Alumina production to see impact from 'making skies blue again' initiative

SHANGHAI, Jul 5 (SMM) – Alumina production in Lvliang of Shanxi province is likely to be affected as the area was highlighted in China's three-year initiative to "make skies blue again", which was released by the State Council on Tuesday June 3. 

The initiative aims to sharply lower levels of PM2.5 in three years, reduce the number of heavy-polluted days and improve air quality. Its key focus areas will expand from Beijing-Tianjin-Hebei region to include surrounding cities such as Jinzhong, Yuncheng, Linfen, and Lvliang in Shanxi province, Luoyang and Sanmenxia in Henan province, as well as Xi'an and Tongchuan in Shaanxi province.

As one of China's major alumina producing areas, Lvliang has an annual capacity of 12.95 million mt. A total of 3 million mt per year of new alumina capacity is scheduled to be commissioned in the second half of this year in Jinzhong, Linfen, and Lvliang.

Key sectors targeted in the initiative, including steel, coke, primary aluminium, casting, cement, and flat glass, will face strict control regarding new capacity. This is likely to cause some impact on the new, 300,000-mt-per-year aluminium smelter Meixin Aluminium is building in Tongchuan of Shaanxi, SMM believes.

Another thing to watch is whether the control over coal consumption would push the costs of production up for both aluminium and alumina.

By 2020, the proportion of coal in China's total energy consumption is targeted below 58%. Coal consumption is set to be cut by 10% from the 2015 level across Beijing, Tianjin, Hebei, Shandong, and Henan, and by 5% for the Yangtze River Delta region. Negative growth shall be achieved in coal consumption by 2020 in Fen-Wei plain, which includes cities in Shanxi and Shaanxi provinces.  

Separately, bauxite prices are expected to gain further in the near term as more regulations on open-cut mining will be put forward, according to the initiative. Most bauxite mines in Shanxi and Henan provinces adopt opencast mining, SMM learned.