With an agenda of counteracting persistent overcapacity and subsequently stabilising global alumina prices, China has come up with a bunch of measures (of course, in a series) aimed at curtailing the rapid expansion of alumina production. The new directives, outlined in the Ministry of Industry and Information Technology’s (MIIT) Action Plan for the High-Quality Development of the Aluminium Industry (2025–2027), extensively highlight the need to shift the country’s approach to managing its aluminium supply chain.
Policy overview and strategic objectives
The latest policy mandates that firms who are planning to establish new alumina projects must secure adequate bauxite supply to ensure a balanced and sustainable growth model. This requirement is a successor to the earlier guidance provided to China’s copper smelting industry and ensures a path towards a broader commitment to resource security. Furthermore, bringing environmental stewardship with industrial development to the centre stage, the new rules also stipulate that projects in heavily polluted areas will not receive further approval.
According to SMM, key targets of the action plan include:
- Domestic bauxite reserves: An increase of 3 to 5 per cent by 2027 to bolster raw material security.
- Recycled aluminium: A production target of over 15 million tonnes, reinforcing the importance of circular economy practices.
- Energy efficiency and clean energy use: Over 30 per cent of primary aluminium capacity is expected to meet benchmark energy efficiency standards, with clean energy accounting for more than 30 per cent of power usage.
- Enhanced red mud utilisation: Achieving a 15 per cent or higher utilisation rate of newly generated red mud.
Strengthening the aluminium supply chain
By accelerating bauxite exploration and fostering the integrated utilisation of industrial waste, the government aims to secure upstream resources while minimising environmental impacts. Additionally, the plan calls for the development of regional recycling bases and the utilisation of ‘Internet + Recycling’ platforms, which are expected to contribute to scaling up recycled aluminium production.
The directive also imposes stricter approval conditions for new or expanded alumina refineries. Notably, projects using boehmite as feedstock are now disallowed, and any expansion must be supported by matching bauxite mining rights and efficient red mud processing capabilities. This multi-pronged approach is set to mitigate the risks associated with excessive capacity while promoting green innovation in the aluminium industry.
Market implications and industry response
Despite the tightening of regulations, more than 10 million tonnes of new alumina capacity already under construction is expected to continue as planned, which means that the immediate supply expansion will not be significantly curtailed. In 2024, China produced 85 million tonnes of alumina out of the total 147 million tonnes produced worldwide (57.82 per cent). However, the long-term outlook for the alumina market is set to shift towards higher efficiency and a greater emphasis on sustainable practices.
The policy announcement has already positively impacted the domestic market sentiment. Following its release, key domestic aluminium-related stocks such as Minfa Aluminium, Chang Aluminium, Nanshan Aluminium, and Pengxin Resources experienced notable intraday gains, reflecting investor confidence in the sector’s move towards quality over quantity.
In conclusion, while the immediate impact on capacity may be limited, China’s stringent regulatory measures signal a clear commitment to transforming its aluminium industry. By prioritising sustainable development and resource optimisation, the policy is expected to foster a more resilient and competitive global market for alumina and aluminium.
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