Disruptions in power supply won't stop China Hongqiao Group from shifting 2 Mt to Yunnan

On November 1, 2022, China Hongqiao Group said it would move 2 million tonnes of its capacity to the country’s southwest by the end of next year, as was decided earlier, despite the recent electricity supply disruptions there.

The news came after Ron Knapp, adviser to the office of the chairman, told Reuters on Monday that Hongqiao Group built 850,000 tonnes of capacity in Yunnan this year, and by the end of 2023, it would build a total 2.03 million tonnes of capacity in Yunnan Hongtai plant. He clarified that relocation would occur despite Yunnan's ongoing power supply disruptions.

The world’s top private aluminium producer had previously said it would move more than 60 per cent of its 6.46 million tonnes of capacity to Yunnan province from northern Shandong province by the end-2025 to leverage the abundant availability of hydropower there to reduce carbon footprint.

According to Knapp, this transformation from fossil-fueled electricity to hydro power will help the company cut 75 per cent of its carbon footprint.

In September, the China government had ordered primary aluminium producers to cut power usage by at least 10 per cent, which is likely to expand to 20 per cent from October, said a local producer to Reuters last week.

In that context, Knapp said, "I see that as a short term issue. We are building for the long-term, and I believe Yunnan is building for the long term as well, with plans for wind and solar as well as energy storage."

China Hongqiao Group launched two green aluminium brands last week, one with recycled aluminium and the other with low-carbon aluminium from metals produced in Yunnan using hydro electricity and other renewables.

Electrolytic aluminium capacity in Yunnan is currently at 5.61 million tonnes compared to 3 million tonnes in 2018, according to SMM.