November 15, 2017 / 9:53 AM / a year ago

China Hongqiao shuts down aluminium smelting pots for winter

* CEO unable to give tonnage for aluminium production cuts

* Hongqiao will reduce winter alumina output by 4 million tpy

* Says closed illegal capacity will not come back in 2018

By Tom Daly

FUZHOU, China, Nov 15 (Reuters) - China Hongqiao Group , the world’s largest aluminium producer, has closed enough smelting pots to comply with industry output restrictions in northern China this winter, its chief executive said on Wednesday.

All of Hongqiao’s nearly 7 million tonnes a year of smelting capacity is in Binzhou, one of 28 northern Chinese industrial cities that face stringent production restrictions over the next four months. China’s industrial output curbs are to control pollution during its peak winter heating season, which is considered to have started on Wednesday.

“Today is the first day. We have stopped what we should stop,” Chief Executive Zhang Bo told Reuters on the sidelines of the China Aluminum Week conference in Fuzhou.

Zhang said he was not able to give a tonnage of primary aluminium production that had been cut, noting, however, that the company had acted according to the requirements published by the Binzhou municipal and Shandong provincial governments.

Hongqiao will also cut over 4 million tonnes of annual output of alumina, a substance used to produce aluminium, during the heating season, Zhang said.

That is more than double the volume state-run rival Chinalco said earlier on Wednesday it would reduce its alumina output by this winter.

Aluminium and alumina producers in the 28 cities targeted are supposed to cut output by at least 30 percent this winter, although analysts have calculated from the Binzhou and Shandong data that Hongqiao may end up cutting much less.

The company has already closed some 2.7 million tonnes a year of illegal capacity by end-July, some of which has been included in the government documents outlining the winter restrictions, according to the analysts.

Consultancy AZ China estimates Hongqiao will only have to cut 470,000 tonnes of annual aluminium production this winter.

Zhang said the shuttered illegal smelting capacity, built without the necessary permits, was not set to come back on line next year. The company made a write-down of 3.37 billion yuan ($508 million) in the first half of 2017 because of the closures.

Hongqiao said in a Nov. 6 statement to the Hong Kong stock exchange it was “proactively seek various measures, including assets disposal” to mitigate the effects of the shutdowns.

Zhang, however, said the company is “not considering selling assets.”

$1 = 6.6317 Chinese yuan Reporting by Tom Daly; Editing by Tom Hogue

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