Aluminum Corp of China (Chalco) is to spend up to US$1.2 billion on acquisitions and extra capacity in 2006. The world’s second-largest maker of alumina is to set aside capital for expanding its production capability for the raw material needed for making aluminum. Chalco, which produces about 90% of Chinese alumina, is to increase expenditure by almost a fifth, compared to last year when it was cut. Possible domestic mergers and acquisitions include smelters that could push annual production of aluminum up to 3 million tonnes, which would be more than double capacity at the end of last year. The average spot price for Chalco’s alumina was US$475 a tonne last year, up 1.2% on 2004. Annual alumina capacity is set to increase from 8.33 million tonnes in 2005 to more than 12 million tonnes in three years.
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