Chalco planning Mideast plants to reduce fuel costs



Oct. 20, 2006 (China Knowledge) – Aluminum Corp. of China (Chalco), China's largest aluminium producer, is in talks to build smelters in the Middle East to cut fuel costs with the rise of electricity tariffs in the mainland.

Chief financial officer Chen Jihua singled out electricity as a major cost in the production of aluminium and as the reason for building smelters in the Middle East. Chalco plans to take advantage of its affluent oil and gas resources to lower electricity bills, as it produces more aluminium abroad.

Beijing has already increased tariffs a few times this year to ease rising coal costs at power generators.

Electricity costs make up between 30% and 35% of Chalco's total aluminium production costs, depending on the price of the raw material, alumina.

Alumina is refined from bauxite and smelted into aluminium, which is used in the construction, automotive and packaging industries.

The plan to build smelters in the Middle East is part of Chalco's strategy to expand overseas and become one of the world's major aluminium players.

Chalco is also eager to invest in overseas bauxite projects to ensure supply over the next 10, 20 or even 50 years, and is already looking at bauxite resources in Vietnam, Africa and North America.