China Hongqiao turns to Yunnan for 'green aluminum' potential

KUNMING, China (Reuters) - China Hongqiao Group has agreed to set up a “green aluminum” industrial park in Southwest China’s Yunnan, according to a statement on Wednesday, as the top aluminum producer seeks to capitalize on the province’s hydropower resources.

Several Chinese aluminum companies, including Aluminum Corp of China, or Chinalco, and Henan Shenhuo, have been drawn to Yunnan, coveting access to cleaner hydropower for the energy-intensive smelting process.

Hongqiao Chairman Zhang Bo attended a signing ceremony with Yunnan government officials in provincial capital Kunming on Tuesday on jointly setting up the park, according to a statement from affiliate firm Shandong Weiqiao Pioneering.

In China, Hongqiao is often known as Weiqiao.

Hongqiao will take the lead on the park construction, developing an integrated hydropower and aluminum project, according to the statement, which did not specify a location or planned production capacity.

Last week, a website managed by the China Nonferrous Metals Industry Association said Hongqiao was planning to build a 2-million-tonnes per year integrated aluminum smelting and hydropower project in southeast Yunnan’s Wenshan prefecture, with construction due to start by the end of this year.

Yunnan vice governor Dong Hua, who also attended the signing ceremony, had told Reuters on the sidelines of the China International Lead and Zinc Conference in Kunming on Tuesday that Hongqiao was “in the process of discussing this issue.”

“Once they have discussed it, you will know,” he said, adding that he did not know specifics about capacity or location, which would be disclosed after the talks.

Hongqiao did not respond to a request for comment.

The company’s move underscores a geographical shift in China’s aluminum sector to more remote areas such as Yunnan from the heavily industrialized smelting heartland of Shandong in the east.

Hongqiao, which has an annual smelting capacity of almost 6.5 million tonnes of aluminum, all in Shandong, shut 2.68 million tonnes in 2017 amid a crackdown on unlicensed facilities.

It had previously floated the idea of moving the shuttered capacity to Indonesia, where it has an alumina refinery, but has not gone ahead with such a plan.

To expand in China, Hongqiao needs more capacity quotas. Metals consultancy CRU Group said it did not expect Hongqiao to change its total capacity and this project may be a relocation of existing capacity.

Reporting by Tom Daly; Editing by Subhranshu Sahu and Sherry Jacob-Phillips