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How much these companies will improve Chalco's profitability is unclear.

Mr Xiao said he hoped participation in the project would help Chalco catch up technologically with its international rivals.

Xiao Yaqing, Chalco president, said yesterday the company was looking at other overseas mergers and acquisition opportunities.

The company, also known as Chalco, is China's biggest producer of aluminium.

Chalco Guizhou Branch is a large - scale complex enterprise and a huge water consumer as well.

It's a big step for Chalco, marking the company's first iron ore asset, as well as its largest investment overseas.

Chalco could spend up to $14. 5bn, Mr Xiao said in a separate television interview.

Chalco, China's biggest aluminium maker, said it was worried about payment defaults from credit-squeezed customers.

For Jazan an agreement has been reached with the Aluminium Corporation of China (Chalco) for a similar smelter project .

Chalco investor relations manager Zhang Qing said a deal would be struck with Liancheng soon.

The decision for Chalco to acquire the asset, instead of its parent, suggests optimism about the potential of the Guinea project.

The bank downgraded Chalco to "sell" from "neutral" and lowered its target price to $4 from $7. 1.

Chalco is planning to build processing plants in Saudi Arabia to take advantage of cheaper electricity.

This would have been Chalco's first investment in Australia.

In the summer, Chalco took over Baotou Aluminium.

In the six months to the end of June, net profits fell 5 per cent to Rm6. 4bn, which Chalco blamed on lower aluminium and alumina prices.

Last year, Chalco had to double its import of bauxite ore, the raw material used to produce aluminium.

Measure and Control on pollutant Discharge of Shanxi Branch of CHALCO