Chalco's Pingguo starts new alumina plant

HONG KONG, May 29 (Reuters) - Aluminum Corp of China Ltd's (Chalco) (2600.HK: Quote, Profile, Research) Pingguo plant in Guangxi region started production at a new 440,000-tonne alumina facility on Wednesday, plant sources said.

Production at another new alumina facility with the same capacity would kick off in late June, boosting designed alumina capacity to 1.78 million tonnes a year, the sources said on Thursday.

"Operations at the facility are well," one of the sources said. "The start-up for another facility is planned on June 22."

The new facilities would be able to run at full rates in July, he said.

The new capacity would produce about 400,000 tonnes of alumina this year, which would boost output to above 1.3 million tonnes this year from 960,000 tonnes last year, the source said.

Zhang Qing, investor relations manager at Chalco in Beijing, said the group's alumina production would be below 11 million tonnes this year, down from last year's 10.2 million tonnes, despite the start-up at the Pingguo plant.

Shares of Chalco -- the world's third-largest producer of alumina, the raw material for aluminium production -- were up 1.4 percent on Thursday morning, outperforming a 0.3 percent gain for the benchmark Hang Seng Index .HSI.

About two tonnes of alumina are used for production of one tonne of aluminium.

Spot alumina prices in China, the world's top alumina consumer, have fallen more than 20 percent so far this year to about 3,500 yuan ($505) a tonne, as the country's refineries boost output to meet robust domestic demand.

Chalco has maintained spot alumina prices at 4,200 yuan a tonne since mid-December. Prices of term contracts for 2008 are set at around 17 percent of aluminium prices, which equalled 3,227 yuan based on Thursday morning's closing prices of the Shanghai August contract SAFQ8.

China's alumina production rose 26 percent to 5.29 million tonnes in the first fourth months of this year, from a year earlier, official data showed.

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