Aluminum Corp of China Ltd announced a plan on Thursday to bring up to 16 billion yuan ($2.41 billion) of investment into five of its subsidiaries after posting a more than 10-fold rise in nine-month net profit.
Chalco, the listed arm of China’s biggest state-run aluminium firm Chinalco, said its net profit for the January-September period rose to 1.36 billion yuan from 124.27 million yuan a year earlier, boosted by soaring aluminium prices.
Nine-month revenues were up 52.5 pct at 139.9 billion yuan, the company said.
Chalco plans to bring in external investors to invest up to a total of 16 billion yuan in five of its subsidiaries, it said in a separate stock exchange filing.
The units, all currently 100 percent owned by Chalco, were named as Chalco Shandong, Chalco Zhongzhou Aluminum Co., Baotou Aluminum Co, Chalco Mining and Chalco Gansu Aluminum Electricity Co.
Chalco Shandong and Zhongzhou Aluminum both produce alumina, according to the filing, while Chalco Mining’s activities include bauxite mining. Both substances are raw materials for aluminium production.
“At present, the company is implementing the relevant decision-making procedures and has not yet entered into any formal agreement with investors,” Chalco said, adding that it would continue to have “substantial control” over the subsidiaries after the external investment.
It gave no indication of who the third-party investors making the capital contribution would be, but said their investment would not constitute a material asset restructuring under Chinese securities regulations.
In another statement, Chalco said it would transfer a 60 percent interest in another wholly owned unit, Chalco Shandong Engineering Technology, to China Aluminum International Engineering Corporation Ltd, a subsidiary of its parent.
The announcements appear to partly clarify why trading in Chalco’s Shanghai shares has been suspended since Sept. 12, pending a major plan.
Earlier this week, Chalco said the plan “involves issuance of shares for purchase of assets” and that the target assets “were preliminarily determined to be certain equity interests of the company’s subsidiaries.”
Chalco’s Hong Kong-traded shares are up more than 100 percent year-to-date as the company reaps the rewards of higher aluminium prices, which have risen by some 20 percent on the Shanghai Futures Exchange so far this year.
Separately, Chalco said it had agreed to raise the caps on financial services provided by Chinalco Finance. Under the new agreement, the maximum total daily balance of loans provided to Chalco is raised from 10 billion yuan to 15 billion yuan. ($1 = 6.6340 Chinese yuan renminbi) (Reporting by Tom Daly and Meg Shen; Editing by Lee Chyen Yee and Adrian Croft)