Chalco Plans to Shutter 330,000 Tons of Aluminum Capacity, Xiong Predicts

Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, plans to shut 330,000 metric tons of obsolete smelting capacity by 2011, Chairman Xiong Weiping said today.

The Chinese government wants to close down 1 million tons of obsolete capacity for the industry by 2011, Xiong said in an interview in Hong Kong today. The 330,000 tons target set by Xiong represents about 8 percent of Aluminum Corp.’s current capacity.

China, seeking to reduce energy intensity, has ordered more than 2,000 companies, including steel and aluminum producers, to shut obsolete plants by the end September. Chalco, as the Beijing-based company is known, said yesterday aluminum metal production in the country, the biggest maker, surpasses demand by 500,000 tons.

“In the past five years, China’s aluminum production has developed too fast,” Xiong said. “In the next three years, aluminum demand will increase as the economy grows and aluminum replaces other metals. I expect the 20-30 percent overcapacity will disappear.”

The company plans to build new low-cost facilities at Liancheng Aluminum Plant in Gansu, Xiong said.

--Xiao Yu. Editors: Tan Hwee Ann, Keith Gosman.

To contact the Bloomberg News staff on this story: Xiao Yu in Hong Kong at yxiao@bloomberg.net;

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