Resignations at Chalco

Aluminium Corporation of China Limited (Chalco) chairman Ge Honglin has resigned. The company’s vice president Qiao Guiling also quit on the same day. Their departure follows Chalco CEO Luo Lanchuan and Vice CEO/CFO Xie Weizhi who both departed at the end of 2015, just 6 weeks prior.

Mr Ge’s resignation was unexpected by the marketplace.

Mr. Ge was previously mayor of Chengdu city before he joined Chalco. When he joined Chalco in October 2014, there were many who questioned the wisdom of appointing a politician to the Board.

The company’s announcement to the Hong Kong stock exchange provided no explanation for Mr Ge’s departure, but for Ms Qiao it said the resignation was for workload reasons.

The loss of 4 senior people is not a good sign for the company. Chalco has been struggling to achieve profit for several years now, and in the process has sold off valuable assets, using the proceeds to book paper profits. The price of aluminium in China has dropped to a floor of around RMB 11,000 per ton, while the average cost of production for Chalco’s smelters has averaged more than RMB 13,000 per ton. The company is receiving handouts from at least one provincial government, and in their previous financial statement reported government handouts were worth more than the gross margin from selling aluminium (RMB 800 million versus RMB 600 million.)

It is interesting that Chalco chose not to announce Mr. Ge’s departure on the Chinese version of their website, only on the English version. When a chair person leaves after only 16 months, it raises questions, especially since the corporate announcement gave no reason for his departure. We checked the CCDI website to see if he was the subject of a corruption investigation, but there is nothing there.

On the same day as the resignations were accepted - February 16 - the Board nominated Yu Dehui as a non-executive Director. Mr. Yu joined Chalco one month ago. He was previously Deputy General Manager in China Power Investment Group. People in the industry say Mr. Yu might take the position as chairman of Chalco in the future. Perhaps we are seeing the early signs of amalgamation with other State Owned Enterprises.

The feature image is of Mr Ge.

Editor’s note: It has since been pointed out to us that Mr Ge resigned from Chalco but remains on the board of Chinalco, and is performing full normal duties.