<P dir=rtl align=left><FONT color=#000000><SPAN style="FONT-SIZE: 12pt; FONT-FAMILY: Arial; mso-fareast-font-family: SimSun; mso-ansi-language: EN-US; mso-fareast-language: ZH-CN; mso-bidi-language: FA"></SPAN></FONT>Alcan Unworried By Chin
Alcan Unworried By <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />China Overcapacity Concerns
Thursday March 11, 5:01 am ET
By Phelim Kyne, Of DOW JONES NEWSWIRES
BEIJING -(Dow Jones)- Canada's Alcan Inc. is betting that its new $150 million investment in a China-based aluminum production facility won't be affected by potential industrial overcapacity, a company executive said recently. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
China's aluminum consumption is growing more than fast enough to absorb the production capacity from Alcan's new joint venture 150-kiloton aluminum smelter in northwestern Ningxia province, Alcan Primary Metal Group President Cynthia Carroll told Dow Jones Newswires recently.
Alcan, the world's second-largest aluminum producer behind Alcoa Inc. of the U.S., Wednesday finalized the joint venture deal with Qingtongxia Aluminum Co. and Ningxia Electric Power Development & Investment Co. after almost two years of negotiations.
The Canadian company also has an option to buy, with an unspecified additional investment, a stake of up to 80% in a 250-kiloton potline currently under construction in Ningxia. A potline is a manufacturing unit consisting of a fixed number of pots into which smelted aluminum is poured.
"We really expect the supply/demand equation to be in balance," Carroll said. "(China's) aluminum consumption has been growing at double digit rates over the past ten years and is projected to grow at similar rates (this decade)."
The Alcan investment highlights the challenges that foreign investors face in balancing the demand produced by China's blistering economic growth and the threat of feeding potential overcapacity bubbles that economists and officials alike warn are looming in various sectors.
China recorded a 9.1% year-on-year rise in gross domestic product last year, outpacing the 8% on-year GDP increase in 2002. National Development and Reform Commission Minister Ma Kai last week projected economic growth of around 7% in 2004.
Aluminum Consumers On Overcapacity Threat List
Leading consumers of the aluminum that Alcan's new joint venture produces include the booming automobile manufacturing and construction industries, sectors that China's policy-makers have repeatedly red-flagged as potential overcapacity threats.
China's official bank regulator said in a statement Thursday that it will examine for "potential credit and market risks" bank lending to sectors including electrolytic aluminum and automobile manufacturing as well as real estate.
But Carroll said that China's projected 10% year-on-year rise in annual aluminum consumption to an estimated 10 million metric tons by 2008 suggests a secure market for Alcan's domestic joint venture projection.
"China is the (world's) second largest (aluminum) consumer today, but in a number of years its expected to be the largest...(there's) tremendous potential from my standpoint," she said.