Aluminium Corp of China Ltd (Chalco), the world's second-largest alumina producer, forecast on Tuesday slowing growth in output in 2004, but vowed to double spending to accelerate growth in 2005 as demand surges.
Chalco said alumina output would rise 7.4 percent to 6.5 million tonnes from 6.05 million tonnes last year, slower than the 11.8 percent growth seen in 2003 as smaller amounts of new capacity come online.
Chairman Guo Shengkun told a news conference the company's 2004 aluminium production would be flat at 760,000 tonnes, after growing by one percent in 2003. But he said that might rise if Chalco buys more capacity during the year.
"It is expected the global economy will continue to recover and China's economy will continue to boom in 2004, which will drive strong demand for aluminium in many industries," Guo said.
Chalco's vice president Joshua Chen said the company would raise capital expenditure to 10.5 billion yuan ($1.3 billion) in 2004 and 10 billion yuan in 2005, from 5.3 billion yuan in 2003.
That doubling of spending will help Chalco increase alumina capacity by 31 percent to 8.5 million tonnes in 2005 to help meet a growing shortage in China, the world's fastest-growing major economy.
Shares of Chalco jumped 6.7 percent to HK$6.40 after it reported late on Monday that 2003 net profit rose 153 percent from a year earlier to 3.55 billion yuan (US$428.74 million) as robust China demand boosted alumina prices.
China's demand for alumina, the raw material for aluminium, rose to 11.88 million tonnes in 2003, up 30.5 percent over 2002.
Guo said Chalco expected China's alumina demand to reach 12.8 million tonnes in 2004, with imports at 6.3 million tonnes versus 5.6 million tonnes last year.
Guo said Chalco would acquire Baotou Aluminium Company in Inner Mongolia later this year. It would also buy other smelters this year to increase its annual capacity by 200,000-300,000 tonnes. He gave no further details.
In mid-2003, Chalco's state-run parent China Aluminium Co (Chinalco) bought Baotou, which is expanding capacity to 300,000 tonnes in 2005 from around 200,000 tonnes at end-2003.
Guo said Chalco had not received approval from the Chinese government for its planned 50:50 joint venture with the world's largest aluminium producer Alcoa Inc at its Pingguo plant, but that the application was being processed.
He said the Guangxi government had agreed the planned venture to buy a local power plant. The parties were negotiating terms of the power plant, he added.
"Chalco wants to participate in all new alumina projects in China in order to maintain a controlling stake in the domestic market," Guo told Reuters at the sidelines of a conference.
Guo said he did not want to elaborate on each project when asked whether it would take a 30-percent stake in China's East Hope's 1.05-million-tonne project in Henan and a possible project by the Nanshan Group in Shandong.
He said Chalco was building 800,000 tonnes-per-year of capacity in Shanxi, 700,000 tonnes in Henan and 300,000 tonnes at its Zhongzhou refinery after completing another 300,000 tonnes at the refinery last year.
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