China Hongqiao to restart part of its closed aluminium capacity to swap with ageing production lines

According to a Reuters report, China Hongqiao Group plans to restart some of its closed smelting capacities this year. The move will allow the company to replace ageing production lines with newer technology, including a high-performing 600 kA potline without adding extra capacity.

Hongqiao, the world’s largest aluminium producer has a licensed aluminium capacity of 6.46 million tonnes per year and had to close 2.68 million tonnes of illegal capacity in mid-2017, on order of the provincial government in eastern China’s Shandong.  According to a statement from Shandong’s Department of Industry and Information Technology Hongqiao will idle 543,000 tonnes of capacity this year and replace it with 542,000 tonnes of new capacity.

China’s Ministry of Industry and Information Technology allows aluminium companies to replace or acquire smelting capacity as long as they stay within quotas.

Sources said Hongqiao’s “new” capacity is part of the 2.68 million tonnes of illegal capacity shut in 2017. The proposed replaced capacity will be dismantled within June to December 2019 and the new capacity will be operational when the old one is completely idled, the government document said.

According to the Industrial Securities note Hongqiao’s production guidance for 2019 is fixed at 6.3-6.35 million tonnes of aluminium. During the winter heating season of 2018/19, Hongqiao had to curb about 100,000 tonnes of aluminium production.

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