Chalco rises for second day on rare earth investment

Exploration & Development

Publishing Date: 29 Sep 2010 4:23pm GMT
Author: Mining Journal

Aluminum Corp of China Ltd, the nation’s biggest producer of the metal, rose to its highest level in five months in Shanghai trading after its parent announced a plan to invest in rare earths.

Shares of Beijing-based Aluminum Corp, known as Chalco, rose 7.5% to close at Yu11.70, the highest since April 26, at 3 pm local time. In Hong Kong trading, it gained 4.4% to HK$7.64 at the 4 pm close.

State-owned parent Aluminum Corp. of China, known as Chinalco, agreed this week to invest more than Yu10 (US$1.5 billion) to build a rare-earth production base in Jiangxi with a local partner.

China supplies more than 90% of the world’s rare earths, a group of 17 metals used to make parts used in weapons, computers and hybrid electric cars.

“Chalco had said Chinalco would inject rare earth assets even though there is no timetable,” said Owen Liang, a Shenzhen-based analyst at Guotai Junan Securities Co. “Rare earth is a very sensitive topic.”

The rare earth investment won’t change the short-term financial fundamentals for Chalco, Liang said.

Sep 29 (Bloomberg)