Chalco to Cut 2.25 Billion Yuan of Costs in 2011, CEO Says

Aluminum Corp. of China Ltd., the country’s biggest producer of the metal, plans to cut 2.25 billion yuan ($342 million) in costs this year, Chief Executive Xiong Weiping said at a briefing in Hong Kong today.

Chalco, as the company is known, will cut costs by 300 million yuan by reducing consumption of raw materials and fuel. It will also cut 700 million yuan from procurement costs, Xiong told reporters. Technology upgrades, direct power purchases and expense controls will also help cut costs, he said.

Chalco posted a lower-than-expected 2010 profit yesterday as higher aluminum prices were undercut by coal, electricity and bauxite costs. Benchmark coal prices in China have gained more than 34 percent in the past 12 months, Bloomberg data shows.

Higher aluminum prices will help boost profit and improve gross margins, Chief Financial Officer Liu Caiming said today. Still, increasing inflation may raise operational costs, said Liu, who was appointed in February after Joshua Chen resigned.

Chalco closed down 1.2 percent at HK$7.29 in Hong Kong trading, the lowest since Jan. 17. In Shanghai trading, the stock fell 1.4 percent.

--Bei Hu and Xiao Yu. Editor: Alan Soughley.

To contact the reporter for this story: Bei Hu in Hong Kong at bhu5@bloomberg.net Xiao Yu in Beijing at yxiao@bloomberg.net;

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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