(Yicai Global) Aug. 2 -- Shareholders injected CNY1.14 billion (USD170 million) to Shanxi Chalco Huarun Co., an electric heating systems company, to ensure smooth proceeding of an aluminum alloy project which faced financial strain during the construction stage.
As approval procedures such as the land preliminary review and environmental impact assessment (EIA) report are being handled and bank financing is not available now, Shanxi Chalco Huarun Co.'s project is lacking sufficient funds, said a statement issued by Shanxi Xishan Coal and Electricity Power Co. (SHE:000983), a shareholder of Chalco Huarun, yesterday in a reference to Phase 1, 500,000-ton aluminum alloy venture.
It said Aluminum Corporation of China Limited (SHA:601600), the largest shareholder of Shanxi Chalco Huarun, will pump CNY457 million (USD68 million), while Xishan Coal Electricity Group Co., China Resources Coal (Group) Co. and Jinneng Electricity Group Co. will contribute CNY228 million (USD34 million) each. The shareholders' stakes will remain unchanged following the capital increase, the statement added.
The project aims to build an aluminum alloy production system and auxiliary project with annual capacity of 500,000 tons and is expected to achieve annual sales revenue of CNY4.81 billion (USD716 million) and the annual average net profit of CNY417 million (USD62 million). The after-tax financial internal rate of return is estimated to reach 14.6 percent, while the payback period is 7.4 years as projected, including construction period.
Xishan Coal Electricity Group said that the project can fully leverage on its controlling company Shanxi Xishan Jinxing Energy Co's local coal and bauxite resources to have a lower electricity cost so as to obtain a strong competitive edge and development potential.