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Chinalco Takes On Volatile Tibet

September 7, 2008

Tina Wang, 09.04.08, 2:50 PM ET
China's largest mining company announced plans to make a major push 
into Tibet, a politically volatile area that is rich in copper, 
chromium, and other mineral deposits.

The country's largest miner, Aluminum Corp. of China (nyse: ACH - 
news - people ), or Chinalco, is investing 250 million yuan ($36.5 
million) to scout the region, the company's Web site said. A newly 
established unit, China Aluminum Tibet Mining, will conduct 
exploration, metals smelting, and sales activities.

A controversial railway link between Beijing and Lhasa that was built 
in 2006 has opened up a cheap transportation route between Tibet and 
the rest of China, and the Ministry of Railways plans to expand 
Tibet's rail network further.

The Yulong copper deposit in southeastern Tibet, China's largest 
copper deposit, already has drawn domestic mining companies. Western 
Mining and Zijin Mining Group plan to begin digging in September. 
Chinalco currently operates a smelting plant in the Amdo region in 
eastern Tibet.

Pro-Tibet groups have criticized Canadian and Australian mining 
companies for setting up exploration activities for mines, which 
activists charge harm local water supplies and the ecosystem, step up 
immigration of Han Chinese into the region, and offer Tibetan 
communities few of the resulting economic benefits. Canada-based 
Continental Minerals (otcbb: KMKCF.OB - news - people ) drew protests 
at its headquarters in 2006 when its plans to open a copper and gold 
mine in Tibet became public. The group has inked a preliminary 
agreement with Jinchuan Group to develop the mine in the Xietongmen 

In 2003, Australia's Sino Gold withdrew exploration activities for a 
gold mine in the Jinkang region of eastern Tibet following fierce 
criticism from Tibet groups around the world. Chinalco said in its 
Web statement that it aims to adopt a socially responsible 
development strategy.

The company acquired a 9% stake in Rio Tinto for $14.1 billion in 
February and expects to raise its interest to 11% (See " Australia 
Steps Out Of Chinalco's Way.")

In noon trading in New York, Chinalco American Depositary Receipts 
were down 69 cents, or 3.37%, to $19.81
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