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Sapa and Chalco form joint-venture to serve the Chinese rolling stock market

On Friday April 8, Aluminium Corporation of China Limited (Chalco), the largest aluminium company in China, and the Sapa Group, the world's largest aluminium extrusion company, signed a joint venture (JV) agreement to serve the rapidly growing Chinese rolling stock market. Each party will have 50% shareholding in the new JV.

The JV will build a state-of-the-art fully integrated aluminium extrusion and fabrication facility in Chongqing in South West China. In addition it will establish R&D facilities to support the development of the rolling stock companies in China. This facility will comprise the latest of technology both with regards to extrusion, press- and fabrication capabilities. The total investment will be almost 70 million Euro.

The establishment of the JV matches well the development of the high-speed train industry in China. According to the 12th Five-Year plan for 2011-2015, China intends to invest a total of 3.5 trillion Renminbi in high-speed rail projects over the next five years. The total length of China Railway High-speed will be over 13,000 km by end of 2012 and 18,000 km by end of 2020. It is expected that there will be in excess of 800 high-speed trains running to match this infrastructure investment. The train industry is regarded as a pillar industry in China, with positive spin-offs on several other industries.

"We are proud to enter into a joint venture with Chalco, the biggest aluminium company in China. Sapa and Chalco combine qualities and strengths that will enable the JV to serve the rolling stock market in China with aluminium products in an excellent way. Sapa's extrusion technology and especially its leading position in Friction Stir Welding will be of great value for the JV. Chalco on the other hand with its market position and its rich aluminium experience will play a significant role in the development of this JV", says Bjørn M Wiggen, Chairman of Sapa.

"This cooperation represents the first JV project done by Chalco in the aluminum fabrication and it also corresponds to the development outlined in the 12th Five-Year plan. This project will be an important milestone in the strategic transformation, internationalization and technological development of Chalco. The JV will be a major cooperation between Chalco and Sapa with great potential for the future. The two companies will enhance each other by their competences, build a world class aluminum profile enterprise dedicated to rolling stock industry and support the Chinese railway industry." says Mr Xiong Weiping, Chairman of Chalco. 

Chalco and Sapa will utilize both parties' existing facilities in order to start serving the market in the near future. The new green-field plant is planned to be ready for production in the beginning of 2013.

Completion of the JV establishment is subject to the approval by certain Chinese authorities. Completion is expected during the 2nd quarter of 2011.

Sapa is owned 100% by Orkla ASA. 

View more pictures on Flickr.com

View the news coverage on the joint-venture on NRK.no, Norwegian Broadcasting Corporation