The Aluminium Corp of China (Chalco) announced on Wednesday, January 30, that it was implementing “flexible production” on about 200,000 tonnes per year of capacity at its Shandong Huayu facility. High electricity tariffs, environmental restrictions, and market environment are some of the factors that prompted the Beijing-based state-owned company for this action.

Shanndong Huayu Aluminium and Electricity, with capacity of 220,000 tonnes per year suspended all output on Wednesday, SMM learned. The plant’s capacity of 100,000 tonnes per tonne operated after production cuts in December and November.

Huayu’s capacity cut of 50,000 tonnes per year in November was included in Chalco’s announcement of 470,000 tonnes capacity cut on November 30.

Chalco had said to the Shanghai Stock Exchange that it would shut around 470,000 tonnes of annual aluminium production at units in Shanxi Huasheng and Shandong Huayu, subject to flexible output arrangements.

According to the company’s annual report, this 470,000 tonnes figure had accounted for nearly 12 per cent of Chalco’s 3.93 million tonnes of primary aluminium capacity at the end of 2017. This resulted in Shanxi Huasheng’s annual capacity at 240,000 tonnes and Shandong Huayu’s at 200,000 tonnes.

Costs of electricity and coal are relatively high in Shandong while Huayu is located close to the smog-plagued 2+26 cities that are subjected to rigorous environmental restrictions. Those factors prompted Chalco to stop production at Huayu.

SMM further apprised that Chalco would swap 650,000 tonnes of year of capacity to Inner Mongolia.