Shanxi willing to ramp-up aluminium smelting capacity with preferred access to bauxite

The government of one of China’s Northern provinces declared in the early part of this week that it would likely to go for the barter choice cuts of its bauxite stores for companies that move aluminium smelting capacity to that area, as reported by Aluminium Insider.

Shanxi’s provincial government have already approached Aluminum Corp of China (Chinalco), Shandong Xinfa Aluminium Group, and Xinjiang East Hope Ferrous Metals Co., Ltd. and offered the deal as per the province’s just-released yearly plan for the non-ferrous industry.

According to the document, reported by Aluminium Insider, Shanxi’s bauxite bounty “will be prioritised for those companies that are transferring electrolytic aluminium capacity to our province.”

This is because, in spite of having a prosperous alumina-refining sector, a large part of it is moving out to some of the areas of the Middle Kingdom for smelting aluminium. In fact, the report shows that in the last year, Shanxi witnessed only 480 thousand tonnes of aluminium smelting, whereas Henan, another major alumina production site, smelted 12.12 million tonnes of primary aluminium.

Experts attribute the decrease of the aluminium smelting in Shanxi to the lawmakers who are apparently motivated by Beijing’s wider efforts to relocate aluminium production away from the populated areas in the east. As the vast majority of China’s aluminium production is powered by coal-burning electric plants, the attendant choking smog is aggravating the severe urban air pollution.

“Shanxi has a lot of (alumina) refineries, so theoretically it makes sense that the local government wants to further develop the smelting industry locally,” opined Jackie Wang of CRU to Reuters earlier this week. 

However, she continued stating that transferring capacity would be an expensive affair and therefore, the province may not be able to own adequate smelting quota. So, as an alternative, Shanxi government is aiming to boost non-ferrous production from 1.32 million tonnes last year to 1.5 million tonnes this year. It also wishes to increase investment in smelting, rolling and processing of such metals to US$1.3 billion.