Yunnan Aluminium Co Ltd, China's third largest aluminium smelter by output, will raise metal production by 18 percent this year following a capacity expansion, a company official said on Thursday. "We plan to produce 380,000 tonnes of primary aluminium in 2006," Zhang Wenwei, the company's board secretary, told Reuters.
That output will be about 3.3 percent of China's production, which is forecast by Beijing at 11.6 million tonnes this year. The firm produced about 320,000 tonnes last year. Yunnan has expanded capacity to 400,000 tonnes of primary aluminium, from 350,000 tonnes last year, Zhang said. Higher power costs would be more than offset by falling prices for alumina, the raw material for aluminium, he said.
China raised power fees last Friday, driving up the average retail cost of electricity by 0.025 yuan per kilowatt hour nation-wide. Smelters need about 15,000 kilowatt hours of electricity and two tonnes of alumina to produce one tonne of aluminium. "I don't think the slight hike would damage the company's profit, while I believe the price fall in alumina will contribute a lot to our net profits this year," Zhang said.
The company's net profit rose 53 percent on year to 37.15 million yuan in the first three months of this year. Spot prices for imported alumina in China, the world's largest spot importer, fell 18 percent in June after domestic output rose 49 percent in the first five months of the year. Yunnan buys alumina from domestic and overseas markets. Shares of Yunnan Aluminium closed at 6.70 yuan on Thursday, up 14 percent from a week earlier.