Government and Policy

China to cool overheated aluminium sector

(Xinhua)
Updated: 2011-04-20 19:32

BEIJING - China is making efforts to curb over production in its aluminium sector, according to a notice posted on the Web site of the Ministry of Industry and Information Technology (MIIT) on Wednesday.

Local governments must immediately suspend electrolytic aluminium and forbid any practices to expand production capacity in the sector, the notice said.

Also, local governments should cancel policies preferential to aluminium producers with regard to taxes, land usage and electricity supply, the notice said.

The aluminium sector showed obvious signs of overheating in the first two months this year, said MIIT chief engineer and spokesman Zhu Hongren at a press conference on Wednesday.

The sector's profits shrank 41.8 percent in the first two months year on year due to sharp competition, Zhu said.

Zhu attributed the surplus capacity problem to some local governments seeking quick economic growth in the first year of the 12th Five-Year Plan period (2011-2015) and some did not see the larger picture across the country.

Electrolytic production of aluminium is relatively inefficient and produces high emissions, Zhu said.

China's aluminium output topped 15.6 million tonnes last year and production capacity was 23 million tonnes, which meant only 70 percent of facilities were in operation, according to the notice.

Production capacity of the sector might exceed 30 million tonnes at the end of 2015, if all the currently proposed 23 electrolytic aluminium projects, with 7.74 million tonnes of capacity and 77 billion yuan ($11.79 billion) of investment, were finished, the notice said.

Sales profit rates averaged only 3.59 percent in the January-November period last year though the sector reported 10.44 billion yuan in total profit.

The notice was jointly issued by nine government departments including the MIIT, National Development and Reform Commission, Ministry of Supervision, Ministry of Land and Resources, Ministry of Environmental Protection, People's Bank of China, among others.

Aluminium is widely used in construction and can only be produced through electrolysis of aluminium oxide.