Chinalco Isn¡¯t Considering Anglo Business Partnership

Aluminum Corp. of China, the nation’s biggest producer of the metal, said it isn’t considering a business tie-up with Anglo American Plc, after news reports this year that the two sides were planning talks.

“Chinalco isn’t considering any possible cooperation with Anglo American,” Xiong Weiping, chairman of the state-owned company, said at an industry conference in London today.

Anglo planned to begin talks with Chinalco, as the Chinese company is known, about investing in a Brazilian iron ore business, the U.K.’s Sunday Telegraph reported on June 28. London-based Anglo was trying to boost funding for its $3.6 billion Minas-Rio iron ore mine in Brazil and may seek a partner to invest, people familiar with the plan said June 24.

Anglo gained full control of Minas-Rio after paying $5.5 billion last year to acquire iron ore mines controlled by Brazilian billionaire Eike Batista. Iron ore demand has fallen since then after global steelmaking slumped. Anglo also cut capital spending by more than half to about $4.5 billion this year and suspended its dividend as commodity prices plunged.

The company “wouldn’t be surprised” if it received an offer for a stake in Minas-Rio, James Wyatt-Tilby, an Anglo spokesman in London, said June 29. He wasn’t immediately available for comment when Bloomberg called his office today.

The Chinese government is urging Chinalco to invest in mines or mining companies overseas to secure minerals the nation needs such as copper and iron ore.

Rio Rejection

After its $19.5 billion investment in Rio Tinto Group was rejected in June, Chinalco held talks to invest in mineral projects in Western Australia state, Xiong said on July 23. The company bought Peru Copper Inc. and 49 percent of Yunnan Copper Group Co., China’s third-largest producer, in 2007.

China consumes more than half of its aluminum in buildings and automobiles and the country may surpass the U.S. as the world’s largest automobile market this year.

“Overcapacity in the production of aluminum in China may keep prices of the metal from rising,” Xiong said today.

“Given the current global situation, aluminum prices now are fair,” he said. “We are confident of returning to profit in the second half as the economic situation picks up.”

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