Fresh on the heels of the largest takeover in Canadian corporate history, Alcan (AL-T, AL-N) has announced plans to broaden its footprint in China by building a world-class mill to produce heat-treated aluminum plates for the aerospace and engineering markets.
Rio Tinto (RTP-N, RIO-L, RIO-A), received U.S. antitrust clearance for its US$38.1 billion acquisition of Alcan late last month after the Canadian Competition Bureau gave the deal the thumbs up on Aug. 7.
Alcan signed a joint venture agreement on Sept. 11 with Dingsheng Aluminum, a privately owned Chinese company, to build a $300-million hot rolling mill in the city of Zhenjiang, in Chinas coastal Jiangsu province.
Alcans new plant in China will produce aluminum heat-treated plates with advanced patented alloys, which are used to make the wings and fuselages of airplanes. The plates can also be used in the manufacture of semiconductor equipment, home appliances, and plastic injection molds for automotive parts.
The new hot rolling mill which will take about two years to build — will largely service the Asian market, in particular China.
In last years annual report, Alcan forecast that the alumina industry is expected to shift from a supply deficit to a near-term surplus position, with China representing more than 50% of the growth in supply and demand.
Alcans decision is part of a broader industry trend with production moving away from North America and Europe to countries with lower labour costs, such as China and Russia, and to countries in the Middle East.
Alcan believes Chinas alumina imports will decrease as the country restarts idle, high-cost capacity.
The joint-venture agreement needs approval from the Chinese government and Alcans board.
Alcans Engineered Products group is the no. 1 supplier of value-added aluminum products to Europes aerospace industry and no. 2 worldwide.
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