Xinhua Far East Assigns AA- Issuer Credit Rating to Aluminum Corporation of China Ltd

Xinhua Far East Assigns AA- Issuer Credit Rating to Aluminum Corporation of China Ltd

March 06, 2006

    HONG KONG, March 6 /Xinhua-PRNewswire/ -- Xinhua Far
East China Ratings today assigned Aluminum Corporation of
China Ltd ("Chalco" or "the Company",
HK 2600; NYSE: ACH) with an AA- domestic currency issuer
credit rating.  The company's rating outlook is stable. 
The rating reflects Chalco's dominant position in China's
growing alumina production industry as well as its sound
financial profile over recent years.  China's robust demand
for aluminum products, the Company's unparallel advantage
over access to raw materials and favorable government
policies are important factors in securing its AA- rating.

    Fast-growing aluminum consumption in China in recent
years has created mounting alumina shortages, and Xinhua
Far East expects this trend to continue in line with the
country's economic growth.  Even so, China's aluminum
consumption per capita cannot be compared to the
consumption levels in developed countries, with the
proportion used for industrial purposes still relatively
low.  As such, there is further growth potential in this
market in the long run.

    The Company enjoys absolute monopolistic market power,
with its alumina production counting for almost all the
nation's output.  Xinhua Far East believes this leading
position will remain unshakable in the near future as a
result of its control over natural resources and the
government support it enjoys.  The four provinces in which
Chalco's alumina plants operate hold more than 90% of the
country's bauxite resources -- the primary raw material
used to produce alumina.  More importantly, China's current
policy imposes tight restrictions on new alumina projects, a
situation which, in effect, reinforces Chalco's dominant
position.

    The new rating also reflects Chalco's sound financial
profile -- a result of rapidly increasing sales volumes and
soaring product prices, both of which have provided Chalco
with solid cash flow and strong earnings ability.  The
Company's leverage ratio has declined significantly, with
gross debt to total capital ratio reaching 28.6% on June
30, 2005.  Moreover, its foreseeable IPO in the domestic
capital market should alleviate the financial burden
imposed by future capital expenditure required to expand
its existing alumina capacity. As such, Xinhua Far East
does not expect Chalco's debt ratio to be elevated in the
medium term.  However, Xinhua Far East also takes into
consideration the fact that Chalco's main advantage lies to
a greater degree in policy support rather than its own
operational and management efficiency.  As China's economy
becomes increasingly market-oriented, the Company will
gradually face the introduction of competitors into the
alumina sector.  The need to vertically integrate to guard
against market fluctuation (mostly in respect to its
downstream aluminum products) will also bring demand for
capital expenditure. Moreover, the government's recent
efforts to contain overinvestment in the downstream
electrolytic aluminum sector and the nation's strategy to
discourage excessive consumption of energy and resources to
achieve sustainable development are likely to dampen
aluminum demand growth and alumina prices in the medium
term.  These are the major factors that constrain Chalco's
rating on the AA- level.  

    Chalco is China's largest producer of both alumina and
primary aluminum. In 2004, it produced 6.82 million tons of
alumina and 770,000 tons of primary aluminum, accounting for
96.9% and 11.5% of the country's total output. Revenue
totaled RMB 33.2 billion in 2004, 39% higher than 2003.  As
of June 30, 2005, Chalco owned nine alumina or aluminum
producing subsidiaries and one research institute. 
Aluminum Corporation of China is Chalco's largest
shareholder, with a 42.14% stake in the Company.  
  
    Chalco is also a large cap company in the Xinhua/FTSE
China 25 Index. As of March 3, 2006, its total market cap
was HKD 93.9 billion with investable market cap of HKD 18.8
billion.

    For the rating report summary, please visit
www.xinhuafinance.com/creditrating .

    Note to Editors:

    About Xinhua/FTSE China 25 Index

    Xinhua/FTSE China 25 Index is a real-time tradable
index designed for use as the basis for both on-exchange
and OTC derivative products, mutual funds and ETFs.  The
index includes the largest 25 Chinese companies comprising
H shares and Red Chip shares, ranked by total market
capitalization.  The index is designed to meet fund
regulatory requirements worldwide, with constituent
weightings capped, in order to avoid over-concentration in
any one stock.
For daily data and further information, see
http://www.xinhuaftse.com .

    About Xinhua Far East China Ratings

    Xinhua Far East China Ratings (Xinhua Far East) is a
pioneering venture in China that aims to rank credit risks
among corporations in China.  It is a strategic alliance
between Xinhua Finance (TSE Mothers: 9399), and Shanghai
Far East Credit Rating Co., Ltd.  Shanghai Far East became
a Xinhua Finance partner company in 2003 and the first
China member of The Association of Credit Rating Agencies
in Asia in December 2003. 

    Capitalizing on the synergy between Xinhua Finance and
Shanghai Far East, Xinhua Far East's rating methodology and
process blend unique local market knowledge with
international rating standards.  Xinhua Far East is
committed to provide investors with independent, objective,
timely and forward-looking credit opinions on Chinese
companies.  It aims to help investors differentiate the
credit risks among the corporations in China, thereby,
cultivating their awareness and promoting information
disclosures and transparency in China market.  For more
information, see http://www.xfn.com/creditrating .

    About Xinhua Finance Limited

    Xinhua Finance Limited is China's unchallenged leader
in financial information and media, and is listed on the
Mothers board of the Tokyo Stock Exchange (symbol: 9399)
(OTC ADRs: XHFNY).  Bridging China's financial markets and
the world, Xinhua Finance serves financial institutions,
corporations and re-distributors through four focused and
complementary service lines: Indices, Ratings, Financial
News and Investor Relations.  Founded in November 1999, the
Company is headquartered in Shanghai with 21 news bureaus
and offices in 18 locations across Asia, Australia, North
America and Europe.  For more information, please visit
http://www.xinhuafinance.com . 
 
    About Shanghai Far East Credit Rating Co., Ltd

    Shanghai Far East Credit Rating Co., Ltd. is the first
and leading professional credit rating company with
comprehensive business coverage in China.  It is an
independent agency established by the Shanghai Academy of
Social Sciences with the mission to develop internationally
accepted standards for capital market in China.  The company
is a pioneer in conducting bond-rating business in China. 
For years, it has been authorized by the Shanghai branch of
the PBOC to undertake loan certificate credit rating.

    Since establishment, it has rated over 1,000 corporate
long-term bonds and commercial papers, based on the
principles of objectivity, fairness and independence.  The
company has also maintained over 50% market share in the
loan certificate-rating sector in Shanghai for three
consecutive years.  With its strong local presence and
knowledge, it provides investors with unique and the most
insightful credit opinion.  For more information, see
http://www.fareast-cr.com .

    For more information, please contact: 

    Hong Kong
     Joy Tsang, 
     Corporate & Investor Communications Director, 
     Xinhua Finance
     Tel:   [phone] or
[phone]   
     Email: [e-mail]

    US
     David Leeney, Taylor Rafferty (IR/PR Contact in US)
     Tel:   [phone]
     Email: [e-mail]

SOURCE  Xinhua Far East China Ratings