Chalco delegate pushes for China's bauxite-rich Shanxi to be aluminum hub

FILE PHOTO: Workers are seen next to aluminium rolls at a plant in Binzhou, Shandong province, China September 13, 2018. REUTERS/Stringer

BEIJING (Reuters) - An executive from a shuttered smelting unit of state-run Aluminum Corp of China Ltd, or Chalco, has called for his province of Shanxi to take advantage of abundant bauxite resources and become a major aluminum production hub.

Bauxite is the main ore source of aluminum and has to be refined into alumina to produce the metal of which China is by far the world’s biggest producer and consumer.

Gao Bingwei, director of the innovation studio at Chalco unit Shanxi Huasheng and a delegate at the National People’s Congress (NPC) in Beijing, noted the northern province ranked first in China with 1.5 billion tonnes of bauxite reserves.

However, while it is the second-biggest alumina producing region, Shanxi only has aluminum smelting capacity of 1.21 million tonnes per year, Gao was quoted as saying on the official NPC website at the weekend. That is about 3% of China’s total aluminum capacity.

Former Chalco chairman Lu Dongliang was this month appointed vice governor of Shanxi, which is also China’s second-biggest coal region.

If all of Shanxi’s alumina were consumed locally, it would create aluminum projects worth two 100 billion yuan ($14 billion), said Gao, who is submitting a proposal on integrating coal, electricity and aluminum in Shanxi at this year’s parliament, which began on Friday and continues until May 28.

His remarks are the latest call for a redistribution of capacity in China’s sprawling aluminum industry, much of which is concentrated in industrial heartlands Shandong and Henan.

Chalco stopped aluminum production at Shanxi Huasheng, a 51%-owned subsidiary, last year,citing high electricity costs, in favor of moving capacity to Yunnan in China’s southwest.

But Gao said Shanxi was closer to the aluminum consumption than “other major electrolytic aluminum regions,” including Yunnan.

Reporting by Tom Daly; editing by Barbara Lewis