China releases development plan for raw materials industry

China has released a development plan that calls for reducing energy consumption in the steel industry and targets "urgent" green development of its raw materials industry during the 14th five-year period (2021-2025), the Ministry of Industry and Information Technology, or MIIT, said on its website Dec. 29.

This is the first time China has announced a plan targeting the entire raw materials industry at once, diverging from a prior practice of developing plans for each sector separately, market observers told S&P Global Platts.

The plan targets raw materials sectors, such as petrochemicals, steel, and nonferrous metals.

China, under the plan, aims to lower energy consumption per mt of steel produced by 2%, from current levels. The plan also calls for reducing carbon emissions in the primary aluminum industry by 5% by 2025, according to the MIIT document.

The country's demand for bulk raw materials, including steel, primary aluminum, and cement, will progressively hit a peak and decline, the document said.

Initiating green and safe development of its raw materials industry was vital in the wake of China's ambitious carbon targets and constraints on its resources and ecology, MIIT said.

China announced lofty carbon targets in 2021, clamping down on industrial usage of electricity and rationing power to energy-intensive sectors, a move that created ripples throughout the global commodities markets.

The country aims to implement a capacity replacement policy for steel, primary aluminum, and other industries, removing excess capacity and proactively controlling capacity additions, according to the document.

China will lay emphasis on restricting runaway development of copper smelting and alumina industries, the document said.

The plan also aims for strategies that will aid reasonable growth in the raw materials industry to ease pressure on supply chains and its economy.

China's steel smelting projects will be built in clusters relying on existing steel producing regions where possible, while alumina projects using seaborne resources will be placed in coastal areas, according to the document.

The country aims for its steel industry, relying on urban mining, to build electric arc furnace mills, and its primary aluminum industry to switch to clean energy, the document showed.

Primary aluminum

China previously set the ceiling for primary aluminum capacity at 45 million mt per year. Chinese primary aluminum smelters currently find it challenging to get approval for capacity additions, but they can easily transfer a portion of their capacity to other regions where clean energy, such as hydropower, is abundant.

Carbon emissions from the world's largest producer of primary aluminum have been relatively high, as most of China's smelters run on coal-fired electricity. Its carbon emissions growth, however, has slowed on lower output growth and electricity consumption.

China's primary aluminum output is expected to peak in 2024 and decline thereafter, mostly replaced by secondary aluminum, state-owned research agency Antaike said.

China had an established primary aluminum capacity of 43.25 million mt/year as of end-December, up 0.93 million mt/year, compared with the same period a year ago, Antaike data showed.