Baotou Aluminum Co, China's fourth-largest aluminum smelter, plans to raise up to 700 million yuan (US$84.6 million) through an initial public offering (IPO) in Shanghai to develop higher value-added products.

The company would issue 140 million yuan-denominated A shares, open to select foreign investors, from April 12 to 22, it said in a prospectus published in the Shanghai Securities News on Wednesday.

The IPO would account for 32.5 percent of its expanded 431 million outstanding shares and reduce its parent's stake to 64.35 percent after the offer, it said in the prospectus filing to the Shanghai Stock Exchange. Proceeds would be invested in a project to produce 52,000 tons of rare-earth aluminum alloys and a 60,000-ton pre-baked anode project, the smelter said.

Its parent, Baotou Aluminum (Group) Corp, has won approval to transfer an 80 percent stake to Hong Kong-listed Aluminum Corp of China Ltd (Chalco), the world's second-largest alumina producer.

Chalco already owns stakes in Lanzhou Aluminum Co and Shandong Aluminum Industry Co.

Baotou said it was developing the projects to raise margins in the face of severe overcapacity in China's aluminum industry.

China's aluminum industry was crowded with 152 smelters with an average annual capacity of only 60,000 tons each, Baotou said in its prospectus.

China last year produced 6.7 million tons of the metal -- used in aeroplanes, construction and beverage cans -- but consumed only 5.97 million tons, exporting the rest.

Meanwhile, Chinese output of alumina, the key raw material for aluminum production, was only 7.04 million tons last year, forcing the country to import some 5.85 million tons to meet demand. Rising alumina and power costs cut into many smelters' margins last year.

Source: Shenzhen Daily
2005/03/31