Zhongwang to spend 6 bln yuan to expand

* Plans to invest 6 billion yuan over 2 years * Aims to lift capacity by one third by end of 2011 * Will shift output to industrial from construction aluminium By Michael Wei and Alan Wheatley BEIJING, Nov 24 (Reuters) - China Zhongwang Holdings will spend 6 billion yuan ($878 million) to boost its capacity over the next two years, a senior executive at Asia's largest maker of aluminium extrusion products said on Tuesday. Zhongwang's capacity utilisation rate, which is running at roughly 86 percent compared with the industry average of 60 to 70 percent, has been curbing its business growth, said Vice President Lu Changqing. "The priority for us is to expand production capacity," Lu told Reuters in an interview. Zhongwang plans to invest 3 billion yuan in 2010 and the same sum in 2011 to lift production to 800,000 tonnes a year by the end of 2011 from 600,000 tonnes now, said Lu, who is also an executive director of the Liaoning-based company. Zhongwang, which raised $1.3 billion in May in one of the world's biggest IPOs this year, exports 30 percent of its production to global markets where it competes with Sapa, a unit of Norwegian conglomerate Orkla and Norwegian aluminium producer Norsk Hydro . Zhongwang mainly produces industrial aluminium for railway cars, subways, trucks and autos, making it a beneficiary of China's heavy spending on transport infrastructure. The company also makes construction aluminium, which is used in door and window frames and interiors in upscale buildings. The firm's products were used in Beijing's new airport terminal and some Olympic Games venues, but margins are slender and Zhongwang has been shifting to the higher-tech industrial aluminium business, which enjoys a 45 percent gross margin. Zhongwang, founded in 1993, only started making industrial aluminium products in 2002. But they already generate 93 percent of the firm's gross profit, a figure that would rise to 100 percent by the end of 2011, Lu said. Industrial aluminium is used in trains, ships and trucks to make them lighter but solid. "Industrial aluminium product is a new sector with tremendous potential," Lu said. "It will become a trend." Volatility in the price of aluminium, the major raw material for Zhongwang, is not a big problem for Zhongwang because of the company's short delivery times, Lu said. He said he expected the price of aluminium to remain in a range of 15,000 yuan to 18,000 yuan per tonne in 2010. ($=6.83 yuan) (Additional reporting by Shao Xiaoyi; Editing by Ken Wills)