Sino-Russian Titanium Sponge Project Broke Earth

Aluminum Corporation of China (Chinalco), a leading aluminum and alumina producer in the country, has recently started construction of a titanium sponge project in Heilongjiang along with London-listed Aricom plc (LSE:ORE).

It will prove a perfect combination of Chinalco's capital, technology, management, and marketing advantage and Aricom's titanium assets in the Russian Far East, adjacent to the northeastern Chinese province of Heilongjiang.

The project will be constructed with a total investment of CNY 4 billion in two phases. The first phase, with an approximate investment of CNY 2.2 billion, is scheduled to start operation in 2010 and will be capable of turning out 15,000 tons a year.

The second phase, once completed, will drive up the project's annual production capacity to 30,000 tons, its annual sales to roughly CNY 4 billion, and its taxes to CNY 400 million.

Aricom will supply ilmenite, raw material for titanium sponge production, from its Kuranakh mine at Amur in eastern Russia, not far away from Heilongjiang, earlier report said.

In Heilongjiang, Chinalco has also been busy expanding its aluminum business. On September 9, 2008, it kicked off a 200,000-ton aluminum alloy sheet and strip production project in Northeast Light Alloy Co., Ltd. in Harbin, capital of the province.

The project, scheduled for completion within three years with a total investment of over CNY 5 billion, will consist of a 50,000-ton aluminum alloy sheet production line and a 150,000- ton aluminum alloy strip production line.

It is expected to bring a profit of CNY 400 million to Northeast Light Alloy, a large-sized aluminum producer established in 1952 and restructured by Chinalco in September 2007.

In the first half of this year, Chinalco suffered a lot from increasing production cost and comparatively low prices of major products. Its listed arm Aluminum Corporation of China Ltd. reaped net profits of CNY 2.4098 billion, slumping 65.42 percent from a year earlier.

The listed planned to distribute pre-tax dividends of CNY 0.052 per share, or about CNY 703 million in total, to its shareholders. Its operating revenues stepped down 7.14 percent year on year to CNY 39.607 billion, and earnings per share stood at CNY 0.178.

Chalco turned out alumina of 4.68 million tons with a year- on-year drop of 3.3 percent. Its alumina chemicals output rose 12.8 percent to 560,000 tons and primary aluminum output jumped 14.3 percent to 1.52 million tons.

Ended June 30, 2008, its total assets amounted to 120.526 billion, compared with CNY 105.496 billion at the end of last year.

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