Chalco to sell $1.3 billion of assets mainly to parent company

Aluminum Corp. of China Ltd., the nation’s biggest producer of the lightweight metal, said it will sell about 8.18 billion yuan ($1.3 billion) of assets, including production plants, mainly to its parent.

The Beijing-based company, called Chalco, also plans to sell $1 billion of perpetual bonds overseas and will eliminate the position of chief executive officer, with the chairman and president taking over those functions, according to Hong Kong and Shanghai stock exchange filings yesterday.

The sale of stakes in its aluminum-fabrication units will “optimize the asset structure, lower the debt-to-asset ratio and improve the debt portfolio of the company,” Chalco said in two of the filings. This will let the “company focus on the development of quality resources” and the high end of the value chain, it said.

Chalco has posted net losses for six straight quarters, according to data compiled by Bloomberg, including a 975 million-yuan in the three months through March 31. The company is unlikely to deliver an operational turnaround amid weak metal prices and cost challenges, Barclays Plc analysts led by Ephrem Ravi said in March.

The company plans to sell the alumina assets of its Guizhou branch, valued at 4.43 billion yuan, to parent Aluminum Corporation of China, or Chinalco, because the Guiyang city government has shifted the designation of the plant’s district to commercial from industrial, according to a company filing.

Chalco said it will build a new alumina production line, which will have “certain cost advantages” and Chinalco can develop the former plant site.

The company said in a separate filing that it also plans to sell the assets of its aluminum fabrication unit in northwest China, valued at 1.66 billion yuan, to Chinalco.

Chalco will offer stakes in eight more aluminum fabrication units on the China Beijing Equity Exchange, it said in another statement and Chinalco has informed the company that it plans to bid. The asset value from those units attributable to the company is 2.09 billion yuan, Chalco said.