Economy

Markets

Industries

Insights

Reports

Events

Chinalco to reduce wages

By Jiang Wei (China Daily)
Updated: 2009-01-17 11:46

Aluminum Corporation of China (Chinalco), the world's second largest alumina producer, will cut employees' salary but promised not to lay off workers this year, in a move to weather the global economic slowdown, the company's senior officials said.

Lu Youqing, vice president of Chinalco, said on Friday that the company would cut the salary of workers by 15 percent and the salary of senior management by up to 50 percent this year.

The move is expected to save 3-4 billion yuan ($439 million-$585 million) in expenditure for the company.

The State-owned company has taken a hard blow from the global economic downturn. Prices of electrolytic aluminum and copper, the company's two major products, plunged 70-80 percent in 2008 as demand dropped sharply both at home and abroad.

Special Coverage: Coping with Financial Crisis Related readings:  Chinalco cut prices by 23%  Gov't foots shoe firm's wage bill  Chinalco to start Australia project  Baosteel cuts executive pay

Lu said in the first half of this year the market will continue to be gloomy or even worse than 2008 but it may pick up between June and September as the country's stimulus packages take effect.

"The nonferrous metal market is likely to be one of the first to rebound," he said.

The State Council, China's cabinet, has approved the stimulus plan for auto and steel industries to boost economic growth, stunted by the global slowdown. The other eight, including the plan for nonferrous metal industry, are now being drafted or under discussion.

To survive the hard times, Lu said, the company must secure cash flow and boost confidence.

Chinalco saw its sales revenue last year hit 126 billion yuan, down 8 percent from a year earlier while profit fell to 2 billion yuan from over 10 billion yuan in 2007 and 2006.

Lu expected the company's sales revenue to see an increase this year and profit to grow to 5 billion yuan.

Chinalco produced 10 million tons of alumina, 390,000 tons of refined copper and 4,450 tons of sponge titanium last year.

It also teamed up with Alcoa Inc in February 2008 to take a 12 percent stake in the London-listed Rio Tinto for $14.05 billion, the largest overseas investment ever by a Chinese company.