SHANGHAI, Jan. 30 (SMM) – The Ministry of Industry & Information Technology (MIIT) issued January 28 the Entrance Requirement for Aluminum Industry 2012 (Draft for Soliciting Opinions). SMM notes this move suggests that the Chinese government has relaxed some in its control on new aluminum projects. Prohibition of all new aluminum projects will come to an end. Instead, some requirement will be set for approval of new aluminum projects.
The Entrance Requirement for Aluminum Industry 2007 stipulates that only aluminum projects that meet environmental protection and/or eliminate outdated capacity can be approved, while the 2012 draft sets that new aluminum projects must be in the form of coal (water)-electricity-aluminum integration or aluminum-electricity integration.
Only aluminum projects that meet related requirement could be approved starting in 2007. However, nine departments of the State Council called for an immediate stop to all aluminum projects in 2011. This was followed by the issuance of the Entrance Requirement for Aluminum Industry 2012 (Draft for Soliciting Opinions) by the MIIT this year. Aluminum capacity has been soaring despite control efforts. Relaxation of control on the parts of related departments is deemed as rational.
Nine departments of the State Council including the MIIT issued an emergency notice back in April 2011 to call off all aluminum projects under planning. No new expansion aluminum projects will be approved. Nevertheless, some local governments remained aggressive in aluminum project construction by offering preferential policies to attract investments.
Roughly 3.65 million mt/yr in aluminum capacity was built in 2012, mostly in west China. Most of these projects were in the form of coal (water)-electricity-aluminum integration or aluminum-electricity integration. The modified entrance requirement may compound aluminum overcapacity in the short term, but this will accelerate layout and adjustment of the industry as well.