HONG KONG, July 7 -- Aluminum Corporation of China (Chinalco) will expand processing capacity of copper and rare metals over the next five years but not of aluminium, a top executive told Reuters on Tuesday.
China's top aluminium producer will rather upgrade existing smelting facilities for that metal and make more value-added products, Vice-President Lu Youqing said in an interview.
This is a shift for the company which had planned at the start of the year to focus on just copper.
"Copper and rare metals are our next development focus," Lu told Reuters.
"For aluminium, (we) would bring in new smelting technology and do more value-added products. (We) are not going to seek more (smelting) capacity," Lu said, adding the new technology was to reduce energy use.
State-owned Chinalco, the parent of Chalco, last week terminated an agreement to build an alumina complex in Australia.
Chinalco, controlling about 4 million tonnes of primary aluminium smelting capacity and over 10 million tonnes of raw material alumina capacity in China, is the majority owner of Yunnan Copper, the third-biggest copper smelter in the country. China is the world's top consumer of the metal.
Chinalco is also on track to develop a $2.2 billion copper mine in Peru, and is interested to invest on the Mongolian Oyu Tolgoi copper-gold project, partly owned by Ivanhoe Mines and Rio Tinto.
"We are continuing to talk with all possible relevant parties," Lu said, adding the parties included Rio and Ivanhoe. He did not provide a timeframe or whether there would be an agreement for Chinalco, which holds 9 percent of Rio's stock.
Chinalco's aluminium and alumina arm Chalco gave up an agreement, signed in March 2007, and to develop a bauxite mine at Aurukun and build an alumina refinery and related infrastructure in Queensland, Australia because Chinalco's studies showed that building costs would be a lot more than it had expected, Lu said.
He added lower alumina prices were also an important factor.
"There were two things. Investment would be much bigger than we previously predicted. Alumina prices have fallen by about half from the time the agreement was signed," Lu said.
But he added Chinalco had not given up the development of the bauxite mine and would continue to talk with the Queensland government on alternatives.
Chalco cut its spot alumina prices by 7 percent this month to 2,650 yuan per tonne after a 5 percent cut in June. This is against the firm's average sales price of 3,318 yuan per tonne in the first quarter of 2007.
Spot alumina traded around $430 a tonne in Asia in March 2007, much higher than $378 for a shipment sold by Indian producer NALCO in May this year.