Alcoa Investing in Chinese Venture

Alcoa Inc. and its new partner, the Aluminum Corp. of China Ltd. (Chalco), announced plans to jointly invest $540 million in a Chinese aluminum production joint venture.

Alcoa last month announced plans to buy an 8 percent stake in Chalco as part of the Chinese company's initial public offering. Chalco is the world's third largest aluminum maker and dominates China's aluminum market.

In forming the joint venture, Alcoa will purchase 50 percent of Chalco's Pingguo refining and smelting facility in China's southern Guangxi region. The two partners will then invest to expand the plant, China's most modern facility, which analysts consider to be the crown jewel in the Chalco group.

The company plans to spend $1.85 billion over the next five years, including $830 million to expand aluminum production and $1 billion to expand alumina production.