Alumina giant offers mining technology in return for 30pc share in joint venture Aluminum Corp of China (Chalco), the mainland's sole provider of alumina, reportedly has wrested a 30 per cent stake from an alumina project that threatens its dominant position. Chalco and entrepreneur Liu Yongxing's East Hope Group have reached an agreement to form a joint venture on the project, Bloomberg quoted a report by Xinhua-run China Metals as saying. Chalco officials would not comment. The 1.05 million-tonne-a-year project is expected to be the first large-scale alumina plant to compete with Chalco, whose annual production capacity of the mineral stood at 5.4 million tonnes at the end of last year. A doubling in alumina prices in the past year due to global shortages has seen the emergence of a slew of new projects. Chalco reportedly has been using its stranglehold over alumina, which is refined from bauxite and smelted into aluminium, as a bargaining chip in return for equity stakes in new market entrants. East Hope needs a patented technology held by Chalco to process bauxite mined on the mainland, since the raw material usually has a higher silica content than bauxite found in other parts of the world. The Ministry of Commerce for Henan province previously said East Hope's project would be located in Sanmenxia and cost 4.59 billion yuan. Under a joint-venture agreement signed on June 16, East Hope was to have 51 per cent of the project, Henan Huanghe Aluminium 24 per cent, United States-based JD Metals Works 12 per cent and Pioneer Global Investment 13 per cent. Scheduled to start construction in July, the plant was expected to come on stream by the end of next year. China Metals quoted sources in Henan as saying, after mediation by the Henan government, East Hope had agreed to let Chalco join the project, with Chalco chairman Guo Shengkun also serving as chairman of the joint venture and Mr Liu as vice-chairman. Under the agreement, Chalco and East Hope will each have a 30 per cent stake, Huanghe's stake will be cut to 15 per cent, while JD Metals and Pioneer Global will not be affected, according to a Huanghe official. East Hope is part of the business empire of Sichuan province's billionaire Liu brothers. It is engaged in animal feed, wheat flour, sausage and chemical products manufacturing. Chalco plans to spend 5.5 billion yuan to boost its alumina capacity to more than seven million tonnes by 2005, as part of efforts to take advantage of a cyclical upturn in the industry. Seven planned rival projects, backed by various local governments, will cut Chalco's share of the mainland's alumina capacity from 100 per cent last year to 52.2 per cent by 2010, according to a Citigroup Smith Barney report.