China’s Hongqiao Set to Move Capacity to Yunnan Despite Power Supply Issues

China’s Hongqiao Group, the world’s largest private aluminum producer, announced that its plans to move 2 million tonnes of capacity to Yunnan province are unchanged despite recent electricity supply disruptions in the region. The company has recently announced that it would move 2 million tonnes of capacity by the end of next year and would move in total 60% of its 6.46 million tonnes capacity by the end of 2025. Hongqiao aims to access the region’s abundant hydropower to reduce its carbon footprint.

It had already built 850,000 tonnes of capacity in Yunnan by June this year, and will have a total 2.03 million tonnes of capacity in the plant by the end of 2023.

The relocation is going ahead despite recent problems with power supply in the region, after lower-than-usual rainfall this year reduced hydropower generation.

As a result, the government ordered primary aluminum producers to cut their power usage by at least 10% in September. In October, power curbs were expanded to 20%.

Hongqiao said in a statement that it sees the power supply disruptions as a short term problem.

The company believes its relocation of aluminum smelters from the base in Shandong to China’s southwest will by far be the world’s biggest relocation of aluminum capacity.

It expects to reduce 75% of carbon footprint by phasing out electricity produced from fossil fuels.

The company launched two ‘green’ aluminum brands last week, one with recycled aluminum and the other from low-carbon aluminum which will come from metals produced in Yunnan using hydro electricity and other renewables.

Electrolytic aluminum capacity in Yunnan province had risen to 5.61 million tonnes at the beginning of September from 3 million tonnes in 2018.

Other aluminum producers, including Aluminum Corporation of China and Sunstone Development have also announced plans to move capacity to Yunnan.

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