26 February
Beijing,
Dow Jones

BEIJING (Dow Jones)- Aluminum Corp. of China, or Chinalco, said Monday it will sell its controlling stakes in six aluminum units for at least CNY4.17 billion (US$583 million).

China’s biggest alumina and aluminum producer by output didn’t give a reason for the stake sale, but analysts said the plan was in line with the company’s aim to restructure its aluminum operations.

Chinalco said the closing date for bids is May 13.

Aluminum Corp. of China Ltd. (ACH), the listed unit of Chinalco, will join the bidding, said a Chalco official, who declined to be named.

Bidders must be state-owned firms with registered capital of at least CNY10 billion and net assets of more than CNY50 billion, Chinalco said.

They must also be alumina and aluminum producers that have been in operation for at least five years.

Chinalco said overseas-listed firms will have priority in the bidding.

Analysts said Chalco is the most likely winner of the bidding.

Chalco said last year that it will gradually aquire the aluminum smelters and aluminum-processing companies of its parent.

Its smelter acquisition targets are Shanghai-listed Baotou Aluminum Co. (600472.SH), Lanzhou Liancheng Aluminum Co. and Tongchuan Xinguang Aluminum Co., while the four processing companies are Southwest Aluminum (Group) Co., Chinalco-SWA Plates & Strips Co., Chinalco Ruimin Co. and Chinalco Henan Aluminum Fabrication Co.

"This share purchase could help Chalco to consolidate its aluminum business chain and strengthen Chalco’s processing operations, as most of these units are processing plants," said Zheng Dong, an analyst at Guosen Securities.

However, it remains unclear how Chalco will raise the funds for the purchase, analysts said.

Zhang Fang, a metals analyst at China Securities Co., said the market had expected Chinalco to inject its aluminum and alumina assets into Chalco rather than selling them at auction.

Chinalco will sell an 84% stake in Henan Aluminum Fabrication Co. for CNY792.9 million; 56% of Huaxi Aluminum Co. for CNY302.9 million; 100% of Liancheng Aluminum Industrial Co. for CNY1.865 billion; 75% of Chinalco Ruimin Co. for CNY519.1 million; 100% of SWA Cold Rolling Strip Co. for CNY119.6 million; and 60% of Chinalco-SWA Plates & Strips Co. for CNY574.3 million.