restructured 60 billion loss-making aluminum assets

After falling to a historical position last year, aluminum prices have picked up one step and two times
.
Faced with the predicament, the State Power Investment Group Corporation (hereinafter referred to as), which is located in the first echelon of the industry, chose to reorganize 60 billion yuan of loss-making aluminum assets and establish an aluminum power company
.

On November 2, the spot aluminum price of the Yangtze River remained in the high price range of 14,600 / ton, and Zhang Meng, an analyst at AZ-China aluminum, said that the current high price is more dependent on speculation, and the aluminum price is likely to run
at a low level.

In the face of the sluggish aluminum market, the State Power Investment Corporation, which has continuously lost money, made a choice
.
Recently, announced on its official website the news of optimizing the integration of aluminum assets and establishing an aluminum power company, and Wang Binghua, chairman of, said that this action is an important task
for reform and development.

The integration plan of aluminum power companies obtained exclusively by the reporter from the State Power Investment Department shows that the State Power Investment Corporation will merge its secondary companies to reduce the level, and eventually achieve synergies to reduce costs
.

It is worth noting that the relevant financial reports show that the aluminum sector of the State Power Investment Corporation reported a loss of 2.
565 billion yuan
last year.
In the face of consecutive years of losses, there has been news in the industry that divested the aluminum plate to Chinalco
.
State Power Investment and Chalco staff said there was no indication of such a move
.

The aluminum industry integration plan was first disclosed

In 2015, ranked among the top five in China with 2.
485 million tons of electrolytic aluminum production capacity, and its aluminum plate was eye-catching
.

According to the official website of, Wang Binghua stressed at the kick-off meeting of the establishment of the aluminum power company that it is necessary to fully understand the important position and role of the aluminum industry in the strategic development of the group; At the same time, in accordance with the direction of specialization and marketization, we must speed up the formulation of the implementation plan
for the establishment of aluminum companies.

According to the integration plan provided by to reporters, it will merge and reorganize its three companies
: International Mining, Ningxia Energy Aluminum, and Aluminum International Trade.
At the same time, the group company transferred its shareholding in Ningxia Energy Aluminum and Aluminum International Trade to International Mining
without compensation.
After the reorganization, International Mining changed its name to State Power Investment Group Aluminum Power Co.
, Ltd.
(hereinafter referred to as Aluminum Power Company).

The reporter checked the official website and found that the above three companies are all second-level companies under the State Power Investment, of which the international mining industry focuses on upstream mining, Ningxia energy aluminum industry is in the middle of the production, and the aluminum industry is good at trade, and the three just complement each other to form a complete industrial chain
.

Zhang Meng pointed out that at present, the international mining industry has a total of 2.
6 million tons of alumina production capacity, Ningxia Energy Aluminum has a total of 1 million tons of electrolytic aluminum production capacity, while the aluminum industry international trade operation is relatively flexible, involving product trade, financial futures, hedging and other fields
.
"The previous three were all second-tier companies, and there were more or less problems in integration, but after this restructuring, coordination will be more convenient, improve the ability of the entire industry chain to resist risks, and increase the level
of profitability.
"

also said that the aluminum power company will be positioned as a specialized industrial sub-group of the group company, and implement professional operation and management of its electrolytic aluminum, alumina, bauxite and supporting power and other related assets and businesses, at the same time, the company also has multiple attributes
such as aluminum trade service platform and aluminum technology innovation platform.

From "divestiture rumors" to internal integration

On the other hand, rumors that will divest the aluminum plate to Chinalco have been circulating in the industry for a long time
.

According to Reuters in August last year, was negotiating to divest its aluminum assets to Chinalco, but the negotiations were slow because it was reluctant to take over the high-cost smelter
.
It has been reported that the merger of China's aluminum industry and the State Power Investment Aluminum plate is currently under negotiation
.

The reporter called Chinalco Group on this matter, and its staff said that there was no indication that there would be a divestment, and also stressed, "This is not something that the two central enterprises can plan
.
" staff also bluntly said that it was not possible, and did not respond positively to whether there had been a negotiation process with Chalco on this issue
.

In just one year, why has gone through the transformation from "divestment rumors" to internal integration?

Zhang Meng believes that this is greatly related
to the trend of aluminum prices.
According to him, last year's aluminum price "fell endlessly", and in November, it even fell to a historical low of 9,710 yuan / ton, making the company's production difficult
.

's 2015 annual report showed a net loss of 2.
565 billion yuan in its aluminum sector last year, compared with a loss of 3.
171 billion yuan
the year before.
At the same time, its revenue last year was 72.
017 billion yuan, and its total assets were 62.
974 billion yuan, down 9.
21%
year-on-year.

According to the rating report disclosed by corporate bonds, in 2015, the revenue of the aluminum sector of was second only to the power sector of 111.
308 billion yuan, but at the other end, the gross profit margin of the aluminum sector was only 1%, and the power sector reached 21.
36%.

Rating agencies believe that the aluminum sector has affected the profitability
of.

The turnaround came
at the beginning of the year.
According to Yangtze River spot data, aluminum prices rose to 13,000 yuan / ton at the beginning of the year, fell back after March, and entered a rally in mid-to-late September, reporting an average price of 14,600 yuan / ton
on November 2.

Zhang Meng said that in the low period of aluminum prices, given that China's aluminum industry itself has only turned a profit, it has no incentive to acquire the aluminum sector of State Power Investment, and when aluminum prices recover, State Power Investment or value its economic value and is unwilling to let go
.

For the future trend of aluminum prices, he said that with the development of urban rail transit, automobile lightweight, aluminum instead of copper and other technologies, the total demand for aluminum will gradually increase, but at the same time, the supply of aluminum is also increasing simultaneously, the current high price is more of a speculation of floating capital, the average price in the next two or three years will fluctuate
steadily around 11,500 yuan ~ 13,500 yuan / ton.
"For aluminum companies, this price is on the profit and loss line, but it only ends here
.
"

For future development, Chalco will improve its own power degree, and chooses to strengthen the integration of the industrial chain, but industry insiders also said that compared with private enterprises, the operational efficiency of the two central enterprises needs to be improved
.
"Last year, in such a poor situation, only two of the top five aluminum companies reported losses
in the aluminum sector.
"