Chinalco to issue new shares

The Aluminum Corp of China Ltd, or Chinalco, plans to issue new shares through a private placement as a means of replenishing its cash reserves.

In a statement to the Shanghai Stock Exchange, the country’s biggest aluminum maker said it plans to raise 8 billion yuan ($1.3 billion) by issuing 1.45 billion shares. Of the money it gets from the transaction, 2 billion yuan will be used to replenish its cash reserves. The rest will go into production.

The decision was made after Chinalco recorded a operation-related cash flow of negative 1.8 billion yuan, indicating its ability to make profits is declining.

Chinalco lost 3.25 billion yuan in the first half of the year as China’s rate of economic growth decreased to a three-year low. From the end of 2009 to the end of June, it lost 6.86 billion yuan in total.