Aluminum Corporation of China (Chalco), one of the largest alumina producers in the world, plans to greatly lift its production in the coming years to cope with burgeoning demand.

Production of aluminium will be boosted to 1.5 million tons and alumina to 7.27 million tons by 2005, Guo Shengkun, Chalco chairman, said yesterday.

He expected aluminium production to reach 780,000 tons for the full year of 2003, compared with 740,000 tons in the previous year. He said the company's production of alumina, the raw material for aluminium, would be slightly higher than the targeted 5.7 million tons in 2003.

The company produced 2.86 million tons of alumina in the first half, up 8.7 per cent from a year earlier. It also produced 376,000 tons of primary aluminium products for the period, up 2.7 per cent.

"We anticipate growth in domestic demand to continue to outstrip supply," Guo told reporters at a press conference.

According to the company, the domestic demand for alumina in the first half amounted to 5.3 million tons with a shortage of 2.4 million tons.

Chalco is currently selling alumina at 2,950 yuan (US$356) per ton on average. Guo said the price was up 48 per cent from last year. He added that the price for alumina would be adjusted for the next half, but it would not be lower than 2,600 yuan (US$314) per ton.

Guo said that in the aluminium market, domestic demand rose 26 per cent from a year earlier, while aluminium prices also went up modestly in the first half. He said the prices for aluminium products would be at around 145,000 yuan (US$17,000) per ton.

"The domestic alumina price is expected to be sustained at relatively high levels, while the average price of aluminium is likely to remain stable," Guo said.

Strong demand and higher product prices pushed up Chalco's net profit by 175 per cent to 1.58 billion yuan (US$191 million) for the first half of 2003. Total revenue of the company and its subsidiaries amounted to 10.57 billion yuan (US$1.28 billion), up 28.1 per cent. Net profit margin increased by 8 percentage points to 15.2 per cent.

Guo said the company would like to take advantages of the current situation for expansion.

"While consolidating and enhancing our competitiveness, we will also continue to expand our operations in order to maintain our leading position in the mainland's aluminium industry," he said.

He said the company would actively look for acquisition opportunities.

Chalco had earlier set up a joint venture with Zhangze Power and it had reached an agreement to set power preferential tariffs with the local governments of Yichang, Guizhou and Qinghai.

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