Aluminum Corp of China (Chinalco) said Xiao Yaqing had stepped down as company president less than a week after signing a $19.5 billion deal to invest in global miner Rio Tinto Ltd/Plc (RIO.AX: Quote)(RIO.L: Quote).
State-owned Chinalco, the world's third-largest producer of alumina, the main material for making aluminium, said Xiong Weiping, a former vice president, will replace Xiao.
The leadership change would not affect Chinalco's Rio investment, said vice president and spokesman, Lu Youqing.
Xiong said in a statement on the company's website (www.chalco.com.cn) that the new management would build on what previous management had achieved, noting the challenges due to the global financial crisis and weak metals markets.
Chinalco's business policies are unlikely to change much, while Xiong may put more energy in the management of the company, said Heng Kun, chief equities analyst at Essence Securities in Shanghai, adding Xiong would likely look to boost profits and reduce debt after heavy investments in recent years.
Chinalco may take some time to digest recent investments, Heng said.
Xiong, previously a professor at Hunan Zhongnan University, was a Chinalco vice president and president of its listed arm, Aluminum Corp of China Ltd (Chalco) (2600.HK: Quote) (601600.SS: Quote), before moving to China Travel.
He was among the candidates for the Chinalco presidency in 2004 to replace Guo Shengkun, who now heads the government of southwestern Guangxi Autonomous Region.
Instead, Xiao, then head of Chinalco's Southwest Aluminium subsidiary, was a surprise choice.
The Chinalco statement did not say where Xiao had moved to, but a source familiar with state-owned metals companies said he had been promoted as a reward for his work during his 5-year term at Chinalco.
Local media had reported Xiao would be working as a deputy secretary general of China's cabinet, the State Council, and would co-ordinate departments on industry policy.
Moving to the government will strengthen Xiao's future in politics and probably make him a candidate to be promoted to senior positions, said another industry source familiar with China's aluminium sector.
Working in government has greater personal achievement than in business, the source added.
Chinalco's latest investment in Rio helped improved Xiao's record as it diluted the $14 billion cost of buying 9 percent of Rio Tinto last year - a costly deal struck when commodity prices were at record highs.
Chalco is expected to post a more than 90 percent drop in 2008 net profit next month, said Essence's Heng, adding 2009 would be difficult due to low aluminium prices and weak demand.
Xiao is also chairman and CEO of Chalco, and the listed arm has not announced any change in his position.
Xiao's strategy was to turn Chinalco, once a local aluminium and alumina producer, into a multi-metal company that could punch its weight on the global stage.
Besides the two big investments in Rio, Chinalco is also investing in a A$3 billion project to develop the vast Aurukun bauxite deposit in Australia.
Xiao also drove the expansion of Chinalco's business to include copper and rare metals, buying Peru Copper and Yunnan Copper Industry, the third-largest copper producer in China. (Editing by Ian Geoghegan)
© Thomson Reuters 2009 All rights reserved