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the Group has implemented a new system of assessing the prices for the procurement of raw materials, while
it also runs a continuous cost optimization and reduction program.
Moreover, the Group’s operational results may be influenced by unfavorable conjuncture, when the drop in the
price of cost items that are linked with the price of LME or the parity €/$ is not enough to counterbalance the
respective reduction in the price of LME or the US Dollar during the same period.
Availability of Greek bauxites and Market Concentration
To meet the needs of Aloumina the Group is significantly dependent on the availability of Greek bauxites. With
the operation of its own mines, through the 100% subsidiary “Delfoi – Distomon SA”, the group meets 38-40%
of its needs for Greek bauxites. However, in the coming years there may be difficulties in terms of licensing or
drilling (finding) new bauxite deposits in Greece. Moreover, the Greek bauxite market is already concentrated
in a small number of suppliers. On top of that, the possibility of a further concentration of the market will have
a negative impact on the cost that the Group will have to bear for the procurement of bauxite in the future.
For these reasons, the Group aims at negotiating multiyear bauxite contracts and strategic alliances with the
Greek producers.
Health, safety and environmental laws and regulations
The Group’s activities fall under the laws and regulations that are relevant to health, safety and environmental
protection.
The compliance cost with such regulations involves, among others, either investments or the significant
spending for actions relating to the safe management of industrial wastes and measures for remedying
environmental damages.
Environmental issues within our responsibility might arise in the future in relation to our current facilities,
facilities that we owned in the past or facilities where we conducted our operations even if the Management
has not been or could not be aware of such issues up to date or these issues have not been present yet.
Climate change and green house effect, relevant legislation and regulations.
Energy is a significant raw material relevant to the activities of our Group while it is considered that in the
immediate future it shall be an important source of revenue as well. Moreover, the Group is active in the wider
energy sector being involved in the construction of integrated energy projects (EPC). There is a widely diffused
belief that the consumption of the energy that is generated by fossil fuel constitutes one of the main factor
contributing to the warming of our planet. A continuously increasing number of governments, governmental
bodies and committees have initiated or intend to pursue regulatory and legislative changes in order to deal
with the potential risks of such phenomenon.
As a result of the EU regulatory amendments, the Group’s operating margins might be affected by the changes
that could be put in place in its production facilities having increased emissions of greenhouses gases and in its
facilities with high energy needs. Given the width of the scope of such changes, the assessment of the eventual
impact of the future legislation and legislative framework for the climate change, as well as of the European
and international conventions and agreements is unclear. The Group might be obliged to undertake significant
investments in the future in order to comply with the new, amended legislation and the new regulations.
Finally, the Group, as a result of an eventual deficit or surplus in terms of CO2 emission rights management
and due to its large energy consumptions mainly because of the production of aluminum, might recognize
significant cost or revenue in future.
