China Moves To Cool Overheated Aluminum Expansion

China's powerful state planner said it would block local officials from approving aluminum plant expansion projects as it tries to slow rampant capacity increases in an overcrowded market.

"Local governments will not be allowed to approve any form of electrolytic aluminum capacity expansion projects," the State Development and Reform Commission said.

"All administrative levels and local governments should recognize the ill effects of blind expansion in the aluminum sector and should impose measures to ensure its healthy development," it added.

The sector was plagued by poor standards and uncompetitive products, it said.

Total aluminum output capacity has hit 5.1 million metric tons per year with production hitting 4.35 million metric tons in 2002, making the country the world's largest producer of the metal, used in the construction and auto sectors.

China houses 130 smelters -- more than the rest of the world combined -- with average capacities of 30,000 tpy each versus 190,000 in most other countries.

The state planner said a total of 2.6 million tpy of new aluminum capacity was in the works, and a series of huge 500,000-tpy plants were due to begin construction soon.

"Six domestic alumina refiners have a combined alumina capacity of 5.3 million tpy. That is expected to increase to 7.0 million tpy by 2005, but it would only be able to satisfy the production of 3.5 million metric tons of aluminum," it said. Reuters