Chalco to Shut Down One Million Tonnes Alumina Capacity

Aluminium Corp of China Ltd is temporarily shutting around one million tonnes of alumina capacity at its Shandong plant due to low prices, a company source said on Wednesday.

The closure would leave Chalco's Shandong plant running at about 200,000t out of 1.5 million tonnes of capacity. The plant had already shut 300,000t of high-cost alumina capacity, the source said.

The shut facilities at Shandong account for about a tenth of total alumina capacity at Chalco, the world's third-largest alumina producer. It has more than ten million tonnes of alumina capacity in China.

"Shandong's output plan for the fourth quarter is set at just 45,000t," the source said.

The Shandong plant has stopped putting raw materials into the facilities that are to be closed and asked clients to take alumina from Chalco's other plants.

The source said the timeframe of the closure was uncertain. During the closure, the Shandong plant would carry out maintenance at its facilities.

Chalco's spokesman was not immediately available to confirm the latest closure. The company's shares were 2.3% lower in Hong Kong and 2.8% lower in Shanghai by 05.14 GMT.

China's spot prices of alumina, the main material for aluminium production, have fallen nearly 40% so far this year to about CNY2,650 per tonne on increased supply from new capacity, which surpassed demand growth from the production of primary aluminium smelters, industry officials said.

Other high-cost alumina producers have also temporarily closed capacity, in the light of low prices.

Weiqiao Aluminium in Shandong province, the second-largest alumina producer in China after Chalco, has closed half of its four-million-tonne-a-year alumina capacity, a company source said on Monday. The firm's production costs for alumina were about CNY3,300 per tonne.

Lubei Group was also closing its one-million-tonne-a-year alumina refinery, a senior executive said on Monday.

Chalco's Shandong plant, Weiqiao and Lubei use imported bauxite as feed.

By Polly Yam, Reuters