Chalco Swings to ‘Substantial’ Loss in 2012 on Lower Prices

Aluminum Corp. of China Ltd., the nation’s biggest producer, said it swung to a full-year net loss on falling prices and higher costs for alumina, which is used to produce the lightweight metal.

The Beijing-based company will report a “substantial” loss for 2012, compared with net income of 238 million yuan ($38.2 million) in 2011, according to a filing to the Shanghai stock exchange yesterday, which didn’t provide 2012 numbers. Aluminum Corp., also known as Chalco, usually announces complete earnings in March.

Aluminum prices dropped about 7 percent last year. Limited supply of bauxite, a raw material, led to a 4 percent increase in costs for alumina production, Chalco said yesterday. The producer of aluminum, used in cars and beverage cans, posted a 1.08 billion yuan third-quarter loss in October, compared with a profit of 555 million yuan a year earlier.

The company will continue to lower costs by increasing self sufficiency in mining and power generation and streamlining purchasing, it said in the statement. Chalco’s investments in coal and power projects will help improve profits, according to the statement.

Chalco shares gained as much as 2.4 percent before trading 0.5 percent higher at HK$3.77 in Hong Kong as of 10:39 a.m., while the benchmark Hang Seng index rose 1 percent.

The aluminum producer may announce a net loss of 4.98 billion yuan for 2012, according to the average of 11 analyst estimates compiled by Bloomberg. The stock has 1 “buy” analyst recommendation, 17 “sell,” and 5 “hold,” according to data compiled by Bloomberg.

The company has sought to diversify into businesses such as coal and iron ore mining to reduce its dependence on aluminum smelting. Chalco dropped an offer to acquire a stake in Vancouver-based SouthGobi Resources Ltd., which mines coal in Mongolia, for C$925 million ($923.5 million) in September because it wasn’t able to get regulatory approval.

Chalco’s President Luo Jianchuan said in a November interview the company plans to build an alumina plant in Indonesia after the country imposed limits on the exports of some mineral ores, including bauxite, in May.

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