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Chalco's H1'19 profit drops YOY; parent Chinalco to form large rare earths firm

Aluminum Corp. of China Ltd., or Chalco, reported an attributable first-half net profit of 705.8 million Chinese yuan, or 3.5 fen per share, decreasing from 821.6 million yuan, or 4.6 fen per share, posted a year ago.

Revenue climbed to 94.94 billion yuan from 82.39 billion yuan, while cost of sales rose to 88.23 billion yuan from 75.92 billion yuan, both due to an increase in trading volume, according to an Aug. 27 release.

Chalco flagged higher finance costs of 2.59 billion yuan due to interest on lease liabilities and the addition of a new subsidiary, Shangxi Huaxing Aluminum Co. Ltd.

Selling and distribution expenses also increased to 1.63 billion yuan due to higher freight charges resulting from a yearly increase of 1.9 million tonnes in imported coal sales volume.

The company also noted that general and administrative expenses jumped to 1.90 billion yuan following a decrease in subsidies for its "zombie" or distressed enterprises.

Meanwhile, Chalco's parent company, Chinalco, secured approval to make its China Rare Earth Holdings Ltd. unit as a large-scale rare earth firm that will consolidate mining and smelting rivals in the Guangxi autonomous region and the provinces of Jiangsu, Shandong and Sichuan, South China Morning Post reported.

In a same-day press release, Chalco said it entered an agreement to increase its stake in China Rare Earth to 23.94% from 14.62% by transferring its gallium production lines, which are valued at 352.85 million yuan.

"This will lay the foundation for Chinalco to create an integrated firm with operations in light, medium and heavy rare earths," the report quoted Chinalco as saying.

As of Aug. 26, US$1 was equivalent to 7.15 yuan.