Shenzhen Stock Exchange-listed Yunnan Aluminium has reached an agreement to acquire additional equity interests in three of its subsidiaries from Yunnan Metallurgical Group for about RMB 2.27 billion (USD 320 million) through a cash-based, non-public transfer by agreement, according to a related-party transaction announcement released by the producer on November 25.
Yunnan Aluminium itself is a subsidiary of state-owned Aluminium Corporation of China Limited (Chalco), whose 29.1 per cent share nonetheless gives Chalco majority control over the Kunming-based aluminium combine.
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Under the deal it has reached with Yunnan Metallurgical Group, Yunnan Aluminium will purchase a 28.7 per cent stake in Yunlv Yongxin, 27.3 per cent in Yunlv Runxin, and 30 per cent in Yunlv Hongxin, all of which are based in Yunnan.
After the transaction is completed (expected to cost RMB 2.27 billion), Yunnan Aluminum's shareholding in the three subsidiaries will rise to 96.1 per cent, 97.5 per cent, and 100 per cent. However, the company has not disclosed a specific acquisition timeline.
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Besides Chalco and minor shareholders, including Hong Kong Securities Clearing Co, Yunnan Aluminium's other shareholders include Yunnan Metallurgical Group, which holds a 13 per cent stake.
The acquisition aims to strengthen Yunnan Aluminium's equity-based primary aluminium capacity and increase net profits attributable to it, according to the announcement. The company can also expect to make savings by centralising back-office operations now undertaken separately by the three smaller firms under its control, Mysteel Global notes.
The deal will increase Yunnan Aluminium's attributable primary aluminium capacity by 154,500 tonnes, with the increase stemming from two of the three subsidiaries – namely, Yunlv Yongxin and Yunlv Runxin, which have a combined primary capacity of 550,000 t/y. In addition, Yunlv Hongxin will serve as the company's platform for expanding into bauxite development and operations.
As China strictly regulates nationwide primary aluminium production capacity, smelters can now only obtain additional primary aluminium capacity through 'capacity swaps' via mergers and acquisitions, internal transfers, or capacity quota trading, Mysteel Global learned.
Operating around 11 subsidiaries across the hydropower-rich southwestern province, Yunnan Aluminium currently has 1.4 million tonnes of alumina capacity, 3.05 million tonnes of primary aluminium capacity, and 1.6 million tonnes of aluminium alloy and processed aluminium products capacity, according to its 2024 annual results.
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