Since the beginning of this year, the prices of some international bulk commodities have continued to rise, increasing the procurement pressure for certain non-ferrous metals. As a state-owned enterprise in China's non-ferrous metal industry, China Aluminum Corporation has taken on its responsibilities, implementing multiple measures to ensure the supply of bulk commodities, maintaining a stable production and increased production trend overall, and effectively stabilizing market expectations.
Increase production and efficiency, continuously increase market supply. As the world's largest supplier of alumina and electrolytic aluminum, a domestic copper enterprise, and Asia's largest lead-zinc enterprise, China Aluminum fully leverages its production capacity advantages, committed to providing sufficient products to the market, striving to increase product output, reduce corporate inventory, and increase the market supply of major products. In the first quarter of this year, the production of electrolytic aluminum and electrolytic copper at China Aluminum increased by 13.53% and 6.77% year-on-year, respectively. Since the beginning of this year, with the efforts of all industry enterprises including China Aluminum, the social inventory of the electrolytic aluminum industry has significantly decreased compared to last year, with most of the electrolytic aluminum in the market directly entering downstream aluminum processing enterprises.
Optimize industrial layout and maintain market price stability. The stable supply of raw materials in the market relies on the guarantee of mineral resources. In recent years, China Aluminum has actively laid out and developed overseas bauxite resources. On one hand, resource development drives local economic and social development, achieving mutual benefits. On the other hand, it has also enhanced the resource guarantee capacity of bauxite, playing a positive role in stabilizing the market price of bauxite.
In April 2020, the Bofa bauxite project with an annual output of 12 million tons, built by China Aluminum's subsidiary China Aluminum Corporation in Guinea, was completed and put into production. This project has a usable resource reserve of about 1.75 billion tons and can be sustainably mined for up to 60 years. In September 2020, the Guangxi Huasheng alumina project with an annual output of 2 million tons was put into production. A relevant person in charge of China Aluminum stated that the completion and stable production of key projects represented by the Guinea Bofa project and the Guangxi Huasheng project have provided resource guarantees for the sustainable development of China Aluminum and have made positive contributions to keeping this year's domestic market alumina prices basically on par with last year.
Optimize the raw material supply structure and reduce procurement risks. In terms of domestic raw materials, China Aluminum strengthens communication and negotiation with suppliers to increase the proportion of direct supply from mines. For imported raw materials, it increases the proportion of long-term contracts while actively and deeply understanding the market to capture spot transaction opportunities in a timely manner. It actively communicates and coordinates with upstream and downstream, appropriately relaxing procurement thresholds without affecting the continuous and stable production of smelting plants, enhancing the adaptability of procurement demand and market supply. In addition, in terms of logistics and transportation, China Aluminum tracks the entire process of goods transportation to ensure that production raw materials arrive at the factory in a timely manner and that the supply chain operates smoothly.
Promote comprehensive benchmarking to hedge against rising cost pressures. Each strategic unit under China Aluminum has numerous physical production enterprises, and the prices of some raw materials involved in production, such as minerals, coal, and petroleum coke, have also risen, putting pressure on the enterprises themselves. Therefore, the group has deeply promoted comprehensive benchmarking at all levels of enterprises, focusing on development. Aluminum smelting enterprises promote "five benchmarks and one control" management, while copper smelting enterprises implement lean management around increasing output, improving indicators, reducing consumption, and lowering inventory. By enhancing production management levels, all enterprises of China Aluminum have achieved stable production and increased output, laying a solid foundation for increasing product supply.
