Chalco set to tighten expenses

Aluminum Corp of China Ltd, or Chalco, the country's largest aluminum producer, yesterday said it would cut costs but will continue to explore overseas acquisition opportunities.

The company has suffered a profit drop of over 65 percent as a result of high production costs, output disruptions and oversupply in the market.

"Chalco will postpone the completion of some projects and reassess new projects to tighten control on expenditure and ensure sufficient working capital," said Xiao Yaqing, chairman and CEO of Chalco, at a news briefing yesterday.

The company on Friday posted a net profit of 2.4 billion yuan for the first six months of 2008, down 65.56 percent year-on-year. Earnings per share plunged 68.33 percent to 0.562 yuan.

Xiao attributed the profit drop to the "unexpectedly" sharp increase in production costs. "
 
Xiao said the company would raise the proportion of self-produced bauxite ore to 50 percent of the total material resources from the current level of 25 to 32 percent, to reduce its reliance on imports.

Aluminum Corp of China, the parent company of Chalco, is investing in the Aurukun bauxite mining project in Australia's northeast and in several smelter projects such as in Saudi Arabia.

Industry analysts said a number of small smelters and processors would be put out of businesses because the current spot prices of aluminum products have dropped below the level of their production cost.

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