Chalco Eyes Aluminum Processing Assets from Parent

Shanghai.  February  27.  INTERFAX - CHINA The Aluminum Corporation of
China Co.   Ltd.  (Chalco),  the  dual  Hong  Kong  and  Shanghai-listed
subsidiary  of  the  Aluminum Corporation of China Group (Chinalco), may
purchase  its  parent's  stake  in  six aluminum processing subsidiaries
through the China Beijing Equity Exchange (CBEX) for a total of RMB 4.17
billion ($583.18 million), a Chalco official told Interfax today.

"The equity  exchange-listed assets are of great value to Chalco as they
are closely  related  to  our  core  alumina  and  electrolytic aluminum
operations,  and  the  company  is  currently  weak in terms of aluminum
processing," a Chalco board secretariat official, surnamed Zhang, said.
However,  Zhang  declined  to  provide  further detail over the possible
acquisition.

"Chinalco  has decided to sell the stake in its subsidiaries in order to
eliminate  any competition between Chinalco and Chalco in terms of their
common operations, as the parent company pledged at the time of Chalco's
listing  on  Shanghai Stock Exchange last April," Wang Qiang, an analyst
with Industrial Securities, told Interfax today.

Wang also  said that Chinalco may have initiated the stake sale in order
to secure  additional  funds,  following its recent buy in to Rio Tinto,
which cost the aluminum giant approximately $12.85 billion," Wang said.
"It seems  as  if  Chinalco has custom-made this deal for Chalco, as the
parent has  set  very  strict  buyer  restrictions that hardly any other
domestic aluminum smelter is able to meet," Wang said.

"The deal will also save Chalco plenty of time and money, compared to if
it purchases the stake through a new share-asset swap," Wang said.
According  to  various announcements released by the CBEX yesterday, the
deal will  automatically  conclude after a 55-day notice period if there
is only one candidate, otherwise the deal will be decided at auction.

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