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China's Henan province to cap aluminum smelting; focus on high value products

Hong Kong — China's Henan province, a key aluminum production base, plans to cap its 2020 aluminum smelting capacity at 2.5 million mt/year while shifting focus on producing high value aluminum products, the provincial government said Wednesday.

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The province, located in Central China, expects to boost its 2020 aluminum products capacity to over 12 million mt/year, in line with the mainland's supply-side reforms and industry restructuring to focus more on value-added products, the government said on its website.

Henan currently has annual capacity of 12 million mt for alumina, 3.16 million mt for aluminum, and over 10 million mt for aluminum products, according to data by the Henan Provincial Nonferrous Metals Guild, a metals industry association.

The province surpassed Shandong as China's No. 1 aluminum product maker since 2017, and ranked No. 3 in alumina output in 2018, producing 11.63 million mt, National Bureau of Statistics data showed.

The government said the province in the past years produced a large volume of primary aluminum products, with a high ratio of low-end and mid-range products. The lower value of products along with falling local bauxite ore grade and rising power costs have spurred the need to cap smelting capacity.

In a bid to refocus on the production of more value-added products for the transport, military and electronics sectors and fuel industry competitiveness, the province is aiming to build two to three new aluminum industry complexes in the cities of Luoyang and Zhengzhou. The complexes will consist of five aluminum producers with ability to produce aluminum processed products resulting in future annual output values of Yuan 100 billion ($14.5 billion), the government added.

Meanwhile, Henan is urging its aluminum processed sector to relocate to the new aluminum industry complexes.

Further, it is aiming to build a 1 million mt/year new recycled aluminum production base in Changge city along with aluminum scrap collection centres in Luoyang, Gongyi and Changge, with tenders for the new recycled base under way, according to the government.

-- Joshua Leung, newsdesk@spglobal.com

-- Edited by Kshitiz Goliya, newsdesk@spglobal.com