China May Add Aluminum Capacity on Lower Costs, Official Says

May 7 (Bloomberg) -- China may add 2 million to 3 million tons of aluminum smelting capacity this year, said Wen Xianjun, deputy head of the China Nonferrous Metals Industry Association.

Investment in aluminum smelters in China, the world’s largest producer, hasn’t slowed in the face of growing overcapacity and a widening surplus of the metal, Wen said. China had 20.62 million tons of capacity last year, and actual output this year may be 15 million tons, he said.

Low construction costs and the comparatively short amount of time needed in China to build smelters has supported expansion, Wen said at a conference in Shanghai today.

The smelting expansion could increase China’s imports of bauxite and alumina, the raw materials used to make the metal. China currently imports around half of its needs, he said.

In China, it takes only about half a year to build a 200,000-ton aluminum smelter, he said. Labor costs account for only 2 percent to 3 percent of total investment costs in China, as compared with an average 10 percent abroad, he said.

--Li Xiaowei. Editors: Richard Dobson, Matthew Oakley

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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