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China Creates Alumina Monolith
The State collected all its alumina assets to form a State-run integrated aluminium giant yesterday, and it plans to seek overseas listing for the company soon.
The Aluminium Corporation of China (Chinalco), which is composed of the six largest alumina manufacturers in the nation as well as research institutes and construction firms, has thus become the third largest alumina producer in the world, after US-based, Alcoa Inc and Canada's Alcan Aluminium Ltd.
Alumina is a material used in the production of aluminium.
The aluminium giant, with assets of 35.6 billion yuan (US$4.3 billion), produces 70 per cent of the domestic market's alumina, and 23 per cent of its aluminium.
The remaining 30 per cent of the alumina production, roughly 1.9 million tons, comes from imports.
"With the establishment of the company, the State hopes to curb the redundant construction of small and inefficient aluminium manufactures by controlling alumina resources," said Guo Shengkun, president of the company.
According to Vice-Premier Wu Bangguo, the company is of great significance in optimizing resources in the sector and withstanding international competition.
"The next strategic move in the sector will help the newly-built company list on major overseas stock markets," Wu said.
Guo said the company will restructure itself to establish a shareholding company for overseas flotation in the coming months.
Insiders revealed that the company is expected to stage a dual listing on stock markets in Hong Kong and New York in the middle of this year.
"By overseas listing, we not only hope to raise funds from the stock market, but also to push through reforms," said Guo.
According to Guo, the company's production costs are much higher than that of its foreign counterparts.
"By listing, we aims to tighten management control and put more effort into technological innovation in a bid to slash costs," Guo said.
Guo revealed that the company plans to invest 2.6 billion yuan (US$313 million) in eight key technological upgrades this year.
Meanwhile, it will tap international alumina resources in the near future, he added.
"We are confident of becoming a strong multinational aluminium conglomerate in three years," he said.
According to Guo, Chinalco plans to turn out 4.3 million tons of alumina and 680,000 tons of aluminium this year, generating a profit of 2.4 billion yuan (US$289 million).
Chinalco produced 4.3 million tons of alumina and 670,000 tons of aluminium last year, rising 12.24 per cent and 7.86 per cent over 1999. It registered a profit of 1.7 billion yuan in 2000, a jump of 3.7-fold over that of 1999.
"By 2005, Chinalco is expected to boast an annual production of 6 million tons of alumina and 1.4 million tons of aluminium," he said.
China, the third largest aluminum producer after the United States and Russia, will import 650,000 tons of aluminum this year, making up almost one-fifth of the country's total consumption, according to experts.
Analysts warn that China is expected to be plagued by a serious aluminium shortage by 2005.
(www.chinadaily.com.cn)
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