From page 27, Corporation, issue 395, Nov 24, 2008
Original article:[Chinese]

Aluminum Corporation of China (CHINALCO), China's state-owned aluminum producer, was seeking to raise RMB 60 billion as the global economic climate worsened.

"So far we have had 40 to 50 billion yuan in our account. The rest will be raised in the near future," Lu Youqing, CHINALCO's vice president, told the Economic Observer.

He said the fund would be spent to upgrade equipment, improve safety and environmental protection, and increase the company's oversea resource reserves.

However, an analyst who wished to remain anonymous said CHINALCO was more likely to use this fund for oversea acquisitions. Buying increasing stakes in Rio Tinto, a multinational mining and resources magnate, may be put on its agenda once again. But he doubted if the company would take action very soon.

Lu recently remarked that the next six months would be the best time for CHINALCO to seek acquisition opportunities overseas.

"There will be a lot of opportunities [for acquisitions] in the future, as prices for some assets are bound to drop. Some may even decline to a level lower than in 2000. So if you have enough cash in hand, you can seize more opportunities," he said.

In late October, Lu told the EO that when the time was appropriate, CHINALCO would be willing to up its shareholdings in Rio Tinto's UK-listed branch company from the previous 12% to 14.99%.

This February, CHINALCO and ALCOA, the US aluminum giant, jointly purchased 12% of Rio Tinto's shares at USD 14.05 billion.

Asked where the company raised the fund, Lu declined to comment in detail on grounds of business secrecy. He said there could be various sources, including cash from routine business activities and financing from the capital markets.

According to official data, CHINALCO issued RMB 10 billion of medium-term notes between this June and October.

In the past two months, the company has been struck by the depressed global economy. Thanks to the Lehman Brothers' collapse, its shares in Rio Tinto and a part of its cash flow almost vanished. Later, as the domestic economy slowed down, it reduced output for several times since mid-October.

CHINALCO saw sliding profits in the first three quarters of this year. Its third quarter financial report showed that its total revenues and net profits were down by 7.4% and 72.1% respectively compared to the same period last year.

CHINALCO is the largest primary aluminum producer and the only alumina producer in China.