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Chinalco subsidiary reports first-half net loss

By Zhou Yan (China Daily)
Updated: 2009-08-26 07:53

Chalco, the dual-listed subsidiary of the Aluminum Corp of China, or Chinalco, reported a net loss of 3.52 billion yuan for the first six months of this year.

The subsidiary of China's largest alumina (aluminum oxide) producer also denied media reports that parent Chinalco is in discussions with Rio Tinto over bauxite and alumina production.

Listed on both the Hong Kong and Shanghai exchanges, Chalco's first-half net loss compares to a net profit of 2.39 billion yuan during the same period a year ago. Chalco's revenues dropped 29 percent year-on-year to 27.98 billion yuan.

Chalco President Luo Jianchuan said yesterday in Shanghai that the company met first-half challenges that included low metal prices and weak demand from lackluster aluminum-related property and vehicle markets.

The State-owned mining company produced 3.2 million tons of alumina from January through June, down 31.6 percent from the same period last year.

The price of the metal was down 38.34 percent year-on-year to 1,745 yuan per ton, which led to a loss of 2.04 billion yuan in the sector despite a 15 percent reduction in manufacturing costs.

The plunge of metal prices, which could not be offset by falling costs, resulted in a decline of 15.2 percent in the gross profit ratio of alumina, said Li Hongji, an analyst with Guosen Securities.

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The company said it expected to profit in the second half based on rising prices and recovering demand.

But the company did not elaborate on whether the anticipated growth would erase the losses of the first six months.

Luo said the domestic aluminum price is projected to hover around 14,000 yuan to 16,000 yuan in the second half.

Chalco, which failed to raise its stake in Anglo-Australian mining giant Rio Tinto to 18 percent for $19.5 billion in June, denied previous media reports that it is in talks with Rio Tinto to produce bauxite and alumina.

"We are willing to seek cooperation with international partners, including Rio Tinto," Chalco Chairman Xiong Weiping said.

"But we have no idea about previous Australian media reports about cooperation issues with Rio Tinto," Xiong said.

Chalco's A-shares sank 2.89 percent to close at 15.13 yuan yesterday.