(Yicai) Aug. 28 -- Aluminum Corporation of China, also known as Chinalco, is joining hands with its three listed units to consolidate and commercialize the group’s rare metal resources and fortify its industry leading position.

State-owned Chinalco will set up a joint venture with Aluminum Corporation of China, aka Chalco, Yunnan Chihong Zinc and Germanium, Yunnan Copper, and its investment arm Chinalco Capital Holdings, the units said in separate statements yesterday.

Chinalco, Chinalco Capital, and Yunnan Copper will contribute cash to the project, while Chalco and Yunnan Chihong Zinc will mainly add assets. Chinalco will have the largest stake at 25 percent. Chalco, Yunnan Copper, and Yunnan Chihong Zinc will each own 20 percent, and Chinalco Capital 15 percent.

Chalco will mainly chip in its high-purity gallium production lines, while Yunnan Chihong Zinc will contribute its wholly owned subsidiary, Yunnan Chihong International Germanium. If the value of these assets is insufficient, the firms will make up the difference in cash.

Chalco’s shares [SHA: 601600; HKG: 2600] today closed down 1 percent and 4.2 percent at CNY7.89 (USD1.11) and HKD6.84 (88 US cents), respectively. Chihong Zinc [SHA: 600497] ended up 2.7 percent at CNY6.01(USD0.84), while Yunnan Copper [SHE: 000878] fell 0.3 percent to CNY14.39 (USD2.02).

Chalco refines high-purity gallium from alumina by-products. The company’s annual gallium production capacity is about 200 tons, accounting for over 20 percent of global capacity, and high-purity gallium (equal to or more than 99.999 percent pure) accounts for more than 30 percent of worldwide output.

Meanwhile, Chihong International Germanium is the sole entity under Chihong Zinc that is involved in the germanium business. Its core assets include high-purity germanium compound production lines with an annual capacity of 60 tons and a series of production lines for midstream and downstream products.

The JV will expand downstream in the rare metals industry, developing high-end rare metal materials, and achieving mass production, thereby expanding Chinalco’s global leadership in rare metal functional materials, Chalco said.
 

The JV will leverage its owners’ industrial advantages to better cooperate, share resources and achieve industrial synergies, and reduce the risks that each could face if they expanded downstream individually, according to Chalco.

Chihong Zinc said that germanium and its compounds will be among the key directions for the JV, which is expected to consolidate the company's position in the upstream germanium resource supply chain.

The JV also plans to engage in the business of metal varieties in which Chinalco has resource advantages, such as gallium, selenium, tellurium, and bismuth, Chihong Zinc noted.

Editor: Futura Costaglione