Chinese Online Class - Alcoa sells stake in China's Chalco for US$2 billion

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BIZCHINA / Center

Alcoa sells stake in China's Chalco for US$2 billion

(Agencies)
Updated: 2007-09-13 12:42

Alcoa Inc, the biggest US aluminum producer, has sold its nearly 7
percent stake in China's largest aluminum maker for US$2 billion.

Pittsburgh-based Alcoa said Wednesday it will continue to invest in the
aluminum industry in China, where it first opened offices in 1993 and
currently manufactures foil, fasteners, automotive components and other
products.

Alcoa had been an investor in Aluminum Corporation of China Ltd, also
known as Chalco, since the Chinese company's initial public offering in
2001. Its initial investment was less than US$200 million.

The company sold its interest for the equivalent of US$2.23 a share, a 15
percent discount to Wednesday's closing price on the Hong Kong Stock
Exchange.

The shares were marketed in Hong Kong and Europe and purchased by 20 to
25 major institutional buyers, according to Alcoa spokesman Jake Siewert.
The sale was handled by Goldman Sachs.

"We normally do not act as financial investors, but we participated in
the Chalco IPO six years ago to help facilitate its entry into the
capital markets," Alcoa's chairman and chief executive, Alain Belda, said
in a statement.

"Over the past seven years Chalco has become firmly established in the
equity market so our role as a financial investor is no longer needed,
and we can redeploy our capital into other value-adding options,
including projects in China," he said.

Alcoa has an ongoing share buyback program and has outlined plans to
maintain its debt-to-capital ratio and invest in other projects in China
and elsewhere. The sale will appear as a gain in Alcoa's third quarter
earnings, to be reported in October.

Alcoa's commitment to China has "never been stronger," Belda said, adding
that the company looks forward "to continuing to work with our partners
and Chalco to help the industry realize its great potential."

The company said it was spending US$300 million to expand its Bohai
rolling mill in Qinghuangdao, a coastal city east of Beijing.

Alcoa has formed several joint ventures in China in recent years as part
of an effort to expand its presence there.

China is the world's biggest producer and consumer of aluminum, with
output at 9.3 million tons of primary aluminum in 2006, up from 3.4
million tons in 2001.

Alcoa has 116,000 employees in 44 countries. It was the world's largest
aluminum producer until earlier this year, when it was surpassed by
Moscow-based United Company Rusal, which was formed in a three-way merger.

Alcoa shares fell 55 cents, or 1.6 percent, to close at US$33.65 in
trading Wednesday.

(For more biz stories, please visit Industry Updates)

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