Commodities

China Hongqiao in talks for Yunnan aluminium project – gov't official

Top aluminium producer China Hongqiao Group is in discussion with local authorities in Yunnan province to build an aluminium plant, a provincial government official said on Tuesday.

KUNMING, China Oct 15 (Reuters) - Top aluminium producer China Hongqiao Group 1378.HK is in discussion with local authorities in Yunnan province to build an aluminium plant, a provincial government official said on Tuesday.

"They are in the process of discussing this issue," Dong Hua, vice governor of the southwestern province, told Reuters on the sidelines of the China International Lead and Zinc Conference in Kunming. "Once they have discussed it, you will know."

When asked about the project's planned location or capacity, Dong said he did not know the specific situation, which would be disclosed after the talks.

Hongqiao did not immediately respond to a request for comment.

Last week, a website managed by the China Nonferrous Metals Industry Association said Hongqiao was planning to build a 2 million tonnes per year integrated aluminium smelting and hydropower project in southeast Yunnan's Wenshan prefecture, with construction due to start by the end of this year.

Hongqiao's move underscores a geographical shift in China's aluminium sector to more remote areas like Yunnan from the heavily industrialised smelting heartland of Shandong in the east.

Several Chinese aluminium companies, including Aluminum Corp of China ALUMI.UL, or Chinalco, and Henan Shenhuo 000933.SZ, have been drawn to the province, coveting access to cleaner hydropower for the energy-intensive smelting process.

Hongqiao, which has an annual smelting capacity of almost 6.5 million tonnes of aluminium, all in Shandong, shut 2.68 million tonnes in 2017 amid a crackdown on unlicensed facilities.

It had previously floated the idea of moving the shuttered capacity to Indonesia, where it has an alumina refinery, but has not gone ahead with such a plan.

To expand in China, Hongqiao needs more capacity quotas. Metals consultancy CRU Group said it did not expect Hongqiao to change its total capacity and this project may be a relocation of existing capacity.

(Reporting by Tom Daly; Editing by Subhranshu Sahu)

((tom.daly@thomsonreuters.com; +86 10 5669 2119;))

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