Chinalco to expand copper and rare metals over next 5 year

Reuters reported that Aluminum Corporation of China will expand processing capacity of copper and rare metals over the next 5 years but not of aluminium.

Mr Lu Youqing VP of Chinalco said that China's top aluminium producer will rather upgrade existing smelting facilities for that metal and make more value added products. This is a shift for the company which had planned at the start of the year to focus on just copper.

Mr Lu said that copper and rare metals are our next development focus. For aluminium, would bring in new smelting technology and do more value added products. We are not going to seek more capacity. The new technology was to reduce energy use.

Chinalco, controlling about 4 million tonnes of primary aluminium smelting capacity and over 10 million tonnes of raw material alumina capacity in China, is the majority owner of Yunnan Copper, the third biggest copper smelter in the country. China is the world's top consumer of the metal.

Mr Lu said that we are continuing to talk with all possible relevant parties. He said that the parties included Rio and Ivanhoe. He did not provide a timeframe or whether there would be an agreement for Chinalco which holds 9% of Rio's stock.

He said that Chinalco's aluminium and alumina arm Chalco gave up an agreement, signed in March 2007 and to develop a bauxite mine at Aurukun and build an alumina refinery and related infrastructure in Queensland, Australia because Chinalco's studies showed that building costs would be a lot more than it had expected. He added that lower alumina prices were also an important factor.

Mr Lu said that there were two things. Investment would be much bigger than we previously predicted. Alumina prices have fallen by about half from the time the agreement was signed. But Chinalco had not given up the development of the bauxite mine and would continue to talk with the Queensland government on alternatives.

Chalco cut its spot alumina prices by 7% this month to CNY 2,650 per tonne after 5% cut in June. This is against the firm's average sales price of CNY 3,318 per tonne in the Q1 of 2007.

(Sourced from Reuters)

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