Chinese aluminium industry will relocate to access low-carbon power, Intl Al Conf hears

Aluminium production capacity in China must relocate to access low-carbon power, which will be key in tackling the country’s emissions, Ron Knapp, international adviser at China Hongqiao Group, told delegates at Fastmarkets’ International Aluminium Conference in Barcelona, Spain, on Wednesday, September 14

“[The choice has] got to be low-carbon power as we go forward [in time],” he said.

In a discussion on the energy crisis, Knapp spoke of an expectation that capacity would change location to access low-carbon power.

Show me the power, but show me the low-carbon power – that will be where the industry goes. And there’s not a lot available. Where are you going to get it? Indonesia? The Middle East?

Ron Knapp, China Hongqiao Group

“We are building 4 million tonnes per year of capacity,” he said, in reference to his company’s plans to relocate aluminium production from Shandong to its hydro-powered smelter in China’s Yunnan Province. “But all we are doing is shifting 4 million tonnes of coal out of Shandong to 4 million tonnes in Yunnan for low-carbon energy – that’s the driver.”

The energy crisis was still an issue on a global scale, he said, citing the disruptions it has caused as a key concern.

“Energy is going to continue to drive some of that [disruption]. It’s going to be very difficult to deal with,” he said.

Aside from the major macro-economic issues, tackling carbon was a key factor for the Chinese aluminium industry, he said.

“Carbon – that’s the key for the future. China is committed to becoming carbon-neutral. We are a very large, heavy footprint in carbon, and we must address that. [But] it will be a [long] journey,” Knapp said.

There was a roadmap that would deal with “short quick stuff upfront. Then we get into the hard issues to address, [including] some that we don’t have the answers yet,” he said.

Some of the answers must come from technology, he added. “Some technologies are in the pipeline and other technologies are still way out there [but they] are going to drive us forward,” he said. “It’s research and development [that is needed], it’s innovation, it’s being open-minded about how we see the industry growing.”

The company set out its pathway for climate neutrality earlier this year.

Access to finance for new projects has also changed, with the banking sector also moving toward a more sustainable path.

“The banking finance community has signed up to a net-zero[-carbon] banking alliance which comes out of the Paris [climate control] agreement,” Knapp said. “You take your project [to the bank] and [it] will run the carbon footprint for your project before you get the money. That interaction is very different [and] very new.”


What to read next
US President Joe Biden will increase tariffs on Chinese imports including steel and aluminium, electric vehicles, semiconductors and advanced batteries, to counteract China’s “unfair” trading practices, he announced on Tuesday May 14
Anglo American's rejection of takeover bids by BHP has put copper firmly under the spotlight, but what challenges lie ahead for the red metal as the corporate tussle continues?
Copper fabricators in China and the wider Southeast Asian region continue to feel the pain of high copper prices on futures exchanges and a lack of new orderbooks, with some having already asked for a postponing of shipments of long-term copper cathodes, sources told Fastmarkets in the week to Wednesday May 15
Recent weeks have seen a significant number of miners agreeing sales of copper concentrate to traders for one to four years of supply, Fastmarkets has learned
The copper market is facing a historical moment with Chinese smelters now paying premiums for raw material copper concentrate while selling their finished product at a discount, but participants point to easing concentrate demand in the second quarter as supportive for the market
The new tariffs on aluminium imports imposed by Mexico are affecting the light metal's supply chain, trade flows and premiums, sources told Fastmarkets during the week to Friday May 3.