Daily Archives: July 12, 2010
No sooner did I publish my thoughts on Chalco, than I received this piece from Bloomberg, from a friend of mine, Peter. Peter’s comment was “the beginning of the end?”
The article mentions RMB14.6 billion for capital expenditure. That’s about US$2.1 billion. They are building 1.7 million tonnes of smelting capacity, all due for completion by the end of next year (plus another million still on the drawing board). Then there is the new foil plant in Chengdu, plus the regular capital needed at each of their plants. Oh, and I haven’t mentioned alumina refineries, and grand plans in Saudi Arabia, but rule out Aurukun from the list. The bankers can expect a few more calls.
Aluminum Corp of China, the country’s largest maker of the metal, will seek bank loans after an equity market decline forced it to delay share sale plans.
The deadline for a planned sale of yuan- denominated shares in China would be pushed back by a year from August 23, the Beijing- based company said yesterday.
Chalco, as the company is known, had earlier won approval from the China Securities Regulatory Commission to sell up to one billion shares.
The benchmark Shanghai Composite Index is down 26 percent this year, after Beijing introduced measures to curb property prices and the European sovereign debt crisis roiled markets globally.
Aluminum prices have dropped below the costs of production, putting pressure on smelters, Chalco president Luo Jianchuan said last month. “The current market conditions are not favorable for the share sale and the company will seek bank loans,” said Shen Hui, a spokeswoman.
Chalco rose 4.9 percent to close at HK$5.99. In Shanghai, the stock rose 1.8 percent to 8.74 yuan. The firm is increasing capital expenditure by 36 percent to 14.6 billion yuan (HK$16.49 billion), chairman Xiong Weiping said in March.