Chalco's 8.18 billion yuan aluminum assets sale unveils industry dilemma

Metal Recycling News  |  2013-05-15 03:29:17   |   By

The country's biggest aluminum producer-Chalco intends to sell its stake in several aluminum processing units, mainly to its parent company-Chinalco

BEIJING (Scrap Monster) : The country’s biggest aluminum producer-Chalco intends to sell its stake in several aluminum processing units, mainly to its parent company-Chinalco. The company plans to pull out of aluminum processing sector which has been running in deep losses for several quarters now.

Chalco has announced its decision to transfer stakes in eight aluminum processing subsidiaries, mainly to its parent. The eight listed subsidiaries are Chalco Henan Aluminum Co, Chalco Southwest Aluminum Sheet Co, Chalco Southwest Aluminum Cold Rolled Sheet Co, Huaxi Aluminum Co, Chalco Ruimin Aluminum Sheet Co, Chalco Qingdao Light Metal Co, Chalco Sapa Special Aluminum Products (Chongqing) Co and Guizhou Chalco Aluminum Co. The eight subsidiaries are together valued at 2.09 billion yuan.

Earlier the company had announced its decision to sell off its Northwest branch valued at 1.66 billion yuan and the production line facility at Guizhou which is valued at 4.43 billion yuan.

Chalco has posted losses for six straight quarters. The net loss of the company during the first quarter of the year totaled 975 million yuan. Analysts believe that Chalco’s decision to exit the draining aluminum assets may bring down the company’s losses and help them concentrate on the high-value products.

Chalco plans to build cost-effective production lines and focus on higher-value areas such as alumina and electrolyzed aluminum in order to optimize assets and trim down the debt burden.  The global aluminum industry is seen to be under the tight grip of low prices and overcapacity issues.