Chinalco subsidiary Chalco profit plunges 99.9 per cent

31 March 2009

Chinalco's listed subsidiary Chalco, China's biggest aluminum producer, has reported a 99.9-per cent plunge in net profit for 2008 - 10 times more than expected and warned that the first-quarter profit would plummet by almost 100 per cent due to the global economic slowdown.

In a surprise move, Chalco's chairman and chief executive Xiao Yaqing resigned and relinquished all his other posts with immediate effect yesterday - not as retribution for the loss; he is is likely to be made the deputy secretary general of China's State Council or cabinet in the near future.

Chinalco's chairman, Xiong Weiping has been nominated to the post, which will be put forth for shareholder's approval at the annual meeting on 26 May.

As metal price and demand plunge throughout the globe, the company said net profits dropped to 9.2 million yuan ($1.9 million), down from 10.75 billion yuan the previous year.

"Aluminum product prices slumped while fuel costs rose. Our group faced unprecedented difficulties and challenges," company president Luo Jianchuan told at a news conference.

Chalco posted a larger than expected loss of 2.57-billion yuan in the fourth quarter, its first loss in a decade and warned of a first-quarter loss as global demand for the metal continues to wane.