Chalco Describes Recovery   

China's aluminum industry began to recover after suffering a serious impact from crisis. Its leading company - Aluminum Corporation of China Limited (Chalco) proved the recovery through announcing new investment plans and increasing operation rate.
   Recently, Chalco's managers disclosed that the company has increased the operation rate of aluminum oxide units from 66.9% in the first half of 2009 to 90% in December. The company will reportedly raise RMB10 billion to construct three aluminum oxide projects in Chongqing municipality, Shanxi and Henan provinces, expanding capacity from 11 million t/a to more than 13 million t/a. On December 23rd, 2009 Chalco held a ceremony in Gansu province to start three renovation projects with an expenditure of RMB4.97 billion.
   The restoration and expansion actions are based on improved market conditions, a manager of the company said.
   The company suffered a loss of RMB2.5 billion in the fourth quarter of 2008 and a loss of RMB3.5 billion in the first three quarters of 2009, attributing to low operation rate and deeply dropped price.
   In 2006 Chalco accounted for 62.6% of domestic aluminum oxide market and 17.4% of China's electrolytic aluminum market. However, with the emergency of new comers such as Nanshan Group and Shandong Xinfa Group, Chalco lost its monopoly position in domestic market, its aluminum oxide share going down to around 75% in 2008.
   In February 2009 China's State Council approved the adjustment and stimulation program for the nonferrous industry, which benefits Chalco. The other private competitors claimed that the program is not fair.
   Except the governmental support, Chalco has also worked hard in order to scramble for its monopoly role. Now the company mulls to purchase aluminum contained minerals from Australia in order to gain qualified, cheaper raw materials for aluminum oxide production. Chalco started to place emphasis on the increase of production efficiency, improvement of technical indexes and reduction of various costs and expected to re-build new competition advantages over three years.     
    An insider judged that the domestic aluminum industry will experience thin profit in a long-term period, companying with overcapacity and cost competition.
   Outlook of the aluminum industry may be found in this issue page 14.


Zhong Weike
January 14th, 2010