Chalco buys 60 per cent stake in Chinalco’s Shanghai unit for 2.1 billion yuan
Aluminum Corporation of China (Chalco), the country’s biggest metal producer, will acquire 60 per cent of the Shanghai subsidiary of state-owned holding company Chinalco Mining for 2.1 billion yuan (HK$2.4 billion), the company announced in a filing to the Hong Kong stock exchange on Tuesday.
The move was made as a part of Chalco’s strategic development plan, allowing it to gain control of two office buildings owned by Chinalco Shanghai at the Shanghai Expo Park, which can be utilised at Chalco’s development base in the city, the announcement said.
Additionally, the majority interest gives Chalco the chance to take advantage of preferential business policies in the Shanghai Free Trade Zone (SFTZ). The nature of the SFTZ provides companies with benefits such as lowering barriers to foreign investment, allowing for virtual office options within the zone, and lower incorporation fees.
Chinalco Shanghai was in the red two years ago, but eked out a profit last year with net earnings of just 13,800 yuan. The subsidiary, which was incorporated in April 2012, engages in domestic trade, imports and exports of cargo and technology, sale of metal materials, industrial investments, among other businesses.
Following the announcement, Chalco — which has shares listed on the Hong Kong, Shanghai and New York stock exchanges — saw its stock increase around 1 per cent in New York, 0.25 per cent in Shanghai and fall 0.71 per cent in Hong Kong to close at HK$2.80 on Tuesday.
The two companies have a close relationship, with Chinalco as the controlling shareholder of Chalco, holding close to 36 per cent of all Chalco shares. Two directors of Chalco also concurrently hold positions in Chinalco, the announcement said.