Chinalco's Baotou Aluminium eyes capacity expansion

HONG KONG, Dec 15 (Reuters) - China's Baotou Aluminium Co. Ltd. aims at boosting smelting capacity more than 66 percent to more than 500,000 tonnes in the coming few years, a company official said on Friday.

The move would form part of a capacity boom at state-owned Aluminum Corp. of China, or Chinalco, which has said it aims to increase its smelting capacity to 5 million tonnes of aluminium by 2010, from 3.5 million tonnes this year and 2.1 million tonnes in 2005.

This is despite Beijing's policy of cooling investment in the resource-intensive aluminium industry.

Chinalco, the world's second-largest producer of alumina through listed Chalco , owns a majority stake in Baotou Aluminium. It is expected to inject that stake into Chalco next year.

"Our capacity will be upgraded to more than 500,000 tonnes," the Baotou Aluminium official said.

Baotou Aluminium has annual smelting capacity of 300,000 tonnes of aluminium. It would produce 240,000 tonnes of primary aluminium in 2006.

Chalco is seeking to build another 300,000-tonne-per-year aluminium smelter in China's northern Inner Mongolia region, home to Baotou Aluminium.

The Hong Kong-listed firm has expanded aluminium smelting capacity over the past two years, to help its huge production of alumina, through acquisitions of rivals and upgrading of existing smelters.

Those acquisitions included stakes in Jiaozuo Wangfang Aluminium Industry Co. Ltd. , Lanzhou Aluminium Co. Ltd. and a joint venture smelter with Shanxi Guanlu Co. Ltd. .

Shanxi Huaze Aluminum and Power Co. Ltd., which is 60 percent owned by Chalco and 40 percent held by Shanxi Zhangze Power Co. Ltd. , is adding 140,000 tonnes of smelting capacity in Hejin city, an official for the city's planning division said. "They are applying to add 140,000 tonnes of capacity," the city official in China's northern Shanxi province told Reuters. He added the construction of the new capacity would be completed in June next year.

The expansion would boost Shanxi Huaze's smelting capacity to 420,000 tonnes of aluminium a year.

The smelter also aims to build a 100,000 tonne-per-year plant to produce aluminium alloy, the city official said.

Chalco is also seeking to add 250,000 tonnes of smelting capacity a year at the Pingguo plant in China's southern Guangxi Autonomous Region. The plant has designed capacity of 135,000 tonnes of aluminium a year.