HONG KONG, Mar. 10 -- China's Hangzhou Jinjiang Group is considering building a one million-tonne-a-year primary aluminium smelter in Inner Mongolia to exploit rich energy resources there, a company official said on Tuesday.
The group aims to build the smelter in Huolinguole city, home of coal producers and aluminium producer HMHJ Aluminium Electricity Co, a unit of China Power Investment Corp.
"Our biggest considerations are: approval, resource (power) supply and funding," the official, in the group's administration department, told Reuters, estimating total investment for the smelter at more than 10 billion yuan ($1.46 billion).
While it weighs the feasibility of building a smelter, the group is concerned about the domestic market, the world's biggest but which may be nearly saturated with aluminium capacity, he added, but gave no timeframe for the investment plan.
An investment official of the Huolinguole government said the two parties had discussed the project but had not yet finalized the investment plan.
But securing central government approval may be a struggle as Beijing looks to close 800,000 tonnes of old smelting capacity by the end of 2010, and has vowed not to approve any new smelters in the 2009 to 2011 period, in principle, as China already has plenty of excess capacity.
If built, the smelter would be Hanzhou Jinjiang's first primary aluminium plant in China after having dropped a few smelting projects in the Chinese provinces of Guangxi and Ningxia in the past several years for lack of resources, the administrative official said.
The group, with interests spanning petrochemicals and hotels, owns a 1.8 million-tonne-a-year alumina refinery, Cayman Aluminium in Henan, which would provide the alumina for the smelter in Huolinguole.
Each tonne of aluminium made in China, the world's top producer and consumer of the metal, takes two tonnes of alumina.
China will consume 15.9 million tonnes of the metal this year, up 15 percent on the year but output would rise a faster 24.7 percent to 17 million tonnes due to expanded capacity, state research group Antaike has predicted.
Chalco (2600.HK: Quote) (601600.SS: Quote) is the top aluminium producer in China with 4 million tonnes of annual capacity in 2009.