Alumina says it needs to drive through change in its pricing structure after its full year net loss blew out.
The group's net loss for the 12 months to December 31 tripled to $US152.9 million ($A149.96 million) from $US47.3 million from $A45.91 million) in 2011.
Melbourne-based Alumina's only earning asset is its 40 per cent stake in Alcoa World Alumina and Chemicals (AWAC), with operators Alcoa holding the remaining 60 per cent.
AWAC owns aluminium smelters at Portland and the struggling Point Henry plant, near Geelong, both in Victoria.
AWAC had two strategic initiatives to improve its financial results, Alumina chief executive John Bevan said.
"Firstly, to be successful, the market-pricing mechanism used by AWAC to sell its alumina needs to reflect the fundamentals of the alumina industry, not the (aluminium) smelting industry," he told an analysts' briefing.
"As a low-cost producer, this change will enable AWAC margins to reflect its market position in the medium term.
"This initiative started in 2011."
AWAC is changing its contracts to spot alumina prices so they are not linked to the aluminium price, with 48 per cent of shipments to reflect that in 2013.
China's overproduction of aluminium has driven down prices that were above $US3,000 a tonne before the global financial crisis and were trading around $US2,143 a tonne on Thursday, giving it access to cheaper input costs through the linked alumina price.
The results come a week after the Chinese government-owned CITIC took a 13 per cent stake in Alumina for $452 million, putting pressure on Alcoa to decide if it will bid.
Alumina's shares closed 3.5 cents down at $1.215.
Foreign exchange losses of nearly $US90 million ($A87.36 million) and other losses of the same amount contributed to Alumina's poor result.
Excluding those items, Alumina recorded a net loss of $US62.1 million ($A60.28 million) compared to a $US126.6 million ($A122.89 million) net profit in 2011.
Its underlying loss was $US52.5 million ($A50.96 million) compared to an underlying profit of $US128 million ($A124.25 million) previously.
Revenue fell to $US5.8 billion from $US6.7 billion ($A5.63 billion from $A6.5 billion).
Alumina cut its final divided to nil, from six US cents.
Mr Bevan said that while 2013 had begun on a positive note with prices recovering from 2012, uncertainty lay ahead.
"The outlook for the market in 2013 remains uncertain with macro-economic conditions, particularly in Europe, remaining difficult," he said in a statement on Thursday.
The AWAC joint venture recorded a net loss of $US91.9 million ($A90.13 million) in 2012, compared to a net profit of $US469.7 million ($A460.67 million) a year earlier.
"Despite the very difficult market conditions, we are heartened by the sound operational performance of AWAC and the progress made on important initiatives that will ultimately strengthen the company's position and improve returns to shareholders," Mr Bevan said.
Falling aluminium prices and the high Australian dollar have put Alumina under financial pressure.
Weaknesses in the global economy in 2012 have hurt demand for aluminium used in products such as aircraft, cars, drink cans and the construction industry.