In an effort at reducing its reliance upon coal-generated electricity, China Hongqiao Group Ltd said yesterday it plans to move almost one-third of its smelting capacity to the province of Yunnan in the southwestern portion of the People’s Republic of China.

In comments to Reuters at China Aluminium Week, Hongqiao chairman Zhang Bo said the move would be executed in two phases, ultimately ending with the transfer of about 2 million metric tons per annum of smelting capacity from Shandong to Yunnan province’s southwestern Wenshan prefecture.

Per Zhang, the move’s primary goal is to trade polluting coal-fired power production with clean and basically inexhaustible hydropower.

“It’s mainly to adjust the energy structure of Hongqiao, with nearly one-third of the production capacity using hydropower and clean energy in Yunnan,” he explained.

Zhang continued by saying that a solar-powered aluminium smelting project is also in the works, but no further details were reported upon regarding it.

At present, Hongqiao plans to transfer the first 1 million metric tons per annum of aluminium smelting capacity beginning in the latter half of next year. Phase two will be contingent upon the speed and success of the first phase, says Zhang.

As the move is purely a relocation of capacity and not an addition to the firm’s total allocated capacity of 6.46 million metric tons for annum, no new permits from Beijing will be necessary, he elaborated.

“The cost is good. Yunnan government gives us some preferential electricity prices,” explained Zhang.

Overall, Hongqiao can expect to see their energy bill fall by one-tenth, said AZ China Managing Director Paul Adkins to Reuters.

In addition to lower energy costs, Yunnan is not obligated by the national government to compel its smelters to cut usage in the winter heating months. Hongqiao is not expected to cut production over the winter this year due to the continuing shutdown of about 300 thousand metric tons per annum of smelting capacity in August that was prompted by heavy flooding in the region. (From Aluminum Insider)