BEIJING, June 15 -- Alcoa Inc, the world's largest aluminium producer, plans to quadruple its investment in China by 2014, aiming to break into the country's upstream smelting and alumina sector.

"With the country's aluminium consumption expected to grow more than 10 per cent annually over the next three years, our investment is estimated to quadruple by 2014," the company said in its China sustainability report.

By the end of last year, Alcoa had invested 5.3 billion yuan (US$662.5 million) in China since it started business in the country in 1993.

"We would like to invest, and will look into any area (in both upstream and downstream sectors of the aluminium industry) that could make good economic returns," Lloyd H Jones, president of Alcoa Asia-Pacific, told China Daily in an interview yesterday.

But the total spending indicated in the report is an estimate, Jones added. "It is hard to give a fixed figure concerning future investments it is a one-by-one thing, all depending on each individual opportunity we have."

The company also showed interest in China's upstream smelting and alumina sector. Alcoa currently has 15 ventures in China in downstream fabrication such as producing rolled components for cars.

"We would like to invest in one or more smelters here, and also (get into) the alumina business if opportunities present," Jones said.

China is the world's biggest aluminium producer, but is short of alumina, a white powder used to produce aluminium.

Alcoa must take a long-term perspective, at least 30 years, to enter China's smelting and alumina business, Jones added, citing factors such as the ability to get economic returns and minimize environmental and community impact.

He admitted that it would be a long and complicated process to get government approval in China under the current policy.

"But we remain optimistic (about starting the upstream business in China), and we will work our way out," he said. It will depend on finding the right opportunity and working closely with both the national and provincial governments in China, Jones said.

China is a good place to invest in smelting given the availability of energy, relatively cheap construction costs and the growing market, he said.

Although the Chinese Government has determined to fight overcapacity in many energy-intensive sectors including aluminium production, Jones said that the country aimed to close down small and inefficient plants, and that new technology and products would help China improve efficiency and save energy.

Alcoa is expected to establish three ventures in China's downstream sector, which would more than triple its capacity of fabricated products by 2008.

These ventures are two new plants in Kunshan near Shanghai and Suzhou in East China's Jiangsu Province, and an expansion of its joint venture with CITIC in Qinhuangdao of North China's Hebei Province.

"The three ventures will boost our fabricated goods capacity from the current 80,000 tons (a year) to 340,000 tons (a year)," Jones said.

The company is also looking into opportunities to build greenfield plants and take over existing ones to expand its business in China.

Alcoa's total revenue in China last year was US$700 million, compared with global sales of US$26 billion.

(Source: China Daily)