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China's Chalco to sell 190,000 T of aluminium capacity to Yunnan affiliate

BEIJING, Feb 20 (Reuters) - Aluminum Corp of China Ltd , known as Chalco, said on Wednesday it had proposed selling 190,000 tonnes of annual aluminium smelting capacity to a Yunnan-based unit of its parent, Chinalco, for 950 million yuan ($141 million).

The move points to a gradual rebalancing of state-owned Chinalco's aluminium portfolio from northern China to southern regions like Yunnan, where the company has taken over Yunnan Aluminium Co and will have access to cleaner hydropower.

Chalco, in statements to the Shanghai and Hong Kong stock exchanges, said the capacity would be transferred from its Shanxi Huasheng unit, which has recently made production cuts, to Heqing Yixin Aluminium, a subsidiary of Yunnan Aluminium that is bringing on stream a 210,000 tonnes a year smelter.

China allows aluminium smelters to move or acquire new capacity in regions that have available quotas. No specific agreement on the proposed capacity transfer has yet been concluded, Chalco said.

Shanxi Huasheng has 240,000 tonnes per year of aluminium smelting capacity, according to Chalco's latest annual report, although some production was shut down in November as Chinese aluminium prices slumped to two-year lows.

($1 = 6.7211 Chinese yuan renminbi) (Reporting by Tom Daly; Editing by Susan Fenton)