Chinese aluminium firm Zhongwang announces to sell its smelter for $656 million
One of the world’s biggest aluminium extrusions manufacturer, China Zhongwang Holdings, on Wednesday, February 26, announced that it would sell its loss-making smelter for $655.94 million.
According to the report, Zhongwang has agreed to sell its 100 per cent stake in Zhongwang Aluminium Material, the unit that holds 800,000 tonnes per annum of primary aluminium smelting capacity in China’s North-eastern Liaoning province.
Yidian Holding Group will purchase the smelter, which will make its capacity double than its existing 600,000 tonnes per annum.
"Due to the high production costs including costs of electricity, the electrolytic aluminium business has been loss-making in recent years," Zhongwang said in a statement.
Zhongwang noted that in 2018 and 2019, the unit recorded net losses of more than RMB 800 million.
Zhongwang has announced about the sale when the coronavirus outbreak has pushed Shanghai aluminium prices down to the lowest in almost a year, thinning smelters’ profit margins.
Last year, Zhongwang closed half of its smelting capacity for maintenance but did not restart immediately even when the refurbishment work was complete.
The company will source primary aluminium from other smelters for its core business of making extrusions and other products, said Zhongwang spokeswoman.
When asked if buying the loss-making smelter was a concern, Yidian general manager Chen Shichang said to the news source that they would make some adjustments, if necessary, and the situation would improve in the future.
source: ALCIRCLE.COM
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