Ningyong Highway Project is of significant importance in enhancement of the brand influence of the Company and its participation in subsequent project construction, and it also helps constructors of the consortium to improve their results of operation.

The Directors consider that the provision of Ningyong Letters of Makeup of Shortfall I and II can meet the working capital and financial needs for the development of the Ningyong Highway Project, which is of great benefit to the development of the Company's principal businesses and is in line with its business strategy and overall interests.

IMPLICATION OF THE LISTING RULES

Pursuant to Rule 14.22 of the Listing Rules, given that the Ningyong Letters of Makeup of Shortfall I and II are to be completed within 12 months and are related to each other, the transaction amounts of the Ningyong Letters of Makeup of Shortfall I and II will be aggregated. As the maximum applicable percentage ratios for the provision of guarantees under Ningyong Letters of Makeup of Shortfall I and II exceed 25% but are below 75%, the provision of guarantees under Ningyong Letters of Makeup of Shortfall I and II constitutes a major transaction of the Company under Chapter 14 of the Listing Rules and is subject to the announcement, reporting and shareholders' approval requirements under Chapter 14 of the Listing Rules.

WRITTEN APPROVAL OF THE SHAREHOLDERS

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, none of the Shareholders has any significant interest in the guarantees under Ningyong Letters of Makeup of Shortfall I and II, therefore, none of the Shareholders is required to abstain from voting at the general meeting convened in respect of the guarantees under Ningyong Letters of Makeup of Shortfall I and II.

The Board announces that the relevant written approval in lieu of convening a general meeting for approving the guarantees under Ningyong Letters of Makeup of Shortfall I and II was approved in writing by Chinalco, the Company's controlling shareholder. As at the Latest Practicable Date, Chinalco beneficially owned 2,176,758,534 shares of the Company and held 73.56% of the total issued share capital of the Company.

As the conditions set out in Rule 14.44 of the Listing Rules have been satisfied, the Company will not convene a general meeting for approving the guarantees under Ningyong Letters of Makeup of Shortfall I and II pursuant to Rule 14.44 of the Listing Rules.

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LETTER FROM THE BOARD

DIRECTOR'S CONFIRMATION

To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, Yunnan Ningyong Highway Co. Ltd., CCB Lijiang Branch, ICBC Yunnan Branch and their ultimate beneficial owners are third parties independent of the Company and its connected persons.

The Directors consider that the terms of the guarantees under Ningyong Letters of Makeup of Shortfall I and II are on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole. None of the Directors has any significant interest in the guarantees under Ningyong Letters of Makeup of Shortfall I and II.

GENERAL INFORMATION

Information about the Company

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

Information about ICBC

ICBC is a joint stock company incorporated in the PRC with limited liability, the H shares and the A shares of which are listed on the Stock Exchange (stock code: 1398) and the SSE (stock code: 601398). It is primarily engaged in the provision of a wide range of financial products and services to customers worldwide.

Information about CCB

CCB is a joint stock company incorporated in the PRC with limited liability, the H shares and the A shares of which are listed on the Stock Exchange (stock code: 0939) and the SSE (stock code: 601939). It is primarily engaged in the provision of a wide range of financial products and services to customers worldwide.

Information about Yunnan Ningyong Highway Co. Ltd.

Yunnan Ningyong Highway Co. Ltd. is a company incorporated in the PRC with limited liability, which is primarily engaged in high-gradehighway-related transportation facilities investment, construction, management and operation. Currently, it is mainly responsible for the construction, operation and management of the Ningyong Highway Project. The Company and Sixth Metallurgical Company hold 30% of the shares of Yunnan Ningyong Highway Co. Ltd. in total (in which each of the Company and Sixth Metallurgical Company holds 15% of the shares). Yunnan Ningyong Highway Co. Ltd. is not a subsidiary of the Company.

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LETTER FROM THE BOARD

RECOMMENDATION

The Board considers that the terms of the guarantees under Ningyong Letters of Makeup of Shortfall I and II are on normal commercial terms, fair and reasonable and in the interests of the Company and its Shareholders as a whole.

ADDITIONAL INFORMATION

Your attention is drawn to the financial and general information as set out in the appendices to this circular.

By order of the Board

China Aluminum International Engineering Corporation Limited

ZHANG Jian

Joint Company Secretary

Beijing, the PRC, 14 August 2020

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1. FINANCIAL INFORMATION OF THE GROUP

The financial information of the Group for the three financial years ended 31 December 2017, 2018 and 2019 are disclosed on the 2017 annual report of the Company dated 16 April 2018 (https://www1.hkexnews.hk/listedco/listconews/sehk/2018/0416/ltn20180416263.pdf), the 2018 annual report of the Company dated 25 April 2019 (https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0425/ltn201904251151.pdf) and the 2019 annual report of the Company dated 21 April 2020 (https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0421/2020042100916.pdf), respectively, published by the Company on HKExnews website (www.hkexnews.hk) and the Company's website (www.chalieco.com.cn).

1. STATEMENTS OF INDEBTEDNESS
   Debt Securities

As at 30 June 2020, the outstanding balance of short-term bonds payable by the Group was RMB1.00 billion.

Bank and Other Borrowings

As at 30 June 2020, the Group had outstanding borrowings of RMB13.658 billion, including secured bank borrowings of RMB50 million, guaranteed borrowings of RMB2.699 billion and credit borrowings of RMB10.909 billion.

Pledge of Assets of the Group

As at 30 June 2020, certain assets of the Group with a book value of RMB1.27 billion were pledged to banks and financial institutions for loan financing used and bills payable obtained by the Group's subsidiaries.

Contingent Liabilities

As at 30 June 2020, the Group did not have any material contingent liabilities.

No Material Change

As at the Latest Practicable Date, the Directors are not aware of any material adverse changes in the Group's indebtedness position and contingent liabilities.

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1. WORKING CAPITAL

The Directors are of the opinion that, after taking into account the present available banking facilities and the internally generated resources of the Group, the Group has sufficient working capital for its requirements with the next 12 months from the date of this circular.

IV. FINANCIAL AND TRADING PROSPECTS

Risk Factors

The Group is primarily exposed to epidemic risk, policy risk, market risk (including price risk, interest rate risk and exchange rate risk), operational risk, financial risk and overseas operational risk in the ordinary course of business.

1. Epidemic risk

With the outbreak and spread of COVID-19 around the world, the Company will not be able to sign awarded contracts and resume some work in progress as schedules. Overseas epidemic continue to have severe impact on our overseas business development.

2. Policy risk

Our business is subject to a certain extent of the policies and investment expenses of the government on infrastructure construction such as highways, municipal works construction and other public transportation. There will be unpredictable impacts on us if the government makes any adjustments to the infrastructure construction policy, PPP project policy, monetary policy, foreign exchange management policy, taxation policy and policy relating to real estate industry.

3. Price risk

The price and supply of materials, subcontracting and labor may have significant fluctuation according to customers' needs, manufacturers' production capacity, market condition, costs of materials and labor costs in different times; and conditions of price changes of energy (including fuel and electricity or water supply) may also affect our business.

4. Interest rate risk

Currently, we have a larger financing scale. Changes in interest rate policy will affect our finance expenses and economic benefits.

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5. Operational risk

In recent years, we have rapidly expanded our business scale and involved in more business aspects. As new business models are gradually increasing, project management becomes more difficult and poses challenge to the project safety and quality management, cadre ethics and upholding the stability of the enterprise. We are exposed to certain management operational risks.

6. Financial risk

As we have insufficient assessment on the credit status of property owners, delays in construction settlement and payment by the property owners, or deterioration in property owners' financial position resulted in funding pressure, or unable to collect working capital in a timely manner, these could severely affect the capital use efficiency of the Group, resulting in reducing turnover rate of account receivables. In case we are not able to obtain sufficient fund, the Group's expansion plan and development prospects will be affected.

7. Overseas operational risk

The Group has selectively tapped into various overseas markets and strategically developed overseas business. The Group will continue to earn considerable income and profits from international projects and other overseas business in the foreseeable future. Any changes in the condition of politics, economics, legal and taxation in the countries where the Group operates as well as other emergency issues would affect the Group in fulfilling its business objectives.

8. Exchange rate risk

We conduct our engineering and construction contracting business overseas, and may make significant equity and other investments in overseas projects. Our assets and liabilities denominated in foreign currency are expected to increase significantly as we further expand our overseas business, particularly when undertaking more EPC projects. Changes in the exchange rate could affect our costs denominated in Renminbi, revenues, the prices of our exported products and imported equipment, which in turn would affect our profits.

To guard against the occurrence of various types of risks, the Group has formulated a comprehensive internal control system. We incorporate risk management into each business process. Pursuant to which, we identify the critical control point of business processes, develop specific control measures, prepare documents for critical control points of procedures, identify the responsibilities of various types of risks and critical control point, work

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closely with the daily management and control, and control risk factors and elements. In addition, the Group strictly supervises the important control aspects of earlier stage of feasibility study, planning, reviewing, approval and decision-making; enhances process control and risk assessment work; and makes measures and contingency plans to deal with risks, aiming to ensure the Group's overall control on various types of risk.

BUSINESS OUTLOOK FOR 2020

2020 marks the final year of the Group's 13th Five-Year Plan and the key year for recovery and progress in business performance. The Group will adhere to the guidance of President Xi Jinping's thought on socialism with Chinese characteristics in the new era, endeavor to restore production while preventing and controlling epidemic disease, take "preciseness, perfection, and competitiveness" as the guideline of work, benchmark against leading peers, and continue to deepen reform for vigorous systems and mechanisms; the Group will continue to enhance marketing efforts, strengthen fine management of projects, continuously increase investment in scientific researches, and strengthen talent teams; efforts will be made to reinforce risk management and control and disposal to facilitate the Group's healthy development. The value of new contracts are expected to reach RMB55 billion in 2020.

1. Benchmark against leading peers all-dimensionally

The Group will carry out the benchmarking work, keeping deep in mind the meaning of "benchmarking against advanced industrial players" in the new era. Rational choices will be made when selecting the target for benchmarking, with industrial characteristics in consideration; the Group will weigh the importance of benchmarking subjects, identify the disparities between the Group and advanced enterprises, and scientifically formulate a plan for benchmarking; the Group will promote the work in a phased and orderly manner to seek continuous improvement, management progress, and top-notch creation.

1. 2. Promote the quality improvement of business and contracts

2. To change from "shopkeepers (坐商)" into "itinerant merchants (行商)". The Group should further enhance the awareness of "going out" and "active provision of services", strengthen the establishment of its marketing system and change from "shopkeepers (坐商)" into "itinerant merchants (行商)". By actively contacting corporates to schedule an on-sitevisit, we proactively actively provide technical solutions, and open up markets in a variety of ways, including impressing customers through our technology and services.
3. To establish roots in the industry and region. In the non-ferrous industry, it is necessary to continuously give full play to the technological advantages and strengthen the management of major customers. The Group has to implement policies based on enterprises, explore based on projects, and understand customer needs through various means, so as to create value for customers and attract customers to cooperate. The Group shall achieve cultural resonance by carefully studying the growth history, cultural

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philosophy, and development vision of each customer, as well as solidify cooperation with customers by resonating with their values. In the civilian industry, it is necessary to deepen regional operations and continue to accelerate the implementation of key tracking projects in the Beijing-Tianjin-Hebei (Xiong'an) region, Yangtze River Delta, Guangdong-HongKong-Macao Greater Bay Area, Chengdu-Chongqing areas, and promote the establishment of regional institutions with key projects. Group members should continue to implement the regional market layout, and initiate the realization of fundamental transformation from project marketing to regional marketing. In terms of engineering aluminum, it is necessary to expand the market share of aluminum formwork, aluminum climbing frames, aluminum flyovers and municipal products, aluminum houses, and aluminum alloy structure products through establishing an aluminum application engineering company. The Group shall also step up its effort in promoting the business of aluminum application demonstration cities and build a model city for Chalieco's "green aluminum application demonstration cities".

1. 3. Facilitate the leaping development of overseas business

2. Technological guides development. All design enterprises should shoulder the responsibility as leaders in nonferrous metal technologies, take design as the starting point and the full industrial-chain development as the goal, strive to improve their capacity in design, procurement, contracting, service and financing while enhancing their abilities to allocate international resources and catch up with international standards.
3. To expand overseas business through cooperation. We will follow closely the overseas investment strategies of Chinalco, cooperate with Chinalco's overseas platforms and speed up "going out", placing focuses on regions and countries with nonferrous metal industry along the Belt and Road regions. The Company will give full play to its advantages and strengthen the cooperation with various financial institutions, governments, and celebrated enterprises, to transit from receiving projects to creating projects.
4. To settle in the local market. The Group should step up efforts to fulfill its social responsibilities, assimilate itself into local cultures and conduct the legal operation to blend into local markets. It is necessary to be involved deeply in the market where the companies are located, actively adapt to local societies, make use of local resources, and pay attention to the value cultivation of brands. By continuous operation and cultivation of regional markets, the Group will achieve sustainable development of overseas business.

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1. Promote fine management of engineering projects
2. 1. To establish the concept of "serving the clients and give priority to contract fulfillment". It is necessary to enhance all the employees' awareness of contract fulfillment, ensure sufficient resource investment, strengthen process management and control, and improve the clients' satisfaction by improving contract fulfillment rates. The Group should aim at "preciseness, perfection, and competitiveness", make efforts to improve work and product quality, and create excessive value for clients. We will pursue the acquaintance of myriad friends, the cultivation of talents, the creation of great memory through the construction of every milestone project.
   2. To improve a "project-centered" management system. The Group will establish a modern corporate governance system with projects as the center, capital as the link, and legal person management structures as the symbol. The Group will further strengthen the "iron triangle" team that involves project managers, project chief engineers, and project contract managers for projects, promote system construction through team building, and improve project management through system formulation.
   3. To continue three major fights. The Group should take sheer safety as the goal, focus on special works including projects under construction and production workshops, and pay attention to safety training and education, safety protection, equipment maintenance, safety guards, and the fulfillment of safety responsibility, to ensure the overall stability of safe production environment of the Group. The Group should keep creating projects eligible for national-level quality awards, improve the quality awareness of all employees, strengthen quality management and control in the process, and improve the quality of project design and engineering entity, to provide more high-quality projects for the clients and the society. The Group should start from the design and deliver ecological engineering projects to its clients. The Group should strictly control the emission to meet standards during the construction, and welcome the environmental supervision by state-level departments with accurate environmental management.
3. Promote innovation and revolution in science and technology
4. 1. To lead the industrial development. The Group should further the formulation and optimization of its science and technology innovation system, and actively promote innovative recourse integration of the Group. Efforts should be made to holistically construct a research enterprise on innovative engineering technologies, channel innovative resources to forward-looking,strategically-important and essential fields for technology innovation. The Group should be committed to solving major key technological difficulties in the industry, leading technological progress of the industry, and achieve quality development driven by innovation.

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1. To unite high-endtalents. Talents are resources or even capital for enterprises. The Group should make the talent capital more valuable and let them create larger amount of values by uniting them, cultivating them and enabling them to make achievements.
2. To serve production and operation. Science and technology innovation should be market-oriented and targeted on market demand. The Group should transform its scientific research advantages into those in the industry and the development to the greatest extent, and encourage the research team to get results and make profits as soon as possible.
3. To enhance management capability. The Group will accelerate the construction of an information collaborative management platform for engineering projects. To serve the Group's engineering general contracting business and improving project management, the Group will rapidly improve its overall management level with information technologies to realize the scientific and refined management of the enterprise and projects, to improve management efficiency and quality, to support the whole project life-cycle with IT application, and to ultimately provide users with first-class engineering technological services.
   6. Facilitate fulfillment of reform tasks

1. To implement the reform plan. Reform is a major task of the Group in 2020. With market-orientation as direction and specialisation and optimisation of "4+1" business as goal, the Group will strive to facilitate the implementation of reform plan.
2. To strengthen business focus. Instructed by the "4+1" business direction and the plan for member companies to keep one core business and one sideline business, the Group shall strive to grow as a world-class nonferrous metal engineering technological company by taking the path of "science and technology + internationalization", adopting the project management pattern of "dual systems". All member companies shall strictly cling to the business plan of "one core business and one sideline business", making market-led endeavors to concentrate leading-edge resources in the core and sideline business. With three to five years' hard work, the member companies will stand out with more outstanding core business, more outstanding core business, more prominent professionalism, more brilliant brands, and stronger market competitiveness.
3. To vitalize system and mechanism. The Group will continue to vigorously promote the incentive mechanism for science and technology, to expand the profits of achievement transformation for scientific researchers. Meanwhile, the Group will constantly improve assessment and incentive methods related to project marketing, for aluminum application expansion, the recovery of accounts receivable and inventory, and project management to ensure thorough implementation.

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1. 1. To formulate the 14th Five-YearPlan. The Group should guide its development with the14th Five-Year Plan that is practical, targeted, and distinctive.
2. Promote the accuracy and refinement of financial management
3. 1. To strengthen financial management. First, the Group should record accurately and conduct in-depth analysis as the foundation for decision-making. Secondly, the financial management efforts should play a collaborative and promoting role in "protecting the value of enterprises + creating value directly".
   2. To control the growth of liabilities. Member companies should strengthen their resilience, take steps to get rid of their reliance on financing, control the growth of liabilities and reduce financial risks by curbing account receivable and inventory and increasing corporate profits.
   3. To continuously reduce cost. First, the Group should establish a management system where small organs handle sizable projects. Secondly, the Group should reduce non-productive expenditures. Thirdly, the Group should control the red line of gross margin of the projects.
4. Promote full coverage of risk management and control
5. 1. To accelerate risk response for key projects. With classification, accurate measure execution, and real-time tracking on key projects, the Group will ramp up efforts to resolve risk and collect payment employing legal action, negotiations, capital disposal, and capital operation.
   2. To strengthen compliance management. The Group will stay committed to operation compliance, set a negative list for production and operation, integrate such supervision resources as laws, auditing, internal control, and regulation, and gradually realize broad compliance; the Group will strengthen the management of contract review, standardize the construction of contract text systems, and strengthen law-based management of subcontracts to play out the constraint power of contracts.
   3. To strengthen supervision by audit. The Group will give full play to the supervisory role of auditing at all levels of the Group, and further improve its operation and management by discovering shortcomings and corresponding reason through auditing, strengthening control and accountability determination.

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1. RESPONSIBILITY STATEMENT

This document, for which the Directors of the Company collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirmed that to the best of their knowledge and belief the information contained in this document is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this document misleading.

2. DISCLOSURE OF INTERESTS AND RECOGNITION

As at the Latest Practicable Date:

1. none of the Directors, Supervisors and senior management of the Company had any interest or short position in the Shares, underlying Shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were deemed or taken to have under such provisions of the SFO), or which were, pursuant to section 352 of the SFO, required to be recorded in the register referred therein, or otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers;
2. none of the Directors, Supervisors and senior management of the Company or their spouses or children under the age of 18 was granted any rights to subscribe for any equity security or debt security of the Company;
3. except that Mr. WU Jianqiang, Mr. WANG Jun and Mr. LI Yihua who hold management positions in Chinalco and its subsidiaries, none of the Directors has material interests in any contract or arrangement which has been entered by any member of the Group since 31 December 2019 (being the date to which the latest published audited annual financial statements of the Company were made up), was subsisting as at the Latest Practicable Date and significant in relation to the business of the Group;
4. none of the Directors has any interest, either directly or indirectly, in the assets which have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group, since 31 December 2019 (being the date to which the latest published audited annual financial statements of the Company were made up); and

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1. save as disclosed in "Directors' interest in competing business" in Appendix II, so far as is known to the Directors, none of the Directors and any of their respective associates were interested in any business (excluding the business of the Group) which competes or is likely to compete either directly or indirectly with the business of the Group; if each of them was a controlling shareholder, they are required to make disclosure under Rule 8.10 of the Listing Rules.

3. SERVICE CONTRACTS

The Company has entered into service contracts with all the Directors and

Supervisors. None of the Directors or Supervisors, including the proposed Directors or Supervisors, has a service contract with the Company which is not determined by the Company within one year without payment of compensation, other than statutory compensation.

4. MATERIAL LITIGATION OR ARBITRATION

As at the Latest Practicable Date, the Group was not engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against the Group.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors confirmed that, save as the net profit of RMB-71.3374 million attributable to shareholders of the listed company for the period recorded by the Group as disclosed in the quarterly report of the Group for the first quarter ended 31 March 2020, there are no any material adverse change in the financial or trading position of the Group since 31 December 2019, being the date to which the latest published audited consolidated financial statements of the Group were made up.

6. DIRECTORS' INTEREST IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors and their associates had any competing interest in any business which directly or indirectly competes or is likely to compete with the business of the Group.

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7. INTERESTS OF SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to the Directors of the Company, the following persons (other than the Directors, supervisors and senior management) had interests or short positions in the Shares or underlying Shares of the Company which would fall to be disclosed pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were directly or indirectly interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at the Shareholders' general meetings:

Notes:

1. The percentage is calculated by dividing number of relevant class of Shares in issue of the Company as at the Latest Practicable Date by total number of Shares.

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1. Chinalco is interested in 2,263,684,000 A Shares, representing approximately 76.50% of the total share capital of the Company. Among which, Luoyang Institute is a wholly-owned subsidiary of Chinalco and is interested in 86,925,466 A Shares, representing approximately 2.94% of the total share capital of the Company. Chinalco is therefore also deemed to be interested in the A Shares held by Luoyang Institute under the SFO.
2. Leading Gaining Investments Limited is the nominee holder of Beijing Jundao Technology Development Co., Ltd.

8. OTHER INFORMATION

1. Mr. ZHANG Jian is the Company's company secretary. Mr. ZHANG Jian has been granted by the Stock Exchange a waiver from complying with the company secretary qualification requirement for Hong Kong listed companies.
2. The address of the Company's registered office is Building C, No. 99 Xingshikou Road, Haidian District, Beijing, the PRC.
3. The Company's H Share registrar is Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong.
4. In the event of any discrepancy between the English version and the Chinese version, the English version shall prevail over the Chinese version.

9. MATERIAL CONTRACT

Within the two years immediately preceding the date of this circular and up to the Latest Practicable Date, the Group had entered into the following contract which is or may be material:

1. China Nonferrous Metals Processing Technology Co., Ltd. (中色科技股份有限 公司) ("China Nonferrous Metal") (a subsidiary of the Company) and Chinalco Henan Aluminum Fabrication Co., Ltd. (中鋁河南鋁業有限公司) ("Chinalco Henan") (a subsidiary of Chinalco) have entered into an equity interests acquisition agreement dated 26 October 2018 with respect to China Nonferrous Metal's acquisition of all the equity interests in Luoyang Kaiying Technology Co., Ltd. (洛陽開盈科技有限公司) from Chinalco Henan at a consideration of approximately RMB205.8132 million.

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10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal place of business of the Company in Hong Kong at Room 4501, Far East Finance Centre, No. 16 Harcourt Road, Admiralty, Hong Kong during normal business hours from the date of the circular to 4 September 2020 (both days inclusive):

1. The Articles of Association of China Aluminum International Engineering Corporation Limited;
2. The annual reports of the Company for the two financial years ended 31 December 2018 and 2019;
3. The material contract mentioned in the paragraph 9 of this appendix; and
4. This circular.

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