Gränges partners with China's Shandong Innovation Group to produce sustainable aluminium

As part of a joint venture, Gränges and Shandong Innovation Metal (group) Technology are on the go for constructing a recycling and casting facility in Yunnan, a hydropower-rich area in China. However, it has also been confirmed that the joint venture has secured access to low-carbon primary aluminium through energy-efficient delivery from a nearby smelter and renewable energy for casting operations.

In order to reach its 2040 net-zero goal, Gränges' carbon footprint will be significantly reduced thanks to this strategic alliance. Additionally, it will make it possible for Gränges to satisfy Asian customers' requests for industry-leading sustainable aluminium solutions.

The latest industry-focused report, ‘Global Aluminium Industry Outlook 2023’ released by AlCircle, states China Hongqiao plans to move 2 million tonnes per annum of aluminium smelting capacity to Yunnan province. The company had previously indicated its intention to move over 60 per cent of its capacity to the southwestern province by the end of 2025. As of June 2022, Hongqiao has constructed 850,000 tonnes of aluminium capacity in Yunnan and by the end of 2023, the company plans to relocate another 2.03 million tonnes per annum to Yunnan. Yunnan has become a highly attractive destination for Chinese aluminium firms in recent years due to its abundant hydroelectric power.

Jörgen Rosengren, the CEO of Gränges, said, “This is an essential step in our Navigate plan for sustainable growth. Partnering with SIG will bring us closer to climate neutrality by 2040 and increase our sourcing of sustainably produced metal and energy. The demand for sustainable aluminium solutions is on the rise throughout Asia. This partnership strengthens our competitiveness and enables us to create more customer value.”

Gränges Asia expects to reduce its carbon emissions intensity by half by 2025 thanks to the joint venture activities' supply of rolling slabs.

Colin Xu, the President of Gränges Asia, said,  “Shandong Innovation Group is a leader in aluminium cast products in China and has been a valued and trusted partner and supplier to Gränges Asia for many years. We share the same vision for innovative and sustainable development, and I’m very pleased to extend our partnership through this joint venture. This is also important for Gränges Asia to strengthen our competitiveness and future-proof our operations in China and Asia.”

Gränges will invest approximately SEK 225 million and control 49 per cent of the shares and capital of the joint venture. The new casting operations will serve Gränges Asia and other downstream customers with cast aluminium products.

 The investment is expected to take around two years to complete and is, over time, expected to generate a ROCE in line with Gränges’ target level of above 15 per cent. Gränges Asia plans to gradually replace its in-house casting operations in Shanghai by sourcing corresponding capacity from the joint venture operation. The equity method will recognise and consolidate the joint venture into the Gränges Group.

The joint venture's completion is subject to customary regulatory approvals in China.