By Chen Jialu and Wu Jiachun (China Daily)
Updated: 2007-11-01 09:33

Aluminum Corp of China (Chinalco), the nation's top aluminum producer, recently took another step in expanding into the copper business by acquiring 49 percent of Yunnan Copper Industry (Group) Co, the country's third largest copper producer.

Aluminum Corp of China, the parent of publicly traded Chalco, has bought the 49 percent stake by paying 7.5 billion yuan (US$1 billion) in cash.

The rest of the company will continue to be owned by the State-owned assets supervision and administration commission of Yunnan Province, which sold the stake.

The aluminum major and the Yunnan provincial government inked the deal - the biggest acquisition in the country's metal industry this year - on Tuesday in Kunming, capital of Southwest China's Yunnan Province, where the copper company is headquartered.

Under the strategic agreement, Chinalco will invest an additional 2 billion yuan for a copper processing project in the province.

Yunnan Copper Group holds 34.5 percent of Shenzhen-listed Yunnan Copper Co, which has a market value of 99 billion yuan.

"The newly restructured company aims to achieve an annual revenue of over hundreds of billions of yuan by 2012," Zou Shaolu, president of Yunnan Copper Industry (Group) Co, said in the deal signing ceremony.

The State-owned parent company in Yunnan chalked up 32.7 billion yuan in sales revenue last year and posted 3.75 billion yuan in profits and tax.

The stake sale has helped shares of Yunnan Copper Co soar, driven by investors' anticipation of an asset injection into its listed arm.

"The stake purchase will be Chinalco's biggest investment deal this year. We will also explore other domestic copper enterprises," said Xiao Yaqing, president of Chinalco.

The deal with Yunnan Copper comes after its US$860 million takeover of Peru Copper earlier this year.

The aluminum major has accelerated its entry into the copper business this year and has earmarked 30 billion yuan to fund its expansion into the metal.