China Hongqiao Planning New Aluminium Smelter In Yunnan

China Hongqiao Planning New Aluminium Smelter In Yunnan

World-leading aluminium producer China Hongqiao Group Ltd. is reportedly in talks with officials from the Yunnan provincial government to build a new aluminium smelter in the region.

“They are in the process of discussing this issue,” explained Yunnan’s vice governor Dong Hua to Reuters earlier this week. “Once they have discussed it, you will know.”

Speaking to reporters during a break at the China International Lead and Zinc Conference in Kunming, Dong indicated that he did not know any further specifics regarding the plant, such as capacity and date of first production, but he assured reporters that an announcement would be made once talks concluded.

Dong’s comments dovetailed with a statement published by the China Nonferrous Metals Industry Association’s website last week that said Hongqiao plans to construct a 2 million metric tons per annum aluminium smelting plant and captive hydropower facility in Wenshan, Yunnan. Per the statement, Hongqiao would break ground on the project by year’s end.

As for Hongqiao, the company did not respond to a request for comment by Reuters by press time.

Hongqiao has made no secret of seeking to move capacity to China’s southern reaches, nor have many of the Middle Kingdom’s other aluminium smelting firms. Attracted by the area’s significant hydropower potential and the resulting cleaner power production, Yunnan has become a major destination for new and relocated aluminium smelting capacity in recent months and years.

At present Hongqiao boasts an all-in aluminium smelting capacity of 6.5 million metric tons, all of which currently resides in the northeastern province of Shandong. The firm shuttered 2.68 million metric tons of capacity in 2017 on account of a state enforcement action against unpermitted capacity.

Construction of a new plant would require permission from Beijing for more capacity or the closure of capacity in another area, however. Analysts from CRU Group told Reuters that Hongqiao is unlikely to petition for or receive permission for new capacity, leaving only the possibility of capacity relocation.