Aluminum Corporation of China (Chalco) plans to buy and then de-list two Shanghai-listed units in its move to restructure its assets before its domestic listing.

The mainland's largest alumina producer will issue A-shares to get funds to buy out aluminum smelter Lanzhou Aluminum and alumina-maker Shandong Aluminum Industry, the official Shanghai Securities News said yesterday, quoting unidentified sources.

The State-controlled Chalco aims to float A-shares in the domestic market, and then both the units would be de-listed, it said.

"That's a good move. An A-share issue should be good for the share price, but near-term earnings-per-share dilution remains a concern," the Daiwa Securities' equity research analyst said.

An industry source close to Lanzhou Aluminum confirmed the deal between the company and Chalco. "The plan was for Chalco to buy Lanzhou's shares... and make it into its subsidiary," the source said.

Chalco now holds 71.43 per cent stake in Shandong Aluminum, but just 28 per cent in Lanzhou Aluminum, based in Northwest China's Gansu Province.

Earlier this year, the State-owned Asset Supervision and Administration Commission of Gansu Province agreed to transfer the 14.65 per cent stake that it owned in Lanzhou Aluminum to Chalco.

Chalco would therefore become Lanzhou Aluminum's largest shareholder, with 42.65 per cent stakes, after the transaction.

Trading in Shandong and Lanzhou Aluminum shares was suspended from November 28 to December 1, pending approval of their individual share conversion plans that would entail getting cash or stock and major assets restructuring, the companies told the Shanghai Stock Exchange in separate statements.

Companies across the mainland have been undergoing a multi-year share reform aimed at converting government-held stocks in listed companies into freely tradable shares.

Like other metal firms that have been using share reforms to consolidate and simplify their structures, Chalco too hopes to overhaul the shareholding structures of the two Shanghai-listed companies after buying them out.

In September, however, minority shareholders of Shandong Aluminum rejected a 2.5-for-10 bonus shares' proposal because they wanted Chalco to come up with a better offer for privatising the company.

About 66 per cent of Chalco's issued shares are now unlisted A-shares, owned by its parent company Chinalco and other investors. The rest are listed in Hong Kong.

The world's second largest alumina-maker's production of the metal was reached 2.26 million tons in the third quarter, up 27 per cent year on year. Its average selling price reached 4,037 yuan ((US$505) a ton, an increase of 7.7 per cent year on year.

Chalco's shares remained flat at HK$6.25 yesterday.