CHINA'S ALUMINIUM CORP SET TO TIGHTEN BELT

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 per cent 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.

He said Chalco would step up the integration of the domestic processors it acquired to increase profits so that they can make greater contributions to the earnings of the listed company.

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

Declining aluminum prices because of oversupply and a slowdown in demand growth in the past months have also squeezed the margins.

Xiao said the company would raise the proportion of self-produced bauxite ore to 50 per cent of the total material resources from the current level of 25 to 32 per cent, 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.

The total domestic output of electrolytic aluminum in 2008 is expected to increase 15.4 per cent to 14.5 million tons, which would exceed projected demand of 14 million tons by a small margin, according to Chalco figures.

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