Government report confirms closing of 530,500 tonnes of illegal aluminium capacity by Xinfa Group

After much awaiting for an official announcement of actual aluminium production cuts taken up by China,  Xinfa Group has confirmed closing of 530,500 tonnes of annual illegal aluminium production capacity. A statement by a local government in eastern Shandong province has confirmed this to Media.

According to an update by Chiping county government on its website, a team of experts from Jinan-based Ailinte Safety Technology Consulting Co and local government officials and Xinfa Chairman Zhang Xuexin, had visited Xinfa smelting facilities on July 30 to check the status and confirmed that the capacity closures had been carried out in its smelters.

As on July 28, Xinfa shut down a total of 426 units at it subsidiaries Huaxin Aluminium, Huayuan Aluminium and Xinyuan Group, the posting said. Though no official confirmation has been received from Xinfa, the report confirms that the scale of the closure is in accordance with analysts' expectations and government’s directive.

In April 2017, authorities in China issued a directive that they will shut down aluminium capacity during the winter in 28 major cities. The development started in Dec’16 when Chinese Ministry of Environmental Protection (MEP) delivered verbal warnings to Chalco, the nation's top aluminium producer, for failing to deal with pollution appropriately. Following that, China’s top economic planning agency, the National Development and Reform Commission has announced plans to crack down on illegal aluminium smelting projects and instructed local governments to inspect smelters built after 2013 on the basis of environmental regulations.

According to Paul Adkins, managing director of consultancy AZ China, around 2.2 million tonnes of illegal Chinese aluminium capacity has been closed since 2013. Last week, during the Reuters Global Base Metals Forum, Adkins said that Xinfa produced 1.1 million tonnes of illegal aluminium annually and was shutting down half of that.

Notably, the government of Shandong, the major aluminium producing province, has also issued 2017 Comprehensive Crackdown Program for Big Environmental Protection Issues. Under the program, alumina, aluminum and carbon producers that meet emission discharge standards are ordered to cut production by over 30%, around 30% and over 50%, respectively, between Nov 15, 2017 and March 15, 2018, depending on the number of production lines. Those who do not meet emission discharge standards have been ordered to close production.