Asia Aluminum's grand scheme turns ugly

In Zhaoqing, Guangdong, amid stunning limestone rocks and lakes as clear as glass, squats a huge but half-finished aluminium plant bankrolled by western lenders. The plant is at the centre of bitter financial infighting and industrial unrest as ugly as its surroundings are beautiful.

That location is the grand-sounding Industrial City. It is owned by Asia Aluminum Holdings, which is teetering on the edge of bankruptcy. The firm, which is already the world's third-biggest aluminium supplier, notched up an HK$18 billion debt in a bid to build a modern factory that was set to produce 400,000 extra tonnes a year. Yet, the plant is not finished and the company has run out of cash.

Asia Aluminum is losing US$25 million a month because of weak demand for the aluminium it sells and high payments on its debt. Foreign lenders, owed US$985 billion before interest payments, are bickering furiously about how the business should be restructured.

At Industrial City, Asia Aluminum has since 2003 built modern offices, staff quarters and luxury villas for company bosses to stay in. The site even has a nine-hole golf course where, in happier days, the firm's founder, Vincent Kwong Wui-chun, would entertain his foreign lenders.

The factory which was to pay for all this should have been finished in 2007. But according to an engineer's report seen by the South China Morning Post, construction was chaotic, with many avoidable delays.

The engineer, Bernie Mittenberger, left Asia Aluminum in March but remains a consultant. He told the Chinese firm's creditors last month that after he started in 2004, Asia Aluminum constantly chopped and changed contractors.