China Hongqiao Mulls Moving Aluminum Smelting Capacity to Indonesia
Fuzhou. China Hongqiao Group , the world's biggest aluminum producer, is looking into the possibility of moving recently shuttered illegal smelting capacity overseas, mainly to Indonesia, a source close to the company said on Thursday (16/11).
Hongqiao had to shut 2.68 million metric tons in annual smelting capacity in its home province Shandong at the end of July amid reforms to cut excess supply in China. Hongqiao chief executive Zhang Bo told Reuters on Wednesday that this would not come back online next year.
However, the company is "reviewing the feasibility" of moving this shuttered capacity to other countries, said the source who was briefed on the plan.
Indonesia is the most likely destination since the company already has a 1-million-ton per year alumina refinery in the Southeast Asian nation, the source said, adding that Hongqiao is also evaluating the Indonesian market to get an idea of local aluminum demand.
China is both the world's biggest producer and consumer of aluminum, but Hongqiao could find its expansion options at home limited amid ongoing supply-side reforms and seasonal curbs on production for environmental reasons.
Hongqiao, with annual smelting capacity of 6.5 million tons, is among Chinese firms that must reduce aluminium output over winter, or from Nov. 15 until March next year, as part of China's anti-smog campaign.
An executive at Hongqiao's state-run rival, Chalco, earlier told the China Aluminum Week conference in Fuzhou his company was also looking to Indonesia as a source of bauxite, the aluminum ore which is processed into alumina, which is then used to produce aluminum.
"It's a good time to go global," Chen Xuesen, deputy director of the strategy development department at Chalco parent Chinalco, or Aluminum Corp of China, told the same conference.
There has been a dearth of investment by Chinese companies in overseas aluminum smelting capacity, he said, except for Citic Resources Holdings' interest in a smelter in Australia, and that it had been difficult to find places that can provide the necessary amount of power for the smelting process.
"More companies will take the initiative," Chen said.
Reuters
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