Novelis sees NEVs and strict fuel economy rules to drive its aluminium business in China; focuses on local expansion

Novelis, the world’s largest aluminium rolling and recycling company is confident of the growth in China’s automotive market despite its sales dip last year. The company believes the rise in aluminium demand will come from New Energy Vehicles and strict fuel emission standards.

Steve Fisher, president and CEO of Novelis believes China will surpass bigger markets like the US and Europe in aluminium automotive applications.

"We're talking about the overwhelming commitment that the government has to the environment here in China and pushing for new energy vehicles, which is going to drive a lot of growth for lightweight materials," he said.

Currently, the automotive sector contributes about 20 per cent of Novelis's business, and China contributes 20 per cent of that. Globally 225 vehicle models use Novelis aluminium and about 38 vehicles in China. Novelis is not much bothered about the cureent drop in automotive sales.

"It certainly will not affect our investment plans, because we're looking at this on a long-term basis," said Fisher.

Novelis, according to him has decided on expanding their facilities in China with an investment of $180 million considering the potential growth in the world's largest automotive market. Novelis's Changzhou plant in Jiangsu province with an annual capacity of 100,000 tonnes, which started production in 2014, supplies to carmakers like FAW-Volkswagen, Chery Jaguar Land Rover, SAIC Motor and startup Nio. The expansion, which is  supposed to be complete by 2020 will double to plant’s capacity to 200,000 tonnes.

The quick growth of China's new energy vehicle market is driving Novelis' business in the country. China sold 1.2 million NEVs in 2018 and is likely to sell about 1.7 million in 2019, according to China Passenger Car Association. Vehicle lightweighting is directly related to the range of NEVs and also to the ability to add more features to the vehicle without adding extra body weight. 

James Liu, managing director of Novelis China, said China's dual credit policy will spur faster and wider adoption of aluminium products.

"This investment will allow us to better serve our automotive customers by providing world-class manufacturing capabilities, products that meet global quality standards, and innovative solutions to make vehicles lighter, safer and stronger," said Liu about the Changzhou plant expansion.

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