Announcement continuing connected transaction and discloseable transaction in relation to the entering into of the finance lease framework cooperation agreement

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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)

ANNOUNCEMENT

CONTINUING CONNECTED TRANSACTION AND DISCLOSEABLE

TRANSACTION IN RELATION TO THE ENTERING INTO OF

THE FINANCE LEASE FRAMEWORK COOPERATION AGREEMENT

The board of directors of China Aluminum International Engineering Corporation Limited (the "Company") announces that on 30 October 2019, the Company entered into the Finance Lease Framework Cooperation Agreement (the "Agreement") with Chinalco Finance Lease Co., Ltd. ("Chinalco Finance Lease"), pursuant to which, Chinalco Finance Lease agrees to provide lease services, investment and financial consulting services and account receivables management services to the Group pursuant to the terms and conditions of the Finance Lease Framework Cooperation Agreement. The details of the principal terms and conditions of the Finance Lease Framework Cooperation Agreement are set out as follows:

DATE OF THE AGREEMENT

30 October 2019

PARTIES

The Company (as the service recipient, for itself and on behalf of its subsidiaries); and

Chinalco Finance Lease (as the service provider, for itself and on behalf of its subsidiaries)

- 1 -

TERM

The Finance Lease Framework Cooperation Agreement has a term of 3 years effective from the date of passing the ordinary resolution at the general meeting of the Company in respect of entering into the Finance Lease Framework Cooperation Agreement and the parties thereto signing the agreement.

PRINCIPAL TERMS

The services that Chinalco Finance Lease intends to provide for the Group in accordance with the Finance Lease Framework Cooperation Agreement include:

1. Lease services. Chinalco Finance Lease will actively explore and facilitate the Group with the finance lease business, and assist the Group in revitalising its existing assets, improving the structure of assets and liabilities and broadening financing channels, in order to provide comprehensive and integrated financing services to the Group. The principal leasing models include but are not limited to finance lease, operating lease, start-up lease and leverage lease. To the extent permitted by the existing laws, Chinalco Finance Lease may work with other leasing companies to adopt various leasing models such as joint leases, to satisfy the capital demand of the Group for a particular financing project;
2. Investment and financial consulting services. Chinalco Finance Lease will actively utilise its resources advantage to establish a close cooperative relationship with organisations, such as banks, insurance companies, trust companies and fund companies, to provide diversified financing products to the Company through multiple combinations; and
3. Account receivables management services. Chinalco Finance Lease may provide related commercial factoring services (including but not limited to the factoring with the right of recourse, the factoring without the right of recourse and other account receivables transactions) and integrated financing services combined with factoring and lease.

Within the term of the agreement, Chinalco Finance Lease and the Group has agreed on an intended scale of cooperation worth RMB1 billion, which is a revolving limit. For the business applications of the Group or its holding enterprises that conform to the conditions of Chinalco Finance Lease (which vary among different cooperative fields), Chinalco Finance Lease will sign specific transaction documents with the Group after the review and approval by Chinalco Finance Lease. Viewing Chinalco Finance Lease as its most significant long-term partner, the Group would prefer cooperation with Chinalco Finance Lease under equal conditions.

- 2 -

FINANCING COSTS AND PAYMENT METHOD

Financing costs principally include lease interests and handling fee, etc. The financing costs of finance lease services provided by Chinalco Finance Lease are not higher than the finance cost of services of the same or similar nature provided by independent third party finance lease companies in the PRC (subject to the after-tax internal rate of return). The lease interest shall be determined with reference to the benchmark interest rates for RMB-denominated loans published by the People's Bank of China on a regular basis; if such rates are not available, the lease interest shall be determined with reference to the interest rates charged or quoted by other major financial institutions for providing services of the same or similar nature. The Company and Chinalco Finance Lease will, based on the actual cash flows, design flexible payment methods, including not limited to payment of principal in equal instalments on a quarterly basis, payment of principal and interest in equal instalments on a quarterly basis, payment of principal in unequal instalments on a quarterly basis, payment of principal in equal instalments on a semi-annual basis, payment of principal and interest in equal instalments on an annual basis, etc.

PROPOSED CAP UNDER THE FINANCE LEASE FRAMEWORK COOPERATION AGREEMENT AND BASIS OF DETERMINATION

Having considered the demand for the finance lease services of Chinalco Finance Lease under the future business development plan and in the daily operation and development of the Group, at anytime during the term of Finance Lease Framework Cooperation Agreement, the balance of financial services such as finance lease, including lease business, investment and financial consulting services and account receivables management, received from Chinalco Finance Lease by the Group shall not be higher than RMB1 billion.

The Company determined the proposed cap with reference to the following factors:

1. The demand for services of Chinalco Finance Lease under the future business development plan and in the daily operation and development of the Group;
2. Current conditions of the financing market, interest rate levels and the possible adjustments to the interest rates of RMB loans by the People's Bank of China. If the People's Bank of China makes any adjustment to the benchmark interest rates of RMB loans in the future, the lease interest rates in the newly executed individual specific agreements will be determined with reference to the adjusted benchmark interest rates of RMB loans; and
3. The nature and carrying value of lease assets. The carrying value of lease assets shall not fall below the principal of the finance lease under any circumstance.

- 3 -

REASONS FOR AND BENEFITS OF ENTERING INTO THE FINANCE LEASE FRAMEWORK COOPERATION AGREEMENT

The Finance Lease Framework Cooperation Agreement and the continuing connected transactions thereunder help to meet part of daily financing needs of the Company, expand financing channels, collect fund in advance and lower the fund appropriation. As compared with other financing methods, it is a simple and convenient procedure which will allow the Company to optimize its financial management, improve its capital utilization efficiency, reduce financing costs and risks, and thus facilitate the smooth business development and operations of the Company. The Finance Lease Framework Cooperation Agreement and the continuing connected transactions thereunder are conducted in objective, fair and equitable principles, safeguarding the interests of the parties concerned. They are in line with the overall development strategies of the Company and are in the interests of the Company and its shareholders as a whole. The finance costs under the Finance Lease Framework Cooperation Agreement are not higher than those of services of the same or similar nature provided by independent third party finance lease companies in the PRC, and will not adversely affect the Company's continuing operation ability, profitability and asset independence or rely excessively on related parties.

INTERNAL CONTROL MEASURES

To ensure that the Company complies with the above pricing policies from time to time and that the fee for the services provided by Chinalco Finance Lease does not exceed the cost of services of similar nature provided by independent-third-party banks or companies which operate finance lease business in the PRC, the Company will adopt a series of internal control measures in its daily course of operation, which will be conducted and monitored by the finance department of the Company:

• The Company has formulated and adopted a set of administrative measures regarding connected transactions, pursuant to which the finance department is responsible for collecting and monitoring the information of connected transactions. For the same transaction, the Company shall ensure that at least two independent third parties will participate in quotation as a supplier. The finance department shall conduct integrated comparison on the quotation materials submitted by no less than two suppliers, and assess the fairness of transaction and pricing terms. If the contract terms are comparable or similar, the one with a lower price shall be selected initially. Officers handling the relevant matters shall submit a report to the head of the finance department and the chief financial officer of the Company to illustrate the details of the preliminary candidate for approval;
• Before Chinalco Finance Lease commences the finance lease business, after internal discussion, the unit in handling relevant matters shall submit to the finance department an application for approval, which is subject to the preliminary and final review by the head of the finance department and the chief financial officer of the Company based on the relevant internal control policies of the Group; and
• The directors of the Company have also reviewed and will continue to review the Finance Lease Framework Cooperation Agreement and the transactions thereunder to ensure that the agreement is entered into on normal commercial terms and in the interest of the Company and the shareholders as a whole. The auditors of the Company will also conduct an annual review on the pricing and proposed cap for such continuing connected transactions.

- 4 -

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 for 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 Chinalco Finance Lease

Chinalco Finance Lease is a company incorporated in the PRC with limited liability, primarily engaged in the finance lease business, lease business, purchase of lease assets from home and abroad, disposal of residual value and maintenance of lease assets, lease transaction consultation and guarantee business. Chinalco Finance Lease is the subsidiary of China Aluminum Group, the Controlling Shareholder of the Company.

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, Chinalco Finance Lease is a subsidiary of Chinalco Capital Holdings Co., Ltd. (a subsidiary of China Aluminum Group), and therefore Chinalco Finance Lease is a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the Finance Lease Framework Cooperation 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 the Listing Rules exceeds 5% but is less than 25%, in accordance with Chapter 14 and Chapter 14A of the Listing Rules, the Finance Lease Framework Cooperation Agreement and the continuing connected transactions thereunder also constitute the discloseable transactions of the Company and are subject to reporting, announcement, circular and Independent Shareholders' approval requirements under Chapter 14 and Chapter 14A of the Listing Rules.

Under Rule 14A.36 of the Listing Rules, any connected persons and any shareholders and their associates who have a material interest in the Finance Lease Framework Cooperation Agreement and the transactions contemplated thereunder are required to abstain from voting in respect of the related resolutions at the extraordinary general meeting. As 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 a connected person thereof, Luoyang Institute, as a wholly-owned subsidiary of China Aluminum Group, is also a connected person of the Company. Accordingly, due to the interests of China Aluminum Group and Luoyang Institute in these transactions, China Aluminum Group and its associate Luoyang Institute shall abstain from voting on the resolution for the approval of the Finance Lease Framework Cooperation Agreement and its proposed cap.

- 5 -

CONFIRMATION FROM DIRECTORS

The Board has considered and approved the resolution of the above-mentioned transactions. As Mr. WANG Jun and Mr. LI Yihua hold positions in China Aluminum Group and its subsidiaries and therefore have material interests in the Finance Lease Framework Cooperation Agreement and the transactions thereunder, they have abstained from voting on the above board resolution. Save as the above-mentioned persons, none of the other directors has interests in the above-mentioned transactions.

The directors (including the independent non-executive directors) are of the opinion that the transactions under the Finance Lease Framework Cooperation Agreement have been negotiated on arm's length basis, and entered into in the ordinary course of business and on normal commercial terms or better. In addition, the terms of the Finance Lease Framework Cooperation Agreement and its proposed cap are also fair and reasonable, and are in the interests of the Company and the shareholders as a whole.

The Company will appoint an independent financial adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the Finance Lease Framework Cooperation Agreement is on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the shareholders as a whole, and to advise the Independent Shareholders as to how to vote in respect of the above resolution at the 2019 fourth extraordinary general meeting. An Independent Board Committee comprising all independent non-executive directors has been established by the Company to advise the Independent Shareholders as to whether the Finance Lease Framework Cooperation Agreement is entered into on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the shareholders as a whole, and to advise the Independent Shareholders as to how to vote in respect of the above resolution, taking into account the recommendations of the independent financial adviser appointed by the Company.

DESPATCH OF CIRCULAR

The Company will convene the 2019 fourth extraordinary general meeting to consider and approve the entering into of the Finance Lease Framework Cooperation Agreement and its proposed cap. A circular containing, among others, the letter from the Independent Board Committee, the letter from the independent financial adviser, together with the notice convening the 2019 fourth extraordinary general meeting, is expected to be dispatched to the shareholders pursuant to the Listing Rules and within 15 working days from the date of publication of this announcement.

- 6 -

DEFINITIONS

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

"Independent Board Committee" an independent committee of the Board established for the purpose of considering the Finance Lease Framework Cooperation Agreement and the transactions thereunder (including the proposed cap), comprising all independent non - executive directors who are independent of the transactions

- 7 -

By Order of the Board

China Aluminum International Engineering Corporation Limited

ZHANG Jian

Joint Company Secretary

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.

- 8 -