Edited by ITOFO.J

Chinalco, the top aluminium group in the country, will further expand into overseas resources, and its confidence remains undimmed by the failure to raise its stake in Rio Tinto, Chinalco President Xiong Weiping told Reuters.

Chinalco, which plans to focus increasingly on copper, rare metals and coal, burst onto global investors’ radars by investing in Rio Tinto in February 2008, a deal that helped to derail a merger plan between Rio and its rival BHP Billiton and made Chinalco the global mining dealmaker to watch.

But a USUSD19.5 billion bid to double its stake in Rio Tinto last year came unstuck when the Anglo-Australian company spurned its advances in favour of a tie-up with BHP.

Chinalco, the top shareholder in Rio with a 9.3% stake in the mining group, has no plans to sell its shares, he said.

Chinalco’s strategy is to focus on shifting production to areas that are rich in resources and energy and concentrating on major consuming markets, as well as upgrading technology and saving energy, in China and overseas.

It is building a coal business to add to its existing business divisions, Xiong said, without elaborating on the plan.

The company is in talks with many potential partners, including Rio, and hoped to participate in Oyu Tolgoi, the Mongolian copper-gold project being developed by Rio’s partner Ivanhoe Mines. He believes Chinalco would give some helpful impetus to the project due to its a geographic advantage and its position as the largest non-ferrous metal company in China.

Chinalco also has a copper project in Peru, which will begin construction in May or June this year and will start operating in 2012 with annual capacity of 1 million metric tons of copper concentrate, and a Saudi Arabian aluminium smelting joint venture, which would also see progress this year, he said.

Xiong said he expected Rio’s value to rise this year thanks to rising commodity prices and growing demand. In China, the real estate, auto and power sectors would support aluminium demand this year, he said.

Chinalco’s listed unit and operator of its aluminium and alumina assets, Chalco (2600.HK), would also see much higher revenue and a better performance this year than in 2009, he said.

China’s aluminium output is expected to grow 30 percent to 17 million metric tons this year, while consumption will grow 20 percent to 16.5 million metric tons, he said. Alumina production will grow 30 percent to 31 million metric tons, while demand will rise 33 percent to 35 million metric tons.

He was not worried about oversupply in China or globally, or the 580,000 metric tons of aluminium stockpiled by China’s State Reserves bureau and a further 500,000 metric tons stockpiled by local governments in China last year.

But he was worried about stockpiles of more than 4 million metric tons of aluminium held in London Metal Exchange stocks, although about 3 million metric tons were locked into financial transactions, he said.

Chinalco hopes to participate in Oyu Tolgoi project

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