CHINA’S largest state-owned aluminium producer is to invest $1bn in an alumina processing plant in Guinea, marking its first foray into overseas refining as Chinese companies race to secure raw material supplies.
Bloomberg News reports that Aluminum Corp. of China, known as Chalco, will establish a special-purpose entity to build a 1.2-million-ton-a-year facility in the West African nation. Guinea’s government will receive a 5% stake free of charge or at nominal cost, with the option to increase its holding to 35% at market value, the newswire said.
The investment deepens Chalco’s presence in Guinea, where it has operated the Boffa bauxite mine for the past decade, shipping the ore to feed smelters in China. The company said the alumina plant would help expand bauxite exports, without providing further detail.
Guinea is the world’s leading producer of bauxite, the ore from which alumina is refined before being processed into aluminium, said Bloomberg News. Its government has been pressing mining companies to develop in-country processing capacity as a means of generating broader economic returns from its mineral wealth.
Chalco is not alone in its African push. Rival China Hongqiao Group and other Chinese producers have been expanding into bauxite-rich countries to lock in upstream supply.
The investment remains subject to approval by Chalco’s shareholders and the Guinean government.
Chalco’s Hong Kong-listed shares rose 2.4% on Friday and have more than doubled over the past year. Aluminium prices have climbed 22% in London this year, boosted partly by supply disruptions stemming from the Middle East conflict, said Bloomberg.
