Shandong Province Announces Plan To Restructure Its Aluminium Sector

Shandong Province Announces Plan To Restructure Its Aluminium Sector

Shandong’s provincial government announced late last week a seven-year plan to reorganize its aluminium sector from the ground up. Regulators say the move is anticipated to yield significant benefits to the country’s processing and fabricating firms.

The plan, entitled “Implementation Plan to Accelerate High-quality Development of Seven Industries with High Energy Consumption,” was released as part of a November 5 notice by the provincial government. It outlines the government’s plan to increase operational efficiency and quality by streamlining the structure of several major industries in the area, including aluminium, steel, and petroleum coke production.

Per the report, the government aims to shrink electrical usage, first to 12,800 kwh/tonne by 2022, then to 12,500 kwh/tonne by 2025. In addition, the province seeks to phase out electrolytic cells with an amperage below 400kA entirely by 2025 as well.

“The cost of electricity accounts for some 30% of the total production cost during the aluminum smelting process (so) reducing electricity consumption would help the sustainable development of aluminum smelters in the long run,” opined an unnamed a Shanghai-based aluminum analyst to industry media on Friday.

The plans in question are a next step in the province’s efforts at shoring up its lucrative aluminium smelting sector. The move is meant to build on the progress it made last year in closing 3.2 million metric tons per year of old, outdated, and inefficient aluminium capacity, according to the provincial government.

“Essentially, the addition of new aluminum smelting capacity is nearly banned in Shandong,” elaborated the analyst. “If the provincial government wants to improve the productive value of this industry, a good way is to raise the ratio of high-end products.”

The provincial government seeks to have high-value added aluminium products comprise at least 60 percent of the industry’s total value, which it projects eventually totaling US$50.5 billion annually.