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Chalco aims to break even
By Fu Chenghao |
August 25, 2009, Tuesday
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Online Edition
Online Edition
ALUMINUM Corp of China Ltd aims to break even in the second half of this year as market conditions improve and it steps up cost control, according to company executives.
The company, known as Chalco, reported late yesterday a more-than-expected net loss of 1.63 billion yuan (US$238.6 million) for the April-June period, its third quarterly loss in a row, blaming weak demand and low prices.
"The market will gradually recover and we will work hard not to lose money in the second half," Chairman Xiong Weiping told a press briefing in Shanghai today.
The Chinese government's 4 trillion yuan fiscal stimulus package is boosting demand from auto and building industries, leading to a recovery in aluminum prices. Chalco President Luo Jianchuan said aluminum prices may hold at US$1,800 to US$2,300 per ton this half on the London Metal Exchange. Aluminum was around US$1,920 today.
"It seems to us that Chalco has been restarting some capacity in response to higher prices and better profitability," Citigroup analyst Catherine Wang said.
"This would result in higher-than-expected volumes in the second half and thus higher profit if the situation sustains."
Luo said the company expects to sign its first deal under the direct power purchase program by the end of the year which could lower power tariff by 0.01 yuan per kilowatt hour. Power is one of the biggest cost components in aluminum and alumina production.
Chalco also aims to boost the self-sufficient ratio for bauxite ore to 55 percent, Luo said. Alumina is refined from bauxite ore and used to make aluminum.
Xiong, who also heads Chalco's state parent, Chinalco, said Chinalco is still committed to foreign investments after Anglo-Australian miner Rio Tinto rejected its US$19.5 billion tie-up plan in June.
"We don't rule out cooperation with foreign partners including Rio. The failed Rio only makes us more mature in making outbound investments." Xiong said.
But he shrugged off recent Australian press reports Chinalco was in talks with Rio to jointly produce alumina and bauxite.
Chalco fell 2.89 percent to 15.13 yuan in Shanghai.
The company, known as Chalco, reported late yesterday a more-than-expected net loss of 1.63 billion yuan (US$238.6 million) for the April-June period, its third quarterly loss in a row, blaming weak demand and low prices.
"The market will gradually recover and we will work hard not to lose money in the second half," Chairman Xiong Weiping told a press briefing in Shanghai today.
The Chinese government's 4 trillion yuan fiscal stimulus package is boosting demand from auto and building industries, leading to a recovery in aluminum prices. Chalco President Luo Jianchuan said aluminum prices may hold at US$1,800 to US$2,300 per ton this half on the London Metal Exchange. Aluminum was around US$1,920 today.
"It seems to us that Chalco has been restarting some capacity in response to higher prices and better profitability," Citigroup analyst Catherine Wang said.
"This would result in higher-than-expected volumes in the second half and thus higher profit if the situation sustains."
Luo said the company expects to sign its first deal under the direct power purchase program by the end of the year which could lower power tariff by 0.01 yuan per kilowatt hour. Power is one of the biggest cost components in aluminum and alumina production.
Chalco also aims to boost the self-sufficient ratio for bauxite ore to 55 percent, Luo said. Alumina is refined from bauxite ore and used to make aluminum.
Xiong, who also heads Chalco's state parent, Chinalco, said Chinalco is still committed to foreign investments after Anglo-Australian miner Rio Tinto rejected its US$19.5 billion tie-up plan in June.
"We don't rule out cooperation with foreign partners including Rio. The failed Rio only makes us more mature in making outbound investments." Xiong said.
But he shrugged off recent Australian press reports Chinalco was in talks with Rio to jointly produce alumina and bauxite.
Chalco fell 2.89 percent to 15.13 yuan in Shanghai.
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