Alcoa set to take major stake in JV

Updated: 2011-09-16 10:10

By Zhang Qi (China Daily)

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Alcoa set to take major stake in JV

The headquarters of Alcoa in Pennsylvania. The company will take the majority of the equity in a joint venture with the State-owned China Power Investment Corp, to cash in on China's growing demand in the high-end fabricated aluminum market. [Photo / Agencies]

Aluminum producer hopes to cash in on increasing demand in China

DALIAN, Liaoning - Alcoa Inc, the world's largest aluminum producer, will take a majority equity share in a joint venture with the State-owned China Power Investment Corp, to cash in on the nation's growing demand in the high-end fabricated aluminum market, Alcoa's Asia-Pacific President Chen Jinya said on Thursday.

The joint venture, as yet unnamed, intends to produce high-end fabricated aluminum products in the areas of commercial transportation, consumer electronics, packaging, areospaces and automotive, according to Chen.

The companies signed a letter of intent on Wednesday to form the joint venture that will focus on producing high-end fabricated aluminum products.

The two parties signed a Memorandum of Understanding in January, pledging close collaboration in the fields of mining, refining, smelting, fabrication and engineering in the global arena.

Chen said Alcoa would have the majority equity in the joint venture, without disclosing details of the investment terms.

China is building large aircraft, of which 80 percent is made from aluminum products, significantly driving the country's aluminum demand.

Aleris International Inc, the world's third-largest aluminum supplier, earlier predicted that consumption of aluminum plate by global aircraft makers may rise 15 percent a year, propelled by China's first large passenger plane - the C919 - built by Commercial Aircraft Corporation of China.

Demand for aluminum in China, the world's largest consumer of the metal, has grown by 12 percent this year, and will more than double over the next decade, Chen said.

In July, Alcoa reported that second-quarter profit more than doubled, driven by continued growth in prices and sales volume.

Meanwhile, aluminum prices jumped 24 percent in the second quarter, according to the London Metals Exchange.

"We see global aluminum demand rising, mainly because of the pull from the emerging markets. China is a driving force of that demand," said Alcoa's Chairman and CEO Klaus Kleinfeld in an earlier interview with China Daily.

"We have seen many opportunities in China's aerospace, automotive, home appliance, consumer electronics, commercial transportation and power generation industries," he said.

China's 12th Five-Year Plan (2011-2015) will stimulate demand for aluminum from the railway infrastructure and see it rise by up to 55 percent, according to the aluminum consultancy

"If aluminum is extensively used in rail carriages as a replacement for steel, almost 20 percent of the weight would be reduced, which means more goods can be shipped without an increase in the number of locomotives or speed," said Kleinfeld.

He also said Alcoa plans to further increase its use of clean energy, especially from hydropower plants. More than 30 percent of Alcoa's energy is powered by clean-energy sources.

Global demand for aluminum from the auto industry will increase by 25 percent by 2015, according to Phil Martens, CEO of the Canadian aluminum producer Novelis Inc, in quotes published by Reuters on August 18. Martens predicted that electronics industry consumption of aluminum will grow by 10 percent to 15 percent and consumption by tin can producers will rise by 4 to 5 percent over the same period.