Chalco, China’s largest aluminum producer whose shares are traded both in Shanghai and Hong Kong, agreed last Friday to set up a joint venture with Malaysia’s MMC and the Saudi Binladin Group to build and operate an aluminum smelter plant in Saudia Arabia.

The plant is to be built in three stages and the total investment is estimated to reach $4.5 billion. In the joint venture, the aluminum producer Chalco will own a 40% stake to become the largest single shareholder. Syed Mokhtar Al-Bukhary-backed MMC will hold a 20% share while a consortium of local investors led by the Saudi Binladin Group will hold the remaining stake.

The smelter plant is to be located in the Middle East country’s Jizan Economic City (JEC), where electricity costs an average of $20 per megawatt-hour compared with $28 in the US and $40 in China for the same measure. The annual aluminum production capacity of the plant is expected to reach one million tons.

In addition, an associated 1,860mW power plant with an estimated $2 billion will also be built, in which Chalco will take a 20% stake to become the third largest shareholder.

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aluminum, Chalco, China, industry, investment, joint venture, Malaysia, MMC, Saudia Arabia

After buying a 12% stake in Rio Tinto Plc in February, Aluminum Corp of China Ltd (Chalco), the largest producer of metal, said it will step up its overseas expansion to ensure sustainable growth through more access to mineral resources.

The company will jointly invest in more overseas mining projects with international mining companies. It also plans to spend 1 billion yuan on a 5% stake in a proposed project with AVIC Ⅰ’s Commercial Aircraft Co.

Chalco decides to acquire more local alumina processors, most of which are struggling as slim processing fees fail to offset increase in costs. “It’s a good time to merge with small alumina processors to expand Chalco’s processing capacity in 2008,” said Xiao Yaqing, chairman and CEO of Chalco. Chalco’s processing capacity is expected to reach 1.09 million tons in 2008, largely through mergers and acquisitions.

Chalco now is also seeking opportunities to expand into other metals such as titanium and copper since aluminum producers are supposed to diversify their businesses in the face of international competition.

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Chalco, China, expansion, investment, mining