Chalco reports US$238m loss | Shanghai Daily

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August 26, 2009

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Chalco reports US$238m loss

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 controls, company executives said yesterday.

The company, known as Chalco, reported late on Monday a wider-than-expected net loss of 1.63 billion yuan (US$238 million) for the April-June period, its third quarterly loss in a row. It attributed the loss to 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 yesterday.

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 in the second half on the London Metal Exchange. Aluminum was around US$1,920 yesterday.

"It seems to us that Chalco has been restarting some capacity in response to higher prices and better profitability," Citigroup analyst Catherine Wang said. "If this continues this would result in higher-than-expected volumes in the second half and thus higher profit."

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 its electricity prices by 0.01 yuan per kilowatt hour.

Power is one of the biggest costs in alumina and aluminum production.

Chalco also aims to boost its self-sufficiency 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-owned parent Chinalco, said Chinalco is still interested in overseas investments even though Anglo-Australian miner Rio Tinto rejected its US$19.5 billion tie-up proposal in June.




 

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