ALUMINUM CORP OF CHINA LTD | CIK:0001161611 | 3

  • Filed: 4/19/2018
  • Entity registrant name: ALUMINUM CORP OF CHINA LTD (CIK: 0001161611)
  • Generator: Merrill
  • SEC filing page: http://www.sec.gov/Archives/edgar/data/1161611/000116161118000020/0001161611-18-000020-index.htm
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  • ifrs-full:DisclosureOfTransactionsBetweenRelatedPartiesExplanatory

     

     

     

     

     

     

     

     

     

     

        

    Note

        

    2015

        

    2016

        

    2017

     

     

     

     

     

     

     

     

     

    Sales of goods and services rendered:

     

     

     

     

     

     

     

     

    Sales of materials and finished goods to:

     

    (i)

     

     

     

     

     

     

    Chinalco and its subsidiaries

     

    (ix)

     

    10,998,505

     

    10,311,722

     

    10,612,330

    Associates of Chinalco

     

     

     

    703,628

     

    688,308

     

    682,992

    Joint ventures

     

     

     

    79,034

     

    648,145

     

    2,031,159

    Associates

     

     

     

    2,165,445

     

    605,449

     

    705,052

     

     

     

     

     

     

     

     

     

     

     

     

     

    13,946,612

     

    12,253,624

     

    14,031,533

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Provision of engineering, construction and supervisory services to:

     

    (iii)

     

     

     

     

     

     

    Chinalco and its subsidiaries

     

    (ix)

     

    46,328

     

    101,323

     

    77,095

    Joint ventures

     

     

     

     —

     

    41,423

     

    2,046

     

     

     

     

     

     

     

     

     

     

     

     

     

    46,328

     

    142,746

     

    79,141

     

     

     

     

     

     

     

     

     

    Provision of utility services to:

     

    (ii)

     

     

     

     

     

     

    Chinalco and its subsidiaries

     

    (ix)

     

    314,544

     

    567,628

     

    581,566

    Associates of Chinalco

     

     

     

    14,803

     

    4,444

     

    8,776

    Joint ventures

     

     

     

     —

     

    3,031

     

    118,280

    Associates

     

     

     

    553

     

    584

     

    1,122

     

     

     

     

     

     

     

     

     

     

     

     

     

    329,900

     

    575,687

     

    709,744

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Rental revenue of land use rights and buildings from:

     

    (vi)

     

     

     

     

     

     

    Chinalco and its subsidiaries

     

    (ix)

     

    34,476

     

    33,231

     

    40,875

    Associates of Chinalco

     

     

     

    249

     

     

     

     

    Joint ventures

     

     

     

     

     

     —

     

    426

     

     

     

     

    34,725

     

    33,231

     

    41,301

     

     

     

     

     

     

     

     

     

    Purchases of goods and services:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Purchases of engineering, construction and supervisory services from:

     

    (iii)

     

     

     

     

     

     

    Chinalco and its subsidiaries

     

    (ix)

     

    1,737,344

     

    1,525,349

     

    1,205,355

     

     

     

     

     

     

     

     

     

    Purchases of key and auxiliary materials, equipment and finished goods from:

     

    (iv)

     

     

     

     

     

     

    Chinalco and its subsidiaries

     

    (ix)

     

    1,640,051

     

    1,626,782

     

    3,849,889

    Joint ventures

     

     

     

    1,276,078

     

    3,799,116

     

    6,516,087

    Associates

     

     

     

    414,539

     

    31,413

     

    1,175

     

     

     

     

     

     

     

     

     

     

     

     

     

    3,330,668

     

    5,457,311

     

    10,367,151

     

     

     

     

     

     

     

     

     

    Provision of social services and logistics services by:

     

    (v)

     

     

     

     

     

     

    Chinalco and its subsidiaries

     

    (ix)

     

    324,872

     

    307,354

     

    326,830

     

     

     

     

     

     

     

     

     

    Provision of utility services by:

     

    (ii)

     

     

     

     

     

     

    Chinalco and its subsidiaries

     

    (ix)

     

    643,597

     

    686,474

     

    1,397,346

    Joint ventures

     

     

     

     —

     

    3,386

     

    19,537

     

     

     

     

     

     

     

     

     

     

     

     

     

    643,597

     

    689,860

     

    1,416,883

     

     

     

     

     

     

     

     

     

     

     

        

    Notes

        

    2015

        

    2016

        

    2017

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Provision of product processing services by:

     

    (vii)

     

     

     

     

     

     

    Chinalco and its subsidiaries

     

    (ix)

     

    62,623

     

     —

     

     —

     

     

     

     

     

     

     

     

     

    Provision of other services by:

     

     

     

     

     

     

     

     

    A joint venture

     

     

     

     —

     

    151,552

     

    269,204

     

     

     

     

     

     

     

     

     

    Rental expenses for buildings and land use rights charged by:

     

    (vi)

     

     

     

     

     

     

    Chinalco and its subsidiaries

     

    (ix)

     

    590,657

     

    509,558

     

    474,567

    Joint ventures

     

     

     

     —

     

    126

     

     —

     

     

     

     

     

     

     

     

     

     

     

     

     

    590,657

     

    509,684

     

    474,567

     

     

     

     

     

     

     

     

     

    Other significant related party transactions:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Borrowing from a subsidiary of Chinalco

     

    (viii), (ix)

     

    5,929,000

     

    5,145,959

     

    3,901,000

     

     

     

     

     

     

     

     

     

    Interest expense on borrowings, discounted notes and factoring arrangement from subsidiaries of Chinalco

     

     

     

    149,213

     

    226,118

     

    225,934

     

     

     

     

     

     

     

     

     

    Entrusted loans and other borrowings to:

     

     

     

     

     

     

     

     

    Joint ventures

     

     

     

    140,000

     

    212,400

     

    500,000

    Associates

     

     

     

     —

     

     —

     

    1,100,000

     

     

     

     

     

     

     

     

     

     

     

     

     

    140,000

     

    212,400

     

    1,600,000

     

     

     

     

     

     

     

     

     

    Interest income on entrusted loans and other borrowings:

     

     

     

     

     

     

     

     

    Joint ventures

     

     

     

    14,061

     

    31,373

     

    41,005

    An associate

     

     

     

     —

     

     —

     

    24,425

     

     

     

     

     

     

     

     

     

     

     

     

     

    14,061

     

    31,373

     

    65,430

     

     

     

     

     

     

     

     

     

    Interest income from the unpaid disposal proceeds from:

     

     

     

     

     

     

     

     

    Chinalco and its subsidiaries

     

     

     

    326,217

     

    246,149

     

    117,587

     

     

     

     

     

     

     

     

     

    Disposal of assets under a sale and leaseback contract to a subsidiary of Chinalco

     

    (xxvi)

     

    1,150,000

     

    1,040,000

     

    600,000

     

     

     

     

     

     

     

     

     

    Finance lease under a sale and leaseback contract from subsidiaries of Chinalco

     

    (xxvi), (ix)

     

    1,150,064

     

    1,040,036

     

    600,036

     

     

     

     

     

     

     

     

     

    Trade receivable factoring arrangement from a subsidiary of Chinalco 

     

    (ix)

     

     —

     

     —

     

    1,570,000

     

     

     

     

     

     

     

     

     

    Discounted notes receivable to a subsidiary of Chinalco

     

    (viii)

     

    122,000

     

    40,200

     

    523,253

    Provision of financial guarantees to:

     

     

     

     

     

     

     

     

    Joint ventures

     

    (xv), (xxv)

     

    340,900

     

    24,245

     

    18,350

    An associate

     

    (xvi)

     

    17,470

     

     —

     

     —

     

     

     

     

     

     

     

     

     

     

     

     

     

    358,370

     

    24,245

     

    18,350

     

     

     

     

     

     

     

     

     

    Financial guarantees provided by:

     

     

     

     

     

     

     

     

    Subsidiaries of Chinalco

     

    19(e)

     

    27,000

     

    23,000

     

    4,000

     

     

     

     

     

     

     

     

     

     

    All transactions with related parties were conducted at prices and on terms mutually agreed by the parties involved, which are determined as follows:

    (i)

    Sales of materials and finished goods comprised sales of alumina, primary aluminum, copper and scrap materials. Transactions entered into are covered by general agreements on a mutual provision of production supplies and ancillary services. The pricing policy is summarized below:

    1.The price prescribed by the PRC government (“state-prescribed price”) is adopted;

    2.If there is no state-prescribed price, state-guidance price is adopted;

    3.If there is neither state-prescribed price nor state-guidance price, then the market price (being price charged to and from independent third parties) is adopted; and

    4.If none of the above is available, then the adoption of a contractual price (being reasonable costs incurred in providing the relevant services plus not more than 5% of such costs is adopted).

    (ii)Utility services, including electricity, gas, heat and water, are provided at the state-prescribed price.

    (iii)Engineering, project construction and supervisory services were provided for construction projects of the Group. The state-guidance price or prevailing market price (including the tender price where by way of tender) is adopted for pricing purposes.

    (iv)The pricing policy for purchases of key and auxiliary materials (including bauxite, limestone, carbon, cement and coal) is the same as that set out in (i) above.

    (v)Social services and logistics services provided by Chinalco Group cover public security, fire services, education and training, school and hospital services, cultural and physical education, newspaper and magazines, broadcasting and printing as well as property management, environmental and hygiene, greenery, nurseries and kindergartens, sanatoriums, canteens and offices, public transport and retirement management and other services. Provisions of these services are covered by the Comprehensive Social and Logistics Services Agreement. The pricing policy is the same as that set out in (i) above.

    (vi)Pursuant to the Land Use Rights Lease Agreements entered into between the Group and Chinalco Group, operating leases for industrial or commercial land are charged at the market rent rate. The Group also entered into a building rental agreement with Chinalco Group and paid rent based on the market rate for its lease of buildings owned by Chinalco.

    (vii)The pricing policy for product processing services is the same as that set out in (i) above.

    (viii)Chinalco Finance Company Limited (“Chinalco Finance”) (中鋁財務有限責任公司), a wholly-owned subsidiary of Chinalco and a non-bank financial institution established in the PRC, provides deposit services, credit services and miscellaneous financial services to the Group. The terms for the provision of financial services to the Group are no less favourable than those of the same type of financial services provided by Chinalco Finance to Chinalco and other members of its group or those of the same type of financial services that may be provided to the Group by other financial institutions.

    (i)

    These related party transactions also constitute connected transactions or continuing connected transactions as defined in Chapter 14A of the Listing Rules.

    (ii)

    In November 2015, the Company together with its two subsidiaries, Chalco International Trading and Chalco Shanghai Kelin Co., Ltd. (上海中鋁凱林鋁業有限公司) (“Shanghai Kelin”) signed a capital injection agreement with Chinalco Asset Management Co., Ltd.*(中鋁資產經營管理公司) (“Chinalco Asset Management”) to inject capital to Chinalco Property Development Co., Ltd.* (中鋁置业發展有限公司) (“Chinalco Property Development”) by way of injecting certain urban property assets and land use rights with appraised value amounting to RMB676.95 million and cash amounting to RMB696 million. Subsequent to the capital injection, the Group held a 24.12% equity interest in Chinalco Investment Development. The investment in Chinalco Property Development has been adjusted the impact of downstream transaction amounting to RMB111.3 million. The transaction generated disposal gain amounting to RMB350.22 million. In November 2015, Chinalco Property Development changed its name to Chinalco Investment Development.

    (xi)Transfer of the Property Assets of Chalco Hong Kong to Chinalco assets holdings

     

    In November 2015, Chalco Hong Kong and Chinalco Assets Holdings entered into an asset transfer agreement, pursuant to which, Chalco Hong Kong agreed to dispose of the property assets (“HK Property”) of Chalco Hong Kong to Chinalco Assets Holdings. The appraised value of the properties was HKD372 million (equivalent to RMB311 million) as at the Benchmark Date of September 30, 2015. According to the asset transfer agreement, 30% of the total consideration, i.e. HKD112 million (equivalent to RMB93 million), shall be paid to Chalco Hong Kong by Chinalco Assets Holdings in December 2015, and the remaining 70% of the total consideration shall be paid before June 30, 2016. The transaction between the Group and Chinalco Assets Holdings constituted a connected transaction. The Group disposed of the Hong Kong property with carrying value of RMB102 million and recognized a gain of RMB210 million. In December 2015, the Group received the first batch of the asset transfer consideration of RMB93 million.

     

    (xii)As disclosed in note 38, the Group acquired relevant assets and liabilities of High-Purity Aluminum Plant and Light Metal Material Plant (“High-Purity Aluminum and Light Metal”) from Baotou Group which also constituted a connected transaction.

     

    (xiii)In August 2015, the Company entered into an agreement with Chalco Resource, a subsidiary of Chinalco, pursuant to which the Company shall make a capital injection to Chalco Resource of RMB616.58 million in proportion to its 15% equity interest in Chalco Resource. As at December 31, 2015, the Company has made a capital injection of RMB246.63 million in cash, and still has the capital injection commitment amounting to RMB369.95 million.

     

    (xiv)In August 2015, the Company signed a capital injection agreement with China Rare Earth pursuant to which the Company has made a capital injection of RMB400 million in cash in return for 14.62% equity interest in China Rare Earth.

     

    (xv)In March 2013, the Company entered into a guarantee agreement  with China Development Bank, together with other shareholders of Xinyugou Coal Co., Ltd. *(“山西介休鑫峪沟煤业有限公司”) (“Xinyugou Coal”), a joint venture of the Company, and pursuant to the guarantee agreement, the Company provided  financial guarantee to loans up to RMB1,020 million of Xinyugou Coal, in proportion to its 34% shareholding. In August 2016, Xinyugou Coal was default in repayment of bank loans and interests of RMB914 million and RMB101 million, respectively. Based on the agreement entered among the Company, Xinyugou Coal, one of its other shareholders and  China Development Bank on 31 August 2016, the Company fulfilled its guarantee obligation by paying RMB336 million to China Development Bank, and the related financial guarantee was released.

     

    (xvi)In February 2014, Shanxi Huasheng, a subsidiary of the Company, entered into a financial guarantee contract with Shanghai Pudong Development Bank providing a financial guarantee to Xingshengyuan Coal Co., Ltd*(“霍州煤电集团兴盛园煤业有限责任公司”) (“Xingshengyuan Coal”) an associate of the Company, for its bank loan up to RMB200 million, in proportion of the 43.03% shareholding in Xingshengyuan Coal. In 2016, Xingshengyuan Coal repaid the bank loan in full, and the guarantee has been released.

     

    (xvii)As disclosed in note 38, on January 1, 2016, Chalco Shandong swapped certain assets and liabilities to acquire a business from Shandong Aluminum, which constituted a related party transaction.

     

    (xviii)As disclosed in note 38, the Group acquired relevant assets and employees of pseudoboehmite and activated silicon powder production lines of Science and Technology Chemical Company from Shanxi Aluminum Plant, which also constituted a related party transaction.

     

    (xix)As disclosed in note 38, the Group acquired the 33% and 33% equity interests in Xinghua Technology from Shandong Aluminum and Shanxi Aluminum Plant, respectively, which constituted a related party transaction.

     

    (xx)As disclosed in note 38, the Group acquired the 60% equity interest of Chinalco Shanghai from Chinalco, which also constituted a related party transaction.

     

    (xxi)In November 2015, the Company and Chinalco Capital, a subsidiary of Chinalco, entered into a capital contribution agreement (the “Capital Contribution Agreement“), pursuant to which the Company made a capital injection to Chinalco Capital by the 15% equity interest held by the Company in ABC-CA Fund Management Co., Ltd. (“農銀匯理基金管理有限公司“) (“ABC-CA“) with appraised value of RMB283.15 million and cash of RMB150 million totalling RMB433.15 million. The Company completed the capital injection of 15% equity interest of ABC-CA in June 2016 which constituted a related party transaction.

     

    (xxii)As Disposal of non-core assets

     

    On March 30, 2016, Chalco Shandong, Chalco Shanxi Branch and Chalco Henan Branch entered into asset transfer agreements to transfer certain non-core assets to Shandong Aluminum, Shanxi Aluminum Plant and China Great Wall Aluminum Corporation, respectively, which are all subsidiaries of Chinalco. The total consideration was RMB474.62 million which was determined based on the valuation reports of the assets disposed of on the valuation base date as at February 29, 2016. The carrying value of the assets disposed of amounted to RMB279.19 million and the Group recognized a disposal gain of RMB195.43 million. The transactions were completed on March 31, 2016. Pursuant to the asset transfer agreements, the considerations will be paid in two instalments. In 2016, Shanxi Aluminum Plant and China Great Wall Aluminum Corporation paid the first instalment amounting to RMB120.04 million by notes receivable, and Shandong Aluminum settled its payment by offsetting receivables amounting to RMB76.62 million.

     

    (xxiii)Disposal of businesses

     

    As disclosed in note 39, on June 30, 2016, the Group transferred the Environmental Protection Business to Aluminum SPC, which constituted a related party transaction.

     

    (xxiv)Cooperative exploration of Maochang Mine

     

    On June 28, 2016, the Company and Chinalco entered into a cooperative exploration agreement, pursuant to which the Company and Chinalco contributed construction investment and mining rights of RMB660 million and RMB475 million, respectively, representing 58.15% and 41.85%, respectively. The Group and Chinalco are entitled to the share of profits derived from Maochang Mine based on their respective percentage of assets contributed and mine rights, respectively, for the period from July 1, 2016 to December 30, 2038.

     

    On June 28, 2016, the Company also entered into a profit sharing rights transfer agreement with Chinalco, pursuant to which the Group acquired 80% of Chinalco’s profit sharing rights in Maochang Mine at the consideration of RMB349.95 million which is determined by both parties  with reference to the appraised value provided by an independent qualified valuer. The consideration will be paid in cash by the Group by instalments of RMB120 million, RMB135 million and RMB94.95 million in 2016, 2017 and 2018, respectively. The Group recorded the profit sharing rights purchased from Chinalco as an intangible asset at the present value of the cash consideration instalments and the related transactions totalling RMB335.41 million.

     

    As at December 31, 2017, Maochang Mine had been put into operation.

     

    (xxv)In December 2006, Ningxia Energy, a subsidiary of the Company, entered into a financial guarantee contract with China Construction Bank providing a financial guarantee to Tian Jing Shen Zhou Wind Power Co., Ltd, a joint venture of the Company, for its 14-year bank loan amounting to RMB35 million. As at December 31, 2017, the outstanding amount of the guarantee was RMB18 million. (December 31, 2015: RMB30 million, December 31, 2016: RMB24 million)

    (xxvi)As disclosed in note 20, the Group has entered into several sales and leaseback contracts with CFL.

    (xxvii)On 12 May 2017, the Company entered into an equity transfer agreement with Chinalco, pursuant to which, the Company acquired the 40% non-controlling equity interest in Chinalco Shanghai at a total cash consideration of RMB1,413 million. The consideration was determined based on the appraisal value of the equity of Chinalco Shanghai and was fully paid before December 31, 2017. On the acquisition date, the carrying amount of 40% equity interest in Chinalco Shanghai was RMB387 million, therefore the difference amounting to RMB1,026 million was recorded in share premium. After the acquisition, Chinalco Shanghai became a wholly-owned subsidiary of the Company. The acquisition of 40% equity interest in Chinalco Shanghai constituted a related party transaction.

    (xxviii)As disclosed in note 38(g), the Group acquired 100% equity interest in Qingdao Light Metal from Chinalco, which constituted a related party transaction.

    (xxix)As disclosed in note 38(h), the Group acquired Shanxi Aluminum Sewage Treatment Plant from Shanxi Aluminum Plant, which also constituted a related party transaction.

    (xxx)As disclosed in note 39 (d), on October 31, 2017, the Group transferred 60% equity interest of China Aluminum Shandong Engineering Technology Co., Ltd.(“Shandong Engineering”) (中鋁山東工程技術有限公司) to China Aluminum International Engineering Co., Ltd. (“CHALIECO”) (中鋁國際工程股份有限公司), which constituted a related party transaction.