China Hongqiao: Plan to shift aluminum output on track despite Yunnan’s power woes

Aluminum smelting and hydropower project located in Yunnan’s Wenshan prefecture, southwestern China. (Image by AndreaGotts, Wikimedia Commons).

China Hongqiao Group will stick to its plan of moving 2 million tonnes of capacity to the country’s southwest by the end of next year despite recent electricity supply disruptions there, the world’s top private aluminum producer said.

Hongqiao has previously said it will move more than 60% of its 6.46 million tonnes of capacity to Yunnan province from northern Shandong province by end-2025 to allow it to access the region’s abundant hydropower and reduce its carbon footprint.

It had already built 850,000 tonnes of capacity in the province by June this year, and will have a total 2.03 million tonnes of capacity in its Yunnan Hongtai plant by the end of 2023, Ron Knapp, adviser to the office of the chairman, told Reuters on Monday.

The relocation is going ahead despite recent disruptions to power supply in Yunnan, after lower-than-usual rainfall this year reduced hydropower generation.

The government ordered primary aluminum producers to cut their power usage by at least 10% in September. One major local producer told Reuters last week that the power curbs have been expanded to 20% from October.

“I see that as a short-term issue. We are building for the long-term, and I believe Yunnan is building for the long term as well, with plans for wind and solar as well as energy storage,” Knapp said.

Hongqiao’s relocation of aluminum smelters from its base in Shandong to China’s southwest will by far be the world’s biggest relocation of aluminum capacity, according to Knapp.

“We are expecting 75% of our carbon footprint to be addressed through moving out of fossil-fueled electricity,” added Knapp.

The company launched two ‘green’ aluminum brands last week, one with recycled aluminum and the other from low-carbon aluminum which will come from metals produced in Yunnan using hydro electricity and also other renewables.

Electrolytic aluminum capacity in Yunnan province had risen to 5.61 million tonnes at the beginning of September from 3 million tonnes in 2018, according to information provider Shanghai Metals Market.

Other aluminum producers including Aluminium Corporation of China Ltd and Sunstone Development Co Ltd have also announced plans to move capacity to Yunnan.

(By Siyi Liu and Dominique Patton; Editing by Muralikumar Anantharaman)


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