Wanfang Aluminum to build 300 MW power plant

Capitalvue reported that Jiaozuo Wanfang Aluminum Manufacturing’s wholly owned subsidiary Jiaozuo Wanfang Electric will build two 300 MW power generators together costing CNY 2.79 billion to promote energy self sufficiency. The plants’ construction period is two years.

The aluminum smelter has an annual capacity of 420,000 tonnes which requires six terawatt-hours of power per year. The company currently buys electricity from the power grid, putting it at risk of power shortages and entailing higher fees than a proprietary power source. Wanfang Aluminum’s reliance on the power grid forced it to cut one thirds of its capacity in October 2010 and it manufactured 140,000 tons less than planned in 2010.

The target power plant will require an annual coal supply of 1.9 million tonnes which reduces the risk of power shortages because the company has coal affiliates in Shanxi Province. The estimated recovery period of the investment is 11.5 years.

Under current accounting standards, the company will record assets impairment of CNY 319 million on Wanfang Electric thus reducing the company’s 2010 net profit by CNY 239 million. Its 2010 net profit plunged 40% YoY to CNY 116 million despite revenue growth of 9.6% YoY to CNY 5.59 billion.

(Sourced from www.capitalvue.com)

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