Since this year, the prices of some international bulk commodities have continued to rise, and the procurement pressure of some varieties of non-ferrous metals has increased. As a non-ferrous metal industrial enterprise in China, Chinalco took on the role of central enterprises, took multiple measures to ensure the supply of bulk commodities, generally maintained the trend of stable production and increased production, and effectively stabilized market expectations.
Increase production and efficiency, and continuously increase market supply. As a global supplier of alumina and electrolytic aluminum, a domestic copper enterprise and a large lead-zinc enterprise in Asia, Chinalco gives full play to its production capacity advantages, is committed to providing sufficient products to the market, strive to increase product output, reduce enterprise inventory and increase the market investment of main products. In the first quarter of this year, the output of electrolytic aluminum and electrolytic copper of Chinalco increased by 13.53% and 6.77% respectively year-on-year. Since this year, with the efforts of enterprises in the whole industry, including Chinalco, the social inventory of electrolytic aluminum industry has been significantly lower than that of last year, and most electrolytic aluminum in the market directly enters downstream aluminum processing enterprises.
Optimize industrial layout and maintain market price stability. The stable supply of raw material market is inseparable from the guarantee of mineral resources. In recent years, Chinalco has actively distributed and developed overseas bauxite resources. On the one hand, we should promote local economic and social development through resource development to achieve mutual benefit and win-win results. On the other hand, it has also improved the guarantee capacity of bauxite resources and played a positive role in the relative stability of bauxite market price.
In April 2020, the baufa bauxite project with an annual output of 12 million tons built by Chinalco's Chinalco Co., Ltd. in Guinea was completed and put into operation. The available resource reserves of the project are about 1.75 billion tons, and the sustainable mining is up to 60 years. In September 2020, Chinalco Guangxi Huasheng alumina project with an annual output of 2 million tons will be put into operation. The relevant person in charge of Chinalco said that the completion and operation of key projects represented by the BofA project in Guinea and the Huasheng project in Guangxi have not only provided resource guarantee for the sustainable development of Chinalco, but also made a positive contribution to the realization that the alumina price in the domestic market this year is basically the same as that of last year.
Optimize the supply structure of raw materials and reduce procurement risks. In terms of domestic raw materials, Chinalco strengthened communication and consultation with suppliers to improve the proportion of direct supply of mines. In terms of imported raw materials, improve the proportion of long orders, actively and deeply understand the market, and timely capture spot transaction opportunities. Actively communicate and coordinate with upstream and downstream, appropriately relax the procurement threshold and improve the adaptability between procurement demand and market supply on the basis of not affecting the continuous and stable production of the smelter. In addition, in terms of logistics and transportation, Chinalco also tracks the transportation of goods in the whole process to ensure the production of raw materials, timely arrival at the plant and supply chain operation.
Promote all factor benchmarking to hedge against rising cost pressure. There are many physical production enterprises under each strategic unit of Chinalco, and the prices of some raw materials such as minerals, coal and petroleum coke involved in production have also increased, bringing pressure to the enterprise itself. To this end, the group further promotes the benchmarking of all elements of enterprises at all levels and focuses on development. Aluminum smelting enterprises promote "five standards and one control" management, and copper smelting enterprises implement lean management around increasing output, increasing indicators, reducing consumption and reducing inventory. By improving the production management level, Chinalco enterprises have achieved stable production and increased production, laying a solid foundation for increasing product supply.