Alumina owns a 40% stake in Alcoa World Alumina & Chemicals, or AWAC, a producer of about 25% of global alumina oxide, which is refined to make aluminum. Alcoa Inc. owns the remaining 60% of AWAC, which operates eight alumina refineries and eight bauxite mines.

Melbourne, Australia-based Alumina said cash from the deal will be used to reduce debt from A$681 million to A$216 million.

"We had always thought Alumina was short of cash and over-geared," CLSA Asia-Pacific Markets analysts noted Thursday. "However, the company has always suggested otherwise so this deal will come as a surprise to most, I suspect."

Citic's investment in Alumina marks a return to a troubled sector that China's biggest investment company knows well. Its first ever investment in Australia, in 1986, was in the Portland Aluminum Smelter, in which it still owns a 22.5% stake alongside AWAC.

Aluminum producers' fortunes have slumped since 2008 along with aluminum prices, while inputs, such as bauxite and caustic soda, have risen. Alumina shares have fallen more than 75% from five-year highs of A$6.38, attained in May 2008 and touched five-year lows of A$0.64 in mid-2012. They closed Thursday at A$1.29, up A$0.09, or 7.5%, on their Wednesday close.

"This secures a strategic long-term investor at a premium to our recent share price," Alumina CEO John Bevan said in a statement. "Citic's investment demonstrates their confidence in the alumina industry and their understanding of Alumina Ltd.'s unique position in the global market."

The deal comes as aluminum suppliers are claiming to see the first signs of recovery. Norsk Hydro ASA, Europe's No. 3 aluminum producer, said earlier this week it expected aluminum demand, excluding China, will grow by between 2% and 4% in 2013, driven in part by stronger demand from carmakers. Demand from China, the world's biggest aluminum consumer, could increase about 11% in 2013, Alcoa Inc. noted last month. Aluminum prices for delivery in three months have advanced more than 4% over the past year to near $2,151 a metric ton.

Under the terms of the deal, Citic will be limited to a 15% stake in Alumina for two years and will then be allowed to raise its holding to just under 20%. Alumina will create a new seat on its board for Citic Resources vice chairman and CEO Chen Zeng. Australian and Chinese regulators have already approved the deal.

Alumina took financial advice from a Flagstaff Partners Pty Ltd. team led by CEO Anthony Burgess. Citic took advice from ANZ Corporate Advisory, a unit of Australia and New Zealand Banking Group Ltd.