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Chalco Continues China Takeover
[August 14, 2006]

Chalco Continues China Takeover


(SinoCast China Financial Watch Via Thomson Dialog NewsEdge) BEIJING, August 15, SinoCast -- Aluminum Corporation of China Limited (2600.HK), the country's biggest alumina and primary aluminum producer, has agreed to acquire a smaller peer based in the northwestern province of Gansu, on the heels of two earlier acquisitions. The buyer, also known as Chalco, just agreed to buy a 51 percent stake in Gansu Hualu Aluminum Co. for as much as CNY 270 million from the latter's local shareholders Baiyin Nonferrous Metal (Group) Co. and Baiyin Honglu Aluminum Co. Upon the completion of the deal, the rest 49 percent stake in Gansu Hualu Aluminum is to be held by Baiyin Honglu Aluminu who is likely to transfer them to Baiyin Nonferrous Metal in the future. The assets at Gunsu Hualu Aluminum have amounted to approximately CNY 529 million by last December. The electrolytic aluminium production capacity hit 127,000 tons annually. Chalco, who sold the first-time shares at the stock exchanges in New York and Hong Kong both in December 2001, this May collected as much as HKD 4.67 billion proceeds via an additional offering and a placement in Hong Kong. The heavy proceeds go to the electrolytic aluminium acquisitions conducted by Chalco and its daily operation. As the bellwether in the alumina and electrolytic aluminium sector, Chalco is understood to implement a series of acquisitions at the home market to provide adequate electrolytic aluminium for its daily production. It last month signed an agreement with Linyi Jiangtai Aluminum Co and Shandong Huasheng Jiangquan Thermal and Power Co to buy a 55 percent stake in Shandong Huayu Aluminum and Power Co. Based in the eastern coastal region of Shandong, Huayu Aluminum and Power owns production lines for aluminum smelting with production capacity of 100,000 tons and their ancillary facilities and two 13.5 megawatts generation units. By last December, the audited assets hit around CNY 899 million. Headquartered in Beijing, Chalco in June announced a plan of buying a 66.4 percent stake in Zunyi Aluminum Co. in the southwestern province of Guizhou. The latter has electrolytic aluminium production lines and ancillary facilities with an annual capacity of 113, 000 tons. By December 31, 2005, its assets have amounted to CNY 1.02 billion. The equity to be bought is worth as much as CNY 219 million. They are now owned jointly by the target company's nine shareholders, including China Non-ferrous Metal Industrial (Guiyang) Company and the state-owned assets investment and operation company of Zunyi City. Chalco also has signed a letter of intent with Sichuan Guangyuan Venus Aluminum Co. to acquire a 26 percent stake. Based in southwestern China, the latter is engaged in the production and sales of electrolytic aluminum spindle, alloy spindle, and positive charcoal. Those moves result partly from the fiercer competition brought by home rival. Qingtongxia Aluminum Industry Group, the No. 2 aluminum maker in China by output, last Friday agreed to sell some stake to Glencore International AG, the world's largest commodities trader based in Switzerland. Based in the northwest, Qingtongxia Aluminum expects to increase the annual aluminum capacity to 700,000 tons by 2010 from the current 430,000 tons. State-owned Chalco vows to lift the primary aluminium annual capacity to around 3 million tons this year from 2005's 1.5 million tons and the alumina annual capacity to 12 million tons in the next three years from 2005's 8.33 million tons. (USD 1 = CNY 7.9)



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