Glencore International AG, a Switzerland-based commodities trader, plans to buy a stake in China's second-biggest aluminum maker by output.

Glencore has entered into a memorandum of understanding with state-owned Qingtongxia Aluminum Group Co for the acquisition, the Swiss company's first aluminum investment in China.

The size and price of the stake will be decided after due diligence is completed. The deal can be finalized either by purchasing existing shares or for Qingtongxia to issue new shares via a private placement.

"On one hand, the company buys into a Chinese aluminum producer to secure resources as global demand rises," Pan Shifei, an analyst at Northeast Securities Co in Shanghai, said after being informed of the possible deal. "On the other, capacity in Europe is declining because of higher energy costs and environmental concerns."

Qingtongxia was founded in 1964 in the northwestern Ningxia Hui Autonomous Region. It operates hydro and coal-fired power stations. The firm is ranked second in China's aluminum business after Beijing-based industry leader Aluminum Corp of China.

Qingtongxia earlier set up an aluminum joint venture with Montreal-based Alcan Inc, the world's second-largest aluminum producer, in Ningxia autonomous region.

Source:佚名