As the largest producer, Beijing intensifies its export drive to developing countries
By Kunal Bose
China whose annual production of primary aluminium routinely well exceeds the metal’s combined output in the rest of the world has in place a comprehensive ‘Action Plan’ for the white metal covering 2025-27. But in order to support production, the country is required to import large quantities of bauxite for refining into alumina, which thereafter is smelted into white metal. Last year saw a significant rise in China’s bauxite imports by 12.3% to 158.767m tonnes in which the share of Guinea was 69.41% and of Australia 25.12%. Non-mainstream bauxite imports, excluding shipments from Indonesia jumped 47.9% to 8.676m tonnes. China’s own production of bauxite in 2024 was 91.38m tonnes, a marginal rise over the previous year. Not only is the domestic bauxite production not in alignment with requirements of Chinese alumina refineries, the quality of domestic mineral in terms of alumina content is not up to the mark. Moreover, China’s bauxite reserves are on the decline.
All this is making China increasingly dependent on bauxite imports to feed its alumina refineries. For a long time, China was a net importer of alumina. But refining capacity now at over 100m tonnes and operating capacity exceeding 100m tonnes, the country has turned into a net exporter. The challenge for the industry is to organise bauxite imports on a very large scale. The aluminium value chain factors have been well factored while formulating the ‘Action Plan’. The plan spells out the structural changes that the behemoth of an industry will be undergoing. Through steps being taken under the plan, Beijing is addressing several global and environmental concerns covering the value chain from bauxite mining to alumina refining to metal smelting as also issues linked to ideal alumina refining and metal smelting capacity and production for the country.
Whatever concerns the Western world in particular may have against China for not restraining aluminium products exports at prices that smack of open and hidden subsidy, Beijing has finally begun taking corrective steps. The recent times have been marked by a crescendo of complaints and also slapping of anti-dumping duties on China origin aluminium products by a number of countries finally leading to US President Donald Trump’s tariff threats. The fact, however, remains as smelting capacity in Europe and the US has shrunk over the years under cost pressure and growing government and civic society oversight on environment fouling by aluminium production chain, China was quick to seize the opportunity to grow the industry at what often appeared to outsiders at a frenetic speed.
To China’s credit, the country’s production of aluminium increased from 4m tonnes in 2004 to 43m tonnes last year and that was 60% of 72.758m tonnes of global output. At the same time, Europe and the US have remained in the forefront of aluminium technology development, including new alloys and as manufacturer of top end machinery and equipment. China too has achieved self-reliance in building alumina refineries and aluminium smelters to the extent of being a supplier of technology and machines to the world market. Furthermore, whether it is aluminium or any other ferrous or non-ferrous metal, China finds for that big domestic consumption, the demand emerging from its construction, infrastructure, manufacturing, automobile and packaging sectors. But as Chinese GDP (gross domestic product) growth slowed during Covid-19 pandemic and its aftermath and the housing sector is beset with loan defaults and demand fall, aluminium producers have come under pressure to export.
There is no running away from the fact that China is destined to remain the world’s largest producer of alumina (mainly for use by its own smelters) and aluminium. But driven by the compulsion of seeking a sustainable future in a progressively decarbonised environment, the industry ‘Action Plan’ has stuck to smelting capacity cap of 45m tonnes introduced in 2017, setting aside pleas by some producer groups to make concessions. The cap on primary aluminium production will, however, work as an incentive for the industry to make the metal by way of recycling. China has a target to make over 15m tonnes of metal through the secondary route of scrap smelting by 2027. International Aluminium Institute (IAI) estimates that around 75% of the almost 1.5bn tonnes of aluminium ever produced in the world is still in productive use, underlining the growing potential of recyclability.
China is not too late in embracing aluminium related circular economy, which promotes the return of end-of-life aluminium products in the recycling loop and in the process does good to environment. Even while scrap collection remains a challenge, more than 30m tonnes of scrap is recycled annually across the globe. IAI says scrap recycling leads to energy saving of up to 95.5% vis-à-vis primary aluminium (mine to cast house chain). Major energy saving resulting in production cost lowering apart, the quality of secondary aluminium retaining the metal’s properties matches that of primary metal.
China generates over 10m tonnes of aluminium scrap annually, accounting for a third of global total and plans are afoot to progressively raise scrap procurement across the vast country. Aggressive domestic procurement apart, China is also a major importer of scrap, albeit under strict quality standards. Scrap imports in 2024 were up 1.8% to 1.7852m tonnes valued at $3.7bn, the principal sources of imports being Thailand, Malaysia, Japan, the UK and the US.
Reuters says in a report, China’s aluminium “production growth is starting to slow from the average 4% annual rate seen over the last five years.” Even then, the country will end this year with aluminium output inching further closer to the official ceiling of 45m tonnes. Stepping up scrap recycling is one strand of Chinese strategy to reduce the impact of aluminium making on environment. No less important is to reduce the carbon footprint of primary aluminium producers who have a share of 5% of China’s total emissions. The heavy carbon footprint of the industry is due to its very high reliance on coal-fired electricity.
In the existing system ,primary aluminium capacity obtains a not so insignificant percentage of old technology driven and climate fouling capacity. The industry is engaged in replacing the time-worn capacity by way of building new smelters. Government encouraged capacity replacement drive is enabling the industry to build smelters in areas with abundant renewable energy resources. Yunnan is a natural choice for new industry ventures to benefit from the region’s immense hydropower potential. Inner Mongolia offering vast scope to harvest both wind and solar power has also become a centre for replacement smelter capacity building. (IPA Service)
