China: Guangxi offers subsidies to local aluminium smelters in a bid to encourage production acceleration

According to the Shanghai Metals Market report, Guangxi province encourages aluminium smelters to resume potlines at the earliest and boost capacity utilization rates by offering subsidies and alluring incentive plans. The province will provide subsidies to the smelters whose potlines were shut down this year due to pandemic or energy consumption restrictions. The eligibility condition for the subsidies is the smelters need to restart their potlines and increase capacity utilization rates as required in the fourth quarter of 2022.

Smelters who will sequentially increase their capacity utilization rates by 15-20 percentage points at the end of Q4 will get a subsidy worth RMB 2 million, while those who will raise their capacity by 20-30 percentage points will get RMB 3 million and those more than 30 percentage points will receive RMB 5 million.

Guangxi will also support aluminium smelters to carry out energy-saving transformation through new processes and green low-carbon technology.

It is to be noted here that the introduction of new incentive plans has led many local smelters to accelerate production capacity.

Since 2021, aluminium smelters in Guangxi have been running at low capacity. Some were shut down for technical transformation, while others were slow in commissioning new capacity. In February 2022, Guangxi Baikuang Aluminium’s Tianyang branch experienced an emergency shutdown due to the sudden resurfacing of the COVID-19 pandemic, leading to a decrease in China's total capacity to 1.63 million tonnes. 

Production resumption in H2 2022 was also slow as many smelters in Gunagxi were under mounting energy costs. At the end of October, the compliant installed aluminium capacity in Guangxi was 2.79 million tonnes, accounting for 6 per cent of the total capacity in China, while the operating capacity was 2.12 million tonnes, barring 665,000 tonnes of idled capacity waiting to be resumed.

From January to October, Guangxi recorded a 15 per cent Y-o-Y fall in aluminium output to 1.59 million tonnes, accounting for only 4.8 per cent of China’s total production.