Chinalco enters upstream industry due to higher costs

Thursday, 26 August 2010 17:49:27 (GMT+2)

High iron ore costs are forcing Aluminum Corporation of China (Chinalco) to enter the upstream industry. Xiong Weiping, board director and CEO of the company, has stated at the mid-term report conference held in Shanghai. As a result, the company has commenced a three-year restructuring plan according to which it is entering the coal and iron ore industry, while it also intends to list the Guinea Simandou iron mine, its joint venture project with Rio Tinto, on the stock exchange. Also, within three years the company plans to build two to three coal production bases to support its downstream aluminum industry.

Commenting on its loss in the second quarter this year, company management said that national policies to control the real estate sector and to adjust electricity consumption were the main reasons. "The aluminum price has dropped but costs increased, leading to a RMB 500 million loss in June," Liu Xiangmin, Chinalco vice president, said, adding that the loss was lower in July due to the reduced cost factor.

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