Chalco’s 2016 net profit more than doubles; more investments in pipeline

Aluminum Corporation of China Limited (Chalco), a state-controlled leading producer of alumina and primary aluminium in China, reported its full-year result for the financial year ended 31 December, 2016. The aluminium giant's net profit more than doubled for the year under review. This marks the second straight year of improved profitability for Chalco which, the producer says is attributable to the recovery in global aluminium prices and production cost cuts.

Chalco, one of the world's biggest aluminium producers, posted a net profit of 402.5 million yuan (US$58.5 million) in 2016, up from 148.6 million yuan (revised) in 2015, it disclosed in a filing with the Shanghai stock exchange.

In the context of the improved global non-ferrous metal market, Chalco said it expects to leverage upon the buoyancy by investing in a number of aluminium value-added projects. The aluminium producer updated that it is planning to invest up to 700 million yuan in a light alloy joint venture project in Guizhou province of China with a total investment of 3.9 billion yuan.

Commenting on the performance Chalco said, "The increase in profit was mainly due to power reforms and stronger operations, which helped lower production costs of alumina and electrolytic aluminium products by about 12 percent and 17 percent respectively."

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Chalco announced its results along with its future plans on Thursday, March 23, after markets closed in Hong Kong and China. The increase in profits saw the company's shares in Honk Kong rising 1.3 per cent higher while the Shanghai stock closed 1.04 per cent up, outperforming broader markets.

Aluminium prices in 2016 trended higher by more than 10 per cent from the previous year. The gains have been continuing so far this year as well due to global aluminium smelter capacity cuts and infrastructure development projects in China, the top producer and consumer of the light metal in the world.