Chinese aluminium behemoth China Hongqiao Group is poised to begin the second phase of construction at its alumina plant in Indonesia according to an adviser to the firm. Hongqiao’s project is hitting full swing just as prices for the aluminium precursor hit highs not seen in many months.
Production at Hongqiao’s Well Harvest Winning alumina refinery commenced about five years ago. Initial plans had the second phase opening last year, but the firm said only that the second phase was “progressing smoothly.”
“A second phase of the Indonesian project – another 1 million tonnes – should come on line later this year,” revealed Hongqiao adviser Ron Knapp at a recent virtual conference.
At present the firm boasts a nameplate capacity of about 16 million metric tons per annum, he explained. The lion’s share of that capacity is in mainland China. However, Hongqiao is one of several Chinese firms seeking to move production capacity from China’s northern reaches to more production-friendly southern provinces or out of China altogether. Aluminium producers in the Middle Kingdom have been squeezed by Beijing in recent years due to significant overproduction and rampant carbon emissions linked to captive coal-fired power plants.
Analysts say Hongqiao is in the process of relocating about a third of its production capacity from Shandong to Yunnan province to take advantage of the abundant hydropower in the region. Knapp said the first phase of that relocation began last year, with a trio of production lines slated to come online as part of a second phase relocation in the near future.
Knapp continued by saying that Hongqiao seeks to increase its presence in the rail and aerospace markets. Yunnan is also likely to see more midstream processing, with Shandong taking over a majority of the downstream value-added processing in the future.
All this comes as prices for alumina spiked to US$320 per metric ton, reaching highs not seen since the summer of 2019.