Bloomberg Jan 20---Aluminum Corporation of China Ltd., the nation’s largest producer of the metal, jumped the most in four months in Shanghai after China Business News reported the company’s parent plans to set up a rare-earth venture.
Shares of Chalco, as the company is called, surged 5.9 percent to 10.60 yuan by the 11:30 a.m. local time break, the most since Sept. 29. The stock, which has risen 4.5 percent this year, plunged 30 percent in 2010, twice as much as the Shanghai Composite Index’s 14 percent drop.
Aluminum Corp. of China, parent of Chalco, will take a controlling stake in the venture with Guangxi Nonferrous Metals Group, China Business News cited spokesman Yuan Li as saying. Two calls to Chalco’s board secretary Liu Qiang in Beijing went unanswered.
“Anything related to rare earths is hot these days,” said Wang Qianming at Everbright Securities Co. in Shanghai. “As the sector is controlled by government, there aren’t many rivals that may compete with Chalco.”
Chalco shares are rebounding on speculation the company’s plans to expand into rare earths will lead to a turnaround in earnings. Chief Executive Officer Xiong Weiping said in August that Chalco plans to diversify into coal, iron ore and rare earths as higher fuel costs and aluminum overcapacity in China, the world’s biggest metals consumer, reduce margins. The company posted a loss of 118 million yuan （$18 million） in the quarter ended Sept. 30.
China, which accounts for more than 90 percent of rare earth’s world supplies, cut its export quotas for rare earths by 35 percent in the first round of permits for 2011 on Dec. 28, threatening to extend a global shortage of the minerals needed for smartphones, hybrid cars and guided missiles. The nation slashed export quotas by 72 percent in the second half of 2010, sparking a surge in prices.
An announcement by Chalco’s parent to invest in rare earths on Sept. 28 spurred a 10 percent jump in shares of Chalco, the maximum daily limit on the Shanghai stock exchange.
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