DJ Chinalco Vice President: Company Has $8.78 Billion In Cash

Aluminum Corp. of China, or Chinalco, has about CNY60 billion ($8.78 billion) in cash for normal operational needs, company Vice President Lu Youqing said Thursday. 

The global credit crunch has prompted companies worldwide to shore up cash levels as a buffer against any future shocks. Lu didn't elaborate on Chinalco's cash levels, but said companies have to be prepared for challenges in an uncertain macroeconomic environment.

Chinalco, China's biggest aluminum and alumina producer by output, reiterated in a statement Tuesday it may plan to lift its stake in Rio Tinto PLC (RTP) after BHP Billiton Ltd. (BHP) dropped its takeover plan for Rio Tinto.

"Chinalco has not made any decision in respect of its investment options in Rio Tinto, including the possibility of increasing its holding above 15.00%," which would be in accordance with the approval previously given by the Foreign Investment Review Board in Australia.

The company "continues to have confidence in the fundamental value of the Rio Tinto Group and the management's strong ability to realize that value for all shareholders," Chinalco said.

In February, Chinalco and Alcoa Inc. paid $14.1 billion for 12% of Rio Tinto's London-listed stock, a move widely viewed as an attempt to stifle BHP Billiton's bid for Rio Tinto at the time. However, the value of the combined Chinalco-Alcoa stake has so far dropped about 74%.

Chinalco's listed unit, Aluminum Corp. of China Ltd. (ACH), or Chalco, said earlier this month it had idled 38% or 4.11 million metric tons of its total alumina production capacity because of low product prices. In October, the company said it had suspended 720,000 tons of aluminum production capacity due to weak demand and high costs.

Chalco's third-quarter net profit fell 92.9% from a year earlier to CNY182.9 million on lower product prices and higher raw material and fuel costs.

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