Alcoa leader shows his mettle

'Dawn raider' likes speed-dating TV but also possesses a tough exterior

BEIJING - When Chen Jinya joined Alcoa China on the first day of 2007, he expected he would be able to build a bridge between East and West.

And as president, Asia-Pacific, based in Beijing, with overall responsibility for Alcoa's China business and regional administrative functions such as legal, finance, human resources, and corporate affairs and government relations, he immediately set about making his mark.

In a joint exercise with Aluminum Corporation of China (Chinalco) and led by both companies' top leaderships, he entered a bidding battle for Rio Tinto - the largest single deal by a Chinese company abroad so far. Later on, the Alcoa leadership agreed a $7.5 billion agreement with China Power Investment Corp (CPI), one of the top five power producers and the second-largest aluminum company in the nation, to work on clean-energy, alumina and aluminum projects.

Chen regarded the so-called "dawn raid" deal with Chinalco as one of the best things Alcoa has ever taken in China, "because Alcoa was doing a right thing with a right company at a right time," said Chen.

On the night of Feb 2, 2008, six days before a deadline for BHP Billiton, one of the three iron ore companies, to table a formal offer for its rival Rio, Paul Skinner and Tom Albanese, Rio's chairman and chief executive, seemed in a relaxed mood while dining together in a London restaurant. BHP, Rio and Vale AG are the world's top three iron ore miners by production.

However, across the city, in the financial hub of Canary Wharf, and thousands of kilometers away from Hong Kong, bankers at Lehman Brothers were secretly plotting the biggest ever swoop on Rio's shares.

Chinalco and Alcoa surprised everyone with the dramatic move on Feb 8, 2008, in which they acquired 12 percent of Rio's London-listed shares worth $14.3 billion. The dividend was large enough to give China a seat at the table during any merger talks between Rio and BHP - and also disrupted a potential takeover of Rio by BHP.

The top three miners Vale, BHP and Rio together meet around two thirds of China's iron ore demand every year. Had BHP taken over Rio, the Australian giant would have been able to control 50 percent of China's iron ore supply, which could enable it to put Chinese steelmakers under greater price pressure, Chen said.

People familiar with the transaction said the dawn raid on Rio is one of the tactics mentioned in The Art of War, the famous Chinese military book written by Sun Tzu 2,500 years ago.

Chen loves reading. Staff said he also loves to discuss Chinese classics, such as Confucius and the Art of the War, with Alcoa Chief Executive Officer Klaus Kleinfeld who is also well known for his rich knowledge about China.

Cooperation principles

"Alcoa is a strong believer in cooperating with others. In China, there are millions of opportunities and no single company can get everything," said Chen. "The best way to win in China is to cooperate with good companies and win together.

"Klaus always tells us to get rich together with our partners instead of getting rich from them."

That belief is driving Alcoa to work with top Chinese companies to go overseas and use aluminum to help the world become greener.

On Jan 19, Alcoa agreed with CPI to work on green energy , alumina and aluminum projects both in China and overseas in investment valued at $7.5 billion. They signed the agreement in Washington DC during President Hu Jintao's visit to the United States between Jan 18 and 21.

China wants renewable energy to account for 15 percent of its energy consumption by 2020. This target has attracted a series of related foreign businesses to compete for a slice of the pie.

The question is, "Why Alcoa?". Chen said that aluminum can be recycled and China needs this "miracle metal" with its higher efficiency to reduce pollution and save energy.

Alcoa regards itself as highly competitive in terms of technologies and solutions compared with its competitors. For example, beverage cans made from sheets of Alcoa's metal are 100 percent recyclable.

Industry leader

Alcoa has been the leader in aluminum technology since it was founded in 1888. More than 90 percent of the high-end aluminum alloys in the aerospace industry have been produced by the company.

It announced in early June that aircraft made of aluminum can be 10 percent lighter than those made of composite-intensive materials, which may result in a 12 percent higher fuel efficiency for ordinary jets or 15 percent when fuel-efficient jet engines are used.

Alcoa is also developing similar technology in ground-based transportation.

China automaker and battery producer BYD Co, which is partly owned by Warren Buffett, is reportedly interested in Alcoa's lightweight automobile parts. People wonder whether Chen's background will help Alcoa to further cooperate with Chinese car companies.

Before joining Alcoa, Chen was working as Asia-Pacific director with responsibility for electronics and safety at Delphi Corporation, a multinational electronics and technologies supplier for the auto industry. "We are interested in talking with many Chinese automakers to look for potential cooperation opportunities," he said, without giving details.

Chen believes the aluminum market in China is on an upward trajectory. "The average consumption per person of aluminum in the US and Japan amounts to 35 kilograms (kg) annually, while in China the figure is approximately 16 kg, indicating a great potential for growth," he said.

China is a "big growth market" for Alcoa at a time when global aluminum demand fell 6 percent in 2009 due to the global financial crisis.

Demonstrating full confidence in the emerging market, Alcoa allocated an additional $100 million funds to Alcoa Bohai Aluminum Industries Company, making its total investment in the subsidiary $440 million in 2009. It is the largest overseas investment in China's aluminum industry so far.

Alcoa currently has more than 10 rolling facilities in China, with more than 1,000 employees across the country. Employees say it's Chen's East-West combined management that holds the large team together.

"He is tough but straightforward with us regarding the job, pushing us to go forward. But, normally, he is like a parent and a mentor looking after and coaching everyone. Even girls and boys go to him for advice, on personal issues," said Shauna Huang, vice-president of Alcoa China in charge of corporate affairs.

The 58-year-old executive loves watching the popular TV show If You Are The One, a speed-dating program. "I like watching certain popular TV shows to understand what young people are thinking about, so I can develop a common language with them," Chen said.