May 24, 2018 / 7:19 AM / in a month

U.S. aluminum firm Novelis expands in China amid trade friction

BEIJING (Reuters) - U.S. aluminum firm Novelis Inc said it would invest about $180 million to double its automotive aluminum body sheet capacity in China, as it seeks to tap demand from the country’s growing electric vehicle (EV) sector.

The Atlanta-based company, which is owned by India’s Aditya Birla Group, said the investment would add around 100,000 tonnes of capacity at its Changzhou plant, in China’s eastern province of Jiangsu, with the new operations to begin by 2020.

“The timing of this investment is closely aligned with key customer product launches slated for 2020-2021 from both traditional automakers as well as electric vehicle startups,” Novelis said in a statement, adding that existing automotive finishing line capacity in Changzhou was already fully contracted.

The expansion comes amid a simmering trade dispute between the United States and China in which aluminum has featured heavily, with Washington slapping 10 percent tariffs on aluminum imports, as well as punitive duties on Chinese aluminum foil and common alloy sheet.

President Donald Trump’s administration on Wednesday launched a national security probe into whether imports of vehicles and parts were threatening the U.S. auto industry’s health.

“At this time, we do not plan to export any of our material from Changzhou to the U.S.,” Novelis spokesman Mike Touhill said in an email. “This investment is designed to supply the growing Asia market.”

Novelis’ statement also noted that China already had the world’s biggest auto market and had committed to reducing emissions, presenting a “favorable opportunity” for aluminum in EVs.

“Worldwide, automotive aluminum demand is projected to nearly triple over the next eight years with the largest growth potential to be in China, as both domestic and global automakers increase aluminum penetration and production in the market,” it said.

The company expects to create around 160 full-time jobs once the expansion is completed.

“We believe China’s commitment to fuel efficiency and reducing emissions represent a large and favorable opportunity that will require greater adoption of aluminum, particularly in the rapidly growing electric vehicle market,” Novelis President Steve Fisher said in the statement.

Reporting by Tom Daly; Editing by Joseph Radford

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