Rusal's Aluminium Pact in China to Draw on CPI Group's Hydro

The hydropower resources of Huanghe Hydropower Development Co are key to the deal struck by its parent group China Power Investment Corp (CPI) and Russian group Rusal for aluminium production in Qinghai province, China.

Rusal signed a memorandum of understanding (MoU) with CPI to support its plans to build a 500,000 tonnes/year smelter in China. As part of a wider, international series of investments, the MoU gives Rusal 49% of the smelter it will co-develop with CPI.

CPI is to supply energy to the smelter under the MoU from the hydropower plants on the Huang He river, and will fund the smelter in proportion to its ownership stake.

The companies plan to undertake and complete an audit and a feasibility study by the middle of this year and estimate that the joint venture scheme could commence construction in 2009.

CPI is building hydro assets on the Huang He river through its subsidiary Huanghe Hydropower Development Co. The subsidiary itself has 13 affiliated power companies, which include plants, such as Bapanxia, Gongboxia, Laxiwa, Lijiaxia, Longyangxia, Qingtongxia and Yanguoxia.

The Gongboxia multi-purpose scheme was built over 2001-06 and has a total installed capacity of 1.5GW (5 x 300MW) and produced 5,140GWh per year.

The Longyangxia unit developing the Banduo hydropower project as the first of 13 schemes with combined capacity of 8GW for the Longyang Gorge section of the Yangtze river. The first unit of the 360MW plant is to be commissioned at the end of 2010 and the scheme completed a year later. The plant is to generate more than 1,400GWh per year.

Another key CIP subsidiary with river basin development opportunities is Huanghe¡¯s sister company Hunan Wuling Electric Power Development Corp. Hydro plants under this company include Hongjiang, Jinweizhou, Wuqiangxi, Wanmipo and Lingjintan.

A further sister company is Guangxi Changzhou Hydropower Development Co.

Separately, last November CPI restructured its Fujian Shaxikou hydro plant unit into two new businesses ¨C the developer China Power (Fujian) Power Development Ltd and maintenance firm China Power (Fujian) Power Engineering Co.

As one of China largest energy group¡¯s, CPI had approximately 9.2GW of hydro capacity at the end of 2006, which is almost a quarter of its total installed capacity of 37.8GW. The group also holds thermal plants in its portfolio, for which it also has been active in acquiring and also co-developing coal mines. While expansion in thermal and coal production are key strategic goals, the group also has nuclear plants.

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