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Print[Ferro-Alloys.com] While major aluminum producers are cutting back on production to rescue slumping prices at a time of weak demand, China is pushing ahead with a major new development to produce more of the light metal in the country's western regions.
Xinjiang Qiya Aluminum & Power Ltd., a subsidiary of a mid-sized privately-held southwestern smelter, on Aug. 11 commissioned one of the world's largest aluminum smelters in Xinjiang-Uighur Autonomous Region, the plant manager said Thursday in a phone interview.
Electricity accounts for half the cost of aluminum, and the central government has sought for years to migrate the polluting industry out of densely-populated seaboard provinces to the more remote west. The plant's capacity amounts to about 2.5% of the country's total output.
Its size, and the speed it was built, may raise questions about its efficacy. The plant was built in about 18 months and designed by a company "not known in the China market for designing aluminum smelters of any size," said AZ China analyst Paul Adkins, though he added this wasn't to cast doubts on its reliability.
The central authorities are pushing to reshape the domestic aluminum industry, which is highly fragmented and includes thousands of smelters that have been largely resistant to government-led consolidation.
The new plant is coming on line at a tough time. Major producers including Alcoa Inc. [AA], United Co. Rusal Plc [0486.HK] and Chalco have announced output cuts this year.
China has shown ambivalence in its willingness to crack down on overproduction. While the government has called for a moratorium on new capacity--the Qiya plant would technically replace obsolete capacity--to lift aluminum prices, local governments have also conceded power subsidies to smelters this year to keep revenue and jobs.
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