China offers 15 aluminium smelters cheaper power

China has allowed 15 aluminium smelters to negotiate lower electricity fees with power plants and power grids, a move which may help cut smelters' production costs by more than 1 percent and spur more output.

The 15 smelters, which account for more than one-fifth of the total aluminium smelting capacity in China, the world's top producer of the metal, were selected for a pilot plan to increase the utilisation of electricity, a statement on the website (www.serc.gov.cn) of State Electricity Regulatory Commission said on Friday.

The new rates would be lower than prices set by Beijing, smelter officials and analysts said.

The move is part of the government's effort to shore up unprofitable smelters at a time of anaemic demand, industry sources say.

The aluminium industry, which uses around 6 percent of the country's electricity output, has cut back production due to weak demand, reducing consumption of electricity.

The smelters, which use about 58 billion kilowatt-hours of electricity a year, would be negotiating with separate power firms for electricity fees and regional grids for charges that are paid to allow the electricity to pass through their networks to the smelters, a manager at one of the smelters said.

"Smelters are excited about it and would start talks as soon as possible," the manager said.

He added the rates to be settled between smelters and power firms and grids were required approvals from the electricity commission and the National Development and Reform Commission.

Currently, the average production cost to smelters in China is estimated at about 12,500 yuan per tonne.

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