Alcoa Inc., the biggest U.S. aluminum producer and the world's number two, has sold its nearly seven per cent stake in China's largest aluminum maker for US$2 billion (€1.44 billion).

Pittsburgh-based Alcoa said Wednesday it will continue to invest in the aluminum industry in China, where it first opened offices in 1993.

Alcoa has 17 facilities in China that produce foil, fasteners, automotive components and other products.

Alcoa had been an investor in Aluminum Corporation of China Ltd., also known as Chalco, since the Chinese company's initial public offering in 2001.

It sold its interest for the equivalent of US$2.23 a share, a 15 per cent discount to Wednesday's closing price on the Hong Kong Stock Exchange.

The company did not say in a news release who bought the shares.

"We normally do not act as financial investors, but we participated in the Chalco IPO six years ago to help facilitate its entry into the capital markets," Alcoa's chairman and chief executive, Alain Belda, said in a statement.

Firmly established

"Over the past seven years Chalco has becomefirmly established in the equity market so our role as a financial investor is no longer needed, and we can redeploy our capital into other value-adding options, including projects in China," he said.

Belda said Alcoa's commitment to China and opportunities there had "never been stronger," and that the company looked forward to continuing to work with "our partners and Chalco to help the industry realise its great potential."

Alcoa said it was spending $300 million (€216 million) to expand its Bohai rolling mill in Qinghuangdao.

Alcoa has 116,000 employees in 44 countries. Its shares fell 52 cents, or 1.5 per cent, to US$33.68 in afternoon trading Wednesday.

- AP