Chinalco weighs options to float non-aluminium business assets

PUBLISHED : Thursday, 20 March, 2008, 12:00am
UPDATED : Thursday, 20 March, 2008, 12:00am

Chinalco, the mainland's largest metals company, is considering floating its non-aluminium business in the stock market either by injecting it into listed flagship Chalco or spinning it off as a new entity, according to company president Xiao Yaqing.

'We are studying many options,' said Mr Xiao, who is also the chairman of Aluminum Corp of China (Chalco).

'It's a matter that takes time to study. All options are open and we haven't set a timetable on when to make a decision,' he said yesterday.

State-owned Chinalco, which has assets of more than 200 billion yuan (HK$220.16 billion), has already injected most of its aluminium assets into Chalco. Its non-aluminium assets include copper, rare metals and other non-ferrous metals, as well as its stake in mining giant Rio Tinto.

In addition to its purchase of 12 per cent of Rio Tinto's London-listed shares with Alcoa for US$14 billion in February, the major part of its non-aluminium assets is in copper.

Copper assets include its 7.5 billion yuan purchase of a 49 per cent stake in the mainland's third-largest copper producer Yunnan Copper Group; its US$860 million takeover of Peru Copper last year; and downstream copper processing plants in Henan, Hubei and Shanghai.

Non-aluminium assets also include Chinalco's planned 1 billion yuan purchase of a 5 per cent stake in an aircraft-making venture.

The venture, which will develop large passenger and cargo jets, will have 20 billion yuan in registered capital. Its largest-shareholder is the State-owned Assets Supervision and Administration Commission. Other shareholders included the two state-owned aircraft makers, Avic I and Avic II, as well as the government of Shanghai, Baosteel Group and Sinochem Corp, mainland media said.

'We entered into this investment as we think there are good prospects for the aviation industry in China,' Mr Xiao said, adding that 'the ultimate objective' was to supply aluminium products to the venture.

Mr Xiao said Chinalco and Chalco would gear up its global and domestic resources acquisition efforts.

Chalco is studying building bauxite mines in Indonesia and Africa and developing aluminium smelters in energy-rich countries.

In October last year, Chalco teamed up with Malaysia's MMC Corp and the Saudi Binladin Group, a construction conglomerate of the bin Ladin family, to co-invest in a US$3 billion aluminium smelter in Saudi Arabia, where electricity costs are 50 per cent lower than on the mainland.

The project, in which Chalco will hold 40 per cent, plans to build a smelter capable of producing 1 million tonnes of aluminium a year.

Meanwhile, Mr Xiao said that at Rio Tinto's current share price, 'the chance for Chinalco to increase its stake in Rio is bigger than selling the stake', but it will discuss any move with Alcoa before making a decision.