Chalco’s decision of expanding stake in Yunnan Aluminium to 29.1% increases its shares on the market

Shares of Aluminum Corporation of China Limited (Chalco) have elevated on Monday, July 25, following the company’s decision to increase its stake in Yunnan Aluminium Co. According to analysts at Citigroup, this acquisition will make Chalco the world’s largest aluminum producer, with a smelting capacity of about 7.5 million tonnes a year.

Shanghai-listed shares of Chalco have advanced as much as 5.5 per cent in early trade, while the Hong Kong-listed stocks have risen 8.2 per cent to trade at HK$2.83, up 1.4 per cent. However, so far this year, the Hong Kong-listed shares have lost 34 per cent.

Yunnan Aluminium’s stocks were recently 2.7 per cent higher at CNY9.84.

As per the report, Chalco will pay RMB 6.66 billion to purchase a 19 per cent stake in Yunnan Aluminium, which will bring its total equity interest in the Shenzhen-listed company to 29.10 per cent.  

After Chalco completes buying the 19 per cent stake, Yunnan Aluminium will become a subsidiary of the former. Yunnan’s financial results will also be consolidated in Chalco’s earnings, according to the filling on Sunday, July 24.

Analysts have also suggested that Chalco’s cost of producing aluminium may also decrease given the lower energy prices in Yunnan, a province in southwestern China.