Chinalco Swings to Operating Profit

BEIJING—Aluminum Corp. of China, or Chinalco, swung to an operating profit of 2.7 billion yuan ($410 million) last year from a record loss in 2009 as the prices of its core products recovered after the financial crisis, and said Wednesday it plans to prioritize the development of its copper business to take advantage of demand in China and a global undersupply of the metal.

Chinalco, the parent of listed unit Aluminum Corp. of China Ltd., had an operating loss of about 7 billion yuan in 2009 as aluminum prices flagged. The company has been expanding its businesses to guard against future price volatility, and copper is regarded by analysts as the most defensive investment among base metals.

In July, Chinalco and Anglo-Australian miner Rio Tinto PLC formed a partnership to develop an iron-ore mine in Guinea, boosting the Chinese firm's mineral-resource reserves to more than two billion tons, and the two companies subsequently announced plans to prospect for minerals across China through a joint venture.

Chinalco said in a statement Wednesday it plans to acquire more overseas copper assets as part of its twelth five-year plan and aims to be one of the world's five biggest copper miners in five years.

It said it plans to start building a mine in Peru's Toromocho copper project this year after it acquired Peru Copper Inc. and the development rights to the Toromocho project for $860 million in 2007. The project is set to be one of Peru's biggest copper mines by 2012 or 2013, producing 250,000 metric tons of copper a year, as well as significant amounts of zinc and silver.

Revenue rose by 41% to 200.3 billion yuan, boosted by increasing demand and higher prices for core products such as alumina, galvanized aluminum and refined copper.

The firm's refined copper production rose 12% last year, while output of copper products increased 17.7% and processed aluminum products by 31.9%.

Chinalco also said it signed a memorandum of understanding in December with Guangxi Nonferrous Metals Group to set up a rare-earth exploration joint venture in Guangxi province. The company said it would be the largest shareholder of the venture.

The firm said in October its president, Xiong Weiping, met with Guangxi governor Ma Biao to discuss possible cooperation on rare earth development. Guangxi Nonferrous has zinc and tin operations and also owns 55% of Guangxi Jinyuan Rare Earth Co., a rare earth processor.

Chinalco said it increased its production capacity for alumina, a raw material for aluminum, by 29.6% and its galvanized aluminum capacity by 22.2% last year.

Write to Yajun Zhang at yajun.zhang@dowjones.com

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