Chinalco to Cut Pay by as Much as 50% as Profit Drops

Aluminum Corp. of China, parent of the country¡¯s biggest producer of the metal, will cut executive pay by as much as 50 percent after profit slumped last year on declining metals prices, according to Vice President Lu Youqing.

Workers¡¯ wages will be reduced by 15 percent to pare costs, which may decline by a total of about 2 billion yuan ($293 million) because of the initiative, Lu said today in an interview from Beijing. There will be no layoffs, he said.

The global recession has undermined demand for metals including aluminum, dragging down prices and hurting producers¡¯ profits. Companies including Rio Tinto Group, the world¡¯s third- largest mining company, have announced thousands of redundancies to try to rein in costs and reduce debt.

The ¡°wage cut will benefit Chalco¡¯s earnings,¡± said Essence Securities Co. analyst Heng Kun, referring to the metal maker¡¯s listed unit, Aluminum Corp. of China Ltd.

Profit at Chinalco, as the Beijing-based parent is known, declined last year after aluminum and copper prices fell, Lu said by phone, without giving an audited figure. Sales dropped 2.3 percent to 128.7 billion yuan ($18.8 billion), he said.

Chalco, which slumped 84 percent in Shanghai last year, rose as much as 3.7 percent to 6.95 yuan, and traded at 6.87 yuan at 10:06 a.m. local time. Chalco, whose Hong Kong shares advanced as much as 4.9 percent, accounts for about 70 percent of Chinalco¡¯s headcount, according to analyst Heng.

¡°The nonferrous metals industry could face a more severe situation in the first half because of weak demand,¡± Lu said.

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