The Chinese aluminium giant is not having a good time of it, thanks largely to depressed aluminium prices, quality issues surrounding domestic bauxite and lower alumina outputs following export restrictions in Indonesia. Add on potential problems with the supply of Mongolian coking coal and you have a recipe for financial disaster.

While all of these problems – depressed prices, bauxite export restrictions from Indonesia and suspect quality levels surrounding China's own bauxite reserves – are enough in themselves, Chalco's possible saving grace (coking coal) is not hassle-free.

Chalco is considering legal action against the Mongolian-owned Erdenes-Tavan Tolgoi company if – as seems likely – it reneges on a coking coal supply agreement, set up in 2011, which involved the Chinese aluminium producer forking out $250 million in advance.

ETT is now claiming that it costs them more to produce and ship the coal than the price originally paid by Chalco.

At year-end 2011, Chalco reported net profits of $38.2 million.

In 2012, aluminium prices fell 7% while alumina production costs rose by 4%.