Metallic dreams

Chongqing municipality will become China's premier aluminum-processing hub if the western municipality gets two new production lines, but it's no sure thing.

A possible deal remains up in the air, though the municipal government is said to be pressing hard to seal it.

During the 2008 Economy Working Conference held in January, Chongqing municipal officials say the city will be pulling out all stops to assist Chongqing-based Southwest Aluminum (Group) Co Ltd (SWA), a subsidiary of Aluminum Corporation of China (Chinalco), in building two more aluminum processing lines by the end of 2012.

If the two lines could be put into operation, SWA could expand its annual processing capability from its current 630,000 tons into 1.2 million tons. It would make SWA the largest aluminum processing company in the world, surpassing the top two global players - United States Aluminum and Aluminum Canada whose capability is 1.1 million tons and 1 million tons respectively.

SWA is currently the largest aluminum processing company in China. In 2007, the company's sales volume hit 600,000 tons, increasing by over 16 percent year-on-year, and its revenue grew by 24.22 percent compared with 2006, reaching 15.9 billion yuan.

In Chongqing, SWA is popular with the municipal government for the handsome revenue and tax base it generates, but this is not where the governmental goal ends.

In March 2006, Chongqing municipal government signed a cooperative agreement with the Chinalco where the two said they had a mutual goal of building the municipality into the nation's aluminum processing hub within eight to 10 years.

Under the agreement, while the government promised to design preferential policies tailored for the aluminum companies, including SWA, the Chinalco also agreed to further assist Chongqing when it comes to its national business expansion.

Two more aluminum-processing lines for SWA would obviously help Chongqing meet its "national aluminum capital" goal.

But it is still too early to predict whether Chinalco will approve the investment because there are also other subsidiaries under the Chinalco umbrella in the provinces of Shandong, Shanxi, Guangxi, Henan and Guizhou, besides SWA.

Chongqing municipal government is cautious about the progress of the deal.

"We would not like to give any comment until it is announced," Wu Yikun, director of Administration of Metallurgical Industry under Chongqing Economic Commission, was recently quoted by China Business News as saying.

Moreover, "Chinalco has its own corporate strategy, it is hard to say whether the lines could be located here or not, but we are doing what we can to make this happen," he adds.

A spokesperson for Chinalco was not available for comment.

Not just aluminum

It's not only about aluminum however. The Chongqing municipal government is also mulling over plans to expand the city's production capability for steel and silicon as part of its five-year plan (from 2008 to 2012).

Last month, the municipal government approved a plan proposed by Chongqing Iron & Steel (Group) Co Ltd for expanding its annual capability from the 3.5 million tons in 2007 to 6.3 million tons when a new site is built in 2011.

The move comes on the heels of the discovery of an enormous iron ore deposit of 100 million tons in Wushan county of Chongqing late last year.

When the ore field comes into operation, it will save steel companies considerable amount of money as they usually import their raw materials.

As for the silicon industry, the government has partnered with the Hong Kong-based Art Textile Technology International Co Ltd in 2005, both of which will jointly develop a quartz mine in Yunyang county with an investment of 1 billion yuan. The mine will annually produce silicon products weighing about 1,000 tons, turning Chongqing into one of the nation's largest bases in China's silicon industry.

(China Daily 03/10/2008 page10)