(Yicai Global) Sept. 11 -- Shandong Nanshan Aluminum Co. [SHA:600219], which engages in the manufacture and distribution of aluminum products, plans to raise CNY5 billion (USD767 million) in a rights issue. The company plans to use the funding in a CNY5.7 billion (USD874 million) alumina project with an annual production capacity of 1 million tons in Nanshan industrial park in Bintan, Indonesia.
SNA plans to pay three shares per 10 shares to raise up to CNY5 billion, the company said today, adding all the net proceeds excluding the issuing expenses will go toward the project.
SNA's overseas subsidiary, BAI PT Bintan Alumina Indonesia, will be responsible for implementing the alumina project in Bintan in Indonesia's Riau Islands province. Total investment in the project is set to reach CNY5.7 billion. The project construction period will run three years, while the plant will have a 23- year production cycle. Average annual profit is expected to reach USD87.6 million when the plant works at full capacity.
SNA's controlling shareholder, Nanshan Group, and the latter's wholly owned subsidiary, Shandong Yili Power Technology Co., have pledged to participate in the rights issue.
Per SNA's announcement, Bauxite, the primary ore of aluminum, has long been in short supply in China, with nearly half of bauxite consumed is imported from foreign countries. Domestic resources are not sufficient to meet the domestic demand, with China importing 3 million to 5 million tons of bauxite per year.
Indonesia was China's biggest bauxite supplier until 2014 when the former put a ban on unprocessed mineral exports, under which bauxite could be exported only after being processed locally.