SHANGHAI The drive for
industry consolidation and restructuring by Chinas
leadership is expected to benefit big companies, such as
Aluminum Corp. of China Ltd. (Chalco), according to market
On Jan. 22, the countrys
Ministry of Industry and Information Technology (MIIT), the
National Development and Reform Commission (NDRC) and 10 other
ministries set out guidelines for the future structure of nine
industries, including aluminum, rare earths and steel.
According to the guidelines,
China aims to have a few aluminum business conglomerates with
"core competitiveness and international influence" by 2015, and
have the top 10 smelters accounting for 90 percent of the
countrys total production capacity.
"The reason why governments want
to stress this again (is) new leadership will do more reform.
... This policy will not immediately change the near-term
supply landscape (but) it is encouraging to see the government
once again become determined to tackle the issue," Helen Lau, a
senior analyst at UOB Kay Hian (Hong Kong) Research Ltd., said
in a report.
"This is undoubtedly good news
for big companies like Chalco, as it is paving the way for
their mergers and acquisitions," according to an analyst at
Shanghai Metals Market Information & Technology Co. Ltd.
Other likely players in
consolidating Chinas aluminum industry are smelters in
Henan province, where combined production of the lightweight
metal would be higher than Chalcos.
To meet the target of the top 10
smelters accounting for 90 percent of national capacity, "major
smelters in Henan province may have to be merged into one, as
China has dozens of smelters of that similar size," a second
SMM analyst said, adding that such talk had been initiated
Henan is Chinas largest
province for aluminum production, with the major five companies
being Zhongfu Industrial Co. Ltd., Shenhuo Group Co. Ltd.,
Jiaozuo WanFang Aluminum Manufacturing Co. Ltd., Henan Wanji
Aluminum Co. Ltd. and Henan Yugang Longquan Aluminum Co.
All of these companies have an
annual capacity ranging from 700,000 to 800,000 tonnes,
according to SMM statistics.
Zhongfu is publicly traded on the Shanghai Stock Exchange,
while both Shenhuo and Jiaozuo are listed on the Shenzhen Stock
A version of this article was first
published by AMM sister publication Metal