Hongqiao eyes start-up of Indonesia alumina plant's 2nd phase by end-2021

Sept 2 (Reuters) - The second phase of a China Hongqiao Group alumina plant in Indonesia should start up by the end of this year, an adviser to the aluminium giant said on Thursday, as prices for the raw material hit two-year highs.

The first 1 million tonnes per year phase of the Well Harvest Winning alumina refinery on the island of Borneo began producing in 2016. Hongqiao had aimed to commission the second phase by end-2020 but recent disclosures only said it was “progressing smoothly.”

“A second phase of the Indonesian project - another 1 million tonnes - should come on line later this year,” Ron Knapp, international adviser at Hongqiao, said in a presentation to the Fastmarkets International Aluminium virtual conference.

Hongqiao currently has around 16 million tonnes of annual alumina capacity, mostly in China, noted Knapp, a former secretary general of the International Aluminium Institute.

COMEX alumina futures hit $320 a tonne on Wednesday, the highest since July 2019 following a fire at the Jamalco refinery in Jamaica last month. Chinese prices SMM-AVEG-ALM for the material topped 3,000 yuan ($465) a tonne on Thursday, also a more than two-year high, amid tight supply.

The run-up in alumina costs has contributed to a surge in prices of aluminium to decade highs this week.

Hongqiao is moving almost one-third of its 6.5 million tonnes of annual aluminium capacity from its home of Shandong to Yunnan in Southwest China. The first phase of the Yunnan project started up in 2020 and three more production lines for Phase 2 will be transferred from Shandong next year, Knapp said.

The company plans to expand aluminium sales into the rail and aerospace sectors in future as its Shandong operations focus on downstream applications and it moves midstream processing to Yunnan, he added.

$1 = 6.4554 Chinese yuan renminbi Reporting by Tom Daly; Editing by Bernadette Baum