A pair of sources claiming knowledge of the situation informed Reuters on Thursday that China Hongqiao Group will restart a portion of the illegal aluminium-smelting capacity it shuttered in 2017.
Per the sources, the move will essentially consist of replacing outdated production lines with more state-of-the-art capacity. Among the planned replacement technology is a high-performance 600-kiloampere potline.
The sources who spoke to Reuters, who did so behind the veil of anonymity, stressed that the capacity to be restarted would not be “new” capacity, as it would only replace old capacity.
Hongqiao has a licensed capacity of around 6.46 million metric tons per annum, and the restarts in question are not expected to add to that number. Two years ago the Shandong government compelled it to close 2.68 million metric tons per annum of capacity that it deemed to be constructed and operated without official sanction.
According to a document posted by the Shandong government earlier this week, Hongqiao has been given permission to dismantle 543 thousand metric tons per annum of capacity in the province and replace all but 1 thousand metric tons per annnum of it with more efficient production capacity.
Per the document, Hongqiao will dismantle the existing capacity in the back half of the year, and the replacement capacity is authorized to begin smelting as soon as the original capacity has been removed.
Even amid the capacity trade-out, Hongqiao expects to keep production high, forecasting a year-end aluminium production total of between 6.3 million and 6.35 million metric tons.
In addition, Chinese aluminium consulting firm Aladdiny said Hongqiao has likely restarted less than 200 thousand metric tons per annum of capacity shuttered under last winter’s mandatory cuts. Such capacity remained closed in preparation for the installation of the new capacity in question, per Aladdiny.