State-owned aluminium firm Aluminum Corp of China Ltd (Chalco) is moving an additional 135 thousand metric tons per annum of aluminium smelting production to its co-affiliate Yunnan Aluminium, the company announced yesterday. This is but the latest in a mass migration to the area, where hydropower is cheap and abundant.
Both Chalco and Yunnan Aluminium are subsidiaries of Chinalco, the state-owned company and the world’s most prolific producer of aluminium. Yunnan Aluminium bid approximately US$80.64 million plus tax for the new capacity according to an announcement to the Shanghai stock exchange.
The capacity in question came available as a result of Chalco’s shuttering of Shandong Huayu almost two years ago, which the firm indicates came about due to the high cost of operating the plant.
For its part, Yunnan Aluminium said the new capacity will “help accelerate implementation of the company’s integrated hydropower and aluminium development strategy and further enhance competitiveness.”
Yesterday’s announcement represents the second time Chalco has moved capacity to the southwestern province. Last year the firm shuttered Shanxi Huasheng and sold its 170 thousand metric tons per annum of aluminium production for CN¥80 million (US$11.98 million).
Yunnan Aluminium became a Chinalco affiliate in 2018 as part of the firm’s push to take advantage of the province’s abundant hydropower in the area. Subsidiary Chalco owns a 10-percent share of Yunnan Aluminium as well as a 38.9-percent stake in the company’s Yixin Aluminium plant.
Chinalco’s move is part of a greater migration by Chinese smelters to Yunnan province for the same reasons. Beijing continues to crack down on aluminium smelters in the country’s northeast due to the high prevalence of captive power plants that run on coal. Additionally, as coal prices have risen, the low cost of hydropower has consequently become of greater interest as time goes by.