Chinalco delays closure of its Liancheng aluminium smelter

Aluminum Corp of China (Chinalco) has delayed a planned shutdown of metal production at its Liancheng aluminium smelter after authorities agreed to offer electricity at a cheaper rate.

Chinalco, China's biggest aluminium and alumina producer, had planned to shutdown its Gansu aluminium smelter two weeks ago due to high cost of production and low metal prices. But industry sources said, the local government and the state electricty authority have urged the aluminium manufacturer to keep producing, given the country's slowing growth scenario, and offered lower power tariffs so that it is easier to cope with the rising COP, which stands somewhere around 13,000 yuan a tonne.

Nevertheless, the company would stop metal production, cheaper electricity or no electricity; but that would be effective most likely by the end of this year. No timeframe has yet been thought of for the reopening of the smelter.

According to one source, the new tariff for Liancheng smelter was 0.25 yuan per kilowatt hour, down from about 0.375 yuan. The new charge was only valid when the spot aluminium prices in China were below 12,000 yuan per tonne.

Low alumiium prices in the global marketplace have already forced some aluminium producers to cut or halt production temporarily this year. This was in fact necessary, given the oversupply of the metal. Fushun aluminium smelter, another unit of Chinalco, has been reported to considering closure in the near term.

Liancheng has an annual capacity of more than 500,000 tonnes of aluminium and Fushun more than 300,000 tonnes.