Aluminum Corp of China (Chinalco), parent of its listed arm Chalco, has acquired the controlling stake of Northeast Light Alloy Co Ltd (NELA), a State-owned enterprise in the defense industry.
Sources told China Daily that a deal was inked over the weekend in Harbin - where the NELA is headquartered - with Chinalco agreeing to participate in NELA's restructuring by acquiring 75 percent of its 1.6 billion yuan of assets.
Chinalco is China's largest aluminum and alumina producer. It paid 1.2 billion yuan to gain the controlling stake of NELA, considered the nation's largest manufacturer of aluminum and magnesium alloy.
The other 25 percent of the company is held by the State-owned assets supervision and administration commission of the Harbin municipal government, according to sources.
NELA specializes in making not only aluminum and magnesium alloy for defense and civilian uses but also the machinery for processing them.
It notched up 1.089 billion yuan in sales revenue in the first half of this year, with 51 million yuan in net profit. Its aluminum and alloy products, under the "Swan" brand name, are sold nationwide and exported to 24 countries and regions.
NELA was developed in the 1950s as part of China's national industrial backbone with support from the former Soviet Union.
The Harbin-based SOE has since contributed to China's first aircraft, first atomic reactor, first nuclear weapon, first missile, first satellite, first nuclear submarine, first carrier rocket and first spaceship, say company executives.
NELA plans to attract new investment in production lines capable of processing 120,000 tons annually in products such as large aluminum alloy plates.
Chalco's NELA deal was its latest move in a string of takeovers of local rivals. It came on the heels of its announced takeover of the Inner Mongolia-based Baotou Aluminum through a share swap in July.
Financial analysts said they anticipate Chinalco will inject NELA's assets into Chalco, which listed in Hong Kong and New York in 2001, before issuing A shares in April 2007.
(China Daily September 4, 2007)