I write to update you on the latest developments with respect to the Asia Aluminum Group and actions going forward.

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1 Our Ref : AMC/AAH547CLM/B3(CORR) Your Ref: STAKEHOLDERS OF THE ASIA ALUMINUM GROUP INCLUDING HOLDERS OF ASIA ALUMINUM HOLDINGS LTD SENIOR 8% NOTES ( Bondholders ) CUSIPs: 04519DAA5, G0536XAA1 ISINs: US04519DAA54, USG0536XAA12 NOTICE DTC 02/12/2010 Dear Stakeholders ASIA ALUMINUM HOLDINGS LIMITED ( AAH ) CHINA STEEL DEVELOPMENT COMPANY LIMITED ( CSD ) ASIA ALUMINUM MANUFACTURING COMPANY LIMITED ( AAMCL ) ASIA ALUMINUM MANAGEMENT LIMITED ( AAM ) (In Liquidation) (collectively, the Companies ) Companies Winding-Up Nos. 140, 142, 165, and 237 of 2009 I write to update you on the latest developments with respect to the Asia Aluminum Group and actions going forward. 1 RECENT DEVELOPMENTS I wish to advise the Stakeholders of recent developments which have a potential impact on the finalisation of the proposed Scheme of Arrangement ( the Scheme ) and the quantum of the distribution of sale proceeds to various stakeholder groups. These developments are as a result of recent discussions and correspondence from the minority shareholder of Asia Aluminum Group ( AAG ) ( the Minority Shareholder ). AAH holds 74.99% of the issued shares of AAG. For the sake of clarity, the Minority Shareholder is a separate party to that of the former management of the Group. 1.1 Bondholders Security Over Intercompany Notes One issue raised relates to three intercompany loan accounts between AAH and each of CSD, AAMCL, and AAG that were assigned as security to the benefit of the Bondholders in accordance with a Share Charge and Intercompany Notes Assignment dated 23 December 2004 ( the Assignment ) executed between AAH and certain of its subsidiaries, and the Bondholders Trustee. The Minority Shareholder is of the view that the security granted for the benefit of the Bondholders over the intercompany loan accounts is not effective. HONG KONG Ferrier Hodgson Limited 14/F, The Hong Kong Club Building 3A Chater Road, Central Hong Kong phone fax fh@fh.com.hk Hong Kong Jakarta Kuala Lumpur Manila Shanghai Singapore Tokyo Adelaide Brisbane Melbourne Perth Sydney Affiliated with Zolfo Cooper & Kroll Americas Europe Africa Middle East R E S T R U C T U R E & T U R N A R O U N D C O R P O R A T E A D V I S O R Y R I S K S O L U T I O N S C O R P O R A T E R E C O V E R Y

2 Page 2 The Minority Shareholder maintains that whilst the Assignment states that the asset being assigned as security were Intercompany Notes ( the Notes ), the underlying documents submitted to support the Notes at the time of the Assignment were in fact Loan Agreements executed between the relevant parties. The Minority Shareholder is therefore of the view that the Assignment does not create an effective security over AAH s rights under the Loan Agreements, as the Assignment was specifically made over the Notes (which they argue do not exist) and not over the Loan Agreements. We are seeking further legal advice on this matter. I have indicated the potential effect of the security being found to be ineffective further below. 1.2 Potential Claim by Minority Shareholder A further issue raised by the Minority Shareholder relates to AAH s alleged breach of a Shareholders Agreement entered into by AAH and the Minority Shareholder in relation to their respective shareholdings in AAG. To this end, the Shareholders Agreement contained a number of provisions which acted as safeguards against the transfer of value from AAG to the wider AA Group without the approval of the Minority Shareholder. The Minority Shareholder claims that AA Group companies made a number of payments or transactions that were in breach of the terms of the Shareholders Agreement, for example, payments made by Zhaoqing Asia Aluminum Factory Co Ltd to other entities in the wider AA Group. As a result, the Minority Shareholder considers it has a claim against AAH. We continue to liaise with the Minority Shareholder and are seeking further information from them in relation to their claim before considering it further. 2 EFFECTS ON ESTIMATED STAKEHOLDER RETURNS The matters described above have a potential impact on the Stakeholders estimated returns. The quantum of the impact on estimated returns depends on the outcome of each of the issues.

3 Page 3 We provide in the table below revised estimated returns to the relevant Stakeholders, given the various outcomes (and subject to the final level of the claim of the Minority Shareholder, if the claim is successful) that may result from these matters. Issue 1 Issue 2 Estimated Returns (Revised) Valid Claim of PIK Minority Bondholders Noteholders Shareholder? Is the Bondholders security invalid? Minority Shareholders No No 19.2% 0.6% HKD24m No Yes 18.6% 0.5% HKD49m Yes No 17.2% 1.4% HKD27m Yes Yes 14.5% 1.2% HKD145m As previously advised to Stakeholders, please note that all estimated returns remain subject to change based on the final quantum of claims submitted. Estimated returns to PIK Noteholders are before costs of the liquidator of AA Investments Limited. Estimated returns are also subject to the issue discussed at part 4 below. 3 IMPLICATIONS ON THE SCHEME AND PROPOSED WAY FORWARD The Liquidators continue to seek ways to progress the finalisation of the Scheme and expedite the distribution of sale proceeds to the Stakeholders despite the matters referred to above. Whilst I do not at this time consider resolution of these matters will cause significant delays, I am currently unable to estimate a timeframe for the resolution thereof. It is possible a resolution may only be obtained by way of an application to Court. In view of this and subject to the Stakeholders approval, the Liquidators propose that the Scheme continue to be finalised and progressed, notwithstanding the matters raised above. In this regard, with respect to each matter: 1. The Scheme can be progressed in conjunction with the Liquidators seeking to determine the validity of the security. To the extent necessary, an initial dividend can be paid if the validity of security has not yet been resolved or determined, with sufficient funds held back to ensure no Stakeholder s position is jeopardised and then the balance of funds paid to the appropriate Stakeholders once validity of the security has finally been determined. 2. It is up to any creditor to prove their claim. If the Minority Shareholder is unable to prove its claim to the satisfaction of the Scheme Administrator, the claim can be rejected, allowing the creditor to appeal to the Scheme Adjudicator to resolve the dispute or refer it to arbitration or the Court. Similar to item 1 above, an interim dividend could be paid pending resolution of the dispute.

4 Page 4 I consider it is in the Stakeholders interest that the Scheme is finalised in parallel with the resolution of the matters referred to above. The Liquidators will require an indication of the Stakeholders consent to proceed down this path. Note that the alternative to implementing the Scheme is to conduct an initial dividend distribution through the liquidation of various companies, however this process will take more time and require the Liquidators to make certain applications to Court before it could proceed. In any event, the matters raised above would still need to be dealt with. 4 PROPOSED LITIGATION FUND The Liquidators also wish to discuss and receive feedback from Stakeholders regarding setting aside up to HKD20 million as a litigation fund from the proceeds of sale currently held by the Liquidators to allow them to pursue certain legal claims against certain parties regarding transactions entered into by the Group prior to its collapse. Without setting aside these funds, the Liquidators may not have sufficient funds available to fund the costs of the actions contemplated. Whilst it is difficult to estimate the recoveries that could be made from these legal actions, based on legal advice received, we consider there are good prospects for success. Use of the funds would be subject to the supervision of a steering committee to be established under the Scheme. To the extent the litigation fund is not utilised, the balance would be paid to relevant Stakeholders. The impact on returns of setting up the litigation fund is small. For example, the estimated impact on return to Bondholders is less than half of a cent in the dollar. 5 NEXT ACTIONS/EVENTS The Liquidators will hold a conference call at 9:00pm (Hong Kong) / 1:00pm (London) / 8:00am (New York) on Thursday, 18 February 2010 to: 1. Further discuss and address any queries the Stakeholders may have regarding this letter, including regarding the options available to progress dividend distributions to Stakeholders. 2. Obtain the Stakeholders views and provide further information on the Liquidators proposal to finalise the Scheme in parallel with the resolution of the legal issues discussed. 3. Receive feedback on setting up the proposed litigation fund.

5 Page 5 Conference call details are as follows and additional international access numbers are provided in Annexure 1. Phone Number : (+852) Conference Reference : Participant PIN : # 6 STAKEHOLDER CONTACT If Stakeholders of AAH, CSD, AAMCL and AAM wish to receive direct communications from the Liquidators, please contact us at fh@fh.com.hk with a request to be placed on our distribution list and the following information: 1. Name of creditor / beneficial bondholder 2. Amount of bond holdings / claim 3. Contact information: a. address b. Telephone number c. Mailing address 4. Proof of bond holdings / claim (i.e. bank statement, screen shot of holdings, invoices, etc) Should you have any queries, please call or fh@fh.com.hk. Yours faithfully ASIA ALUMINUM HOLDINGS LIMITED CHINA STEEL DEVELOPMENT COMPANY LIMITED ASIA ALUMINUM MANUFACTURING COMPANY LIMITED ASIA ALUMINUM MANAGEMENT LIMITED Roderick John Sutton Joint and Several Liquidator Encl

6 Annexure 1

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