Aluminum Corp of China Ltd, the nation's biggest producer of the metal, signed an agreement to buy five aluminum-processing plants and a smelter from its parent for 4.2 billion yuan (US$605 million).
The acquisition, plans for which were first announced in March, includes assets of CSWA Cold Rolling Co and four other processing plants, the company, known as Chalco, said in a statement to the Shanghai Stock Exchange yesterday.
Chairman Xiao Yaqing wants to expand aluminum processing output to diversify earnings and meet domestic demand that's forecast to increase 20 percent a year. China buys high-end aluminum products used in the aviation and defense industries from companies such as Alcoa Inc.
"The acquisition won't affect Chalco's profit much," Feng Zhang, a Hong Kong-based analyst at JPMorgan Chase & Co, told Bloomberg News yesterday. "Chalco paid a relatively cheap price for the plants, which are not very profitable."
Shares of Chalco fell 2.94 percent to HK$13.86 (US$1.78) in Hong Kong. The Hang Seng Index dropped 1.6 percent.
Chalco will buy 100 percent of CSWA Cold Rolling and controlling stakes in Chinalco Ruimin Ltd, Huaxi Aluminum Ltd, Chinalco Southwest Aluminum Cold Rolling Ltd and Chinalco Henan Aluminum Ltd, according to the statement.
The five processing plants have a total production capacity of 1.09 million tons.
The company will also buy Lanzhou Liangcheng Longxing Aluminum Ltd smelter.
(Shanghai Daily May 23, 2008)
