Chalco acquires Guizhou smelter

PUBLISHED : Tuesday, 20 June, 2006, 12:00am
UPDATED : Tuesday, 20 June, 2006, 12:00am

Aluminum Corp of China (Chalco) has agreed to buy a 66.4 per cent stake in Zunyi Aluminum for 219 million yuan, the latest move in an acquisition spree that has seen Chalco more than double its production capacity in a year.

Chalco, the nation's largest aluminium smelter and the world's third-largest producer of the raw material alumina, said in a statement it would buy part of the equity interest in Zunyi held by Wujiang Hydropower and the entire Zunyi holdings of eight other companies.

Zunyi is based in Guizhou province. It has net assets of 307 million yuan and can produce 113,000 tonnes of aluminium each year.

Chalco chairman Xiao Yaqing said in March the company planned to double its smelting capacity to three million tonnes this year, after doing the same last year mainly through acquisitions.

In January, Chalco signed an agreement to buy a 60 per cent stake in a 600,000 tonnes a year smelter in Shandong province.

It has budgeted at least 10 billion yuan this year to build alumina plants, take over domestic rivals and buy its parent company's downstream aluminium processing operation.

To fund the expenditure, the company raised $4.67 billion through a share placement last month.

The mainland's aluminium smelting industry, where 80 per cent of the firms lost money last year because of high raw material prices, has recovered this year as the metal's price soared almost 40 per cent to a high of US$3,185 a tonne last month.

Since then, the industry's fortunes have waned as three-month futures on the London Metal Exchange slumped 22 per cent amid a general rout in commodities prices and concern that rising interest rates will slow growth and dampen aluminium demand.

Chalco's share price fell 2.72 per cent yesterday to close at $5.35. That is down 37.05 per cent from its April 7 peak of $8.50.


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Chalco acquires Guizhou smelter

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