Weiqiao's relocated aluminum smelter starts operations in Yunnan province

Shandong Weiqiao Pioneering Group Co Ltd has operationalized its 40 billion yuan ($5.72 billion) aluminum smelter project, which has been relocated from Shandong province, to Wenshan autonomous prefecture in the hydropower-rich Yunnan province on Thursday.

The company said the project's annual smelting capacity is 2.03 million metric tons. When fully operational, the project will employ around 12,000 local people, the company said.

It is part of Weiqiao Pioneering's relocation of around one-third of its smelting capacity, totaling 2.03 million tons annually, from Binzhou in Shandong, to Yunnan's Wenshan.

Weiqiao Pioneering is in pursuit of green capacity and more presence in markets related to the Belt and Road Initiative.

The Yunnan smelter project marks the launch of the green aluminum industrial park set up jointly by the provincial government and Weiqiao Pioneering in Wenshan autonomous prefecture.

Analysts said the park will ensure adequate energy supply in Yunnan as well as meet demand from the southern parts of China.

Aluminum smelting is energy-intensive, with power accounting for more than one-third of total costs. Building aluminum plants in a province with abundant hydropower could be more cost-effective and will ensure safe and low-cost electricity supply, said Zhu Yi, a senior analyst for metals and mining at Bloomberg Intelligence.

"China is over-supplied with low-end commodity-grade aluminum products, but in supply deficit for high-end products and relying on imports. The high-value-added aluminum products produced at the park with about 2-million-ton planned capacity will help ease the situation," she said.

The government's supply-side reforms are designed to reduce overcapacity, and effect structural changes in oversupplied industries, including aluminum and steel, so they could upgrade their product mix.

Zhang Bo, chairman of Weiqiao Pioneering, said the company will firmly adhere to the country's "dual circulation" development pattern, in which the domestic and external demands will complement each other and offer vast opportunities to businesses around the world.

Weiqiao Pioneering said it will set up an advanced and high-end green aluminum plant in Yunnan, to enhance the competitiveness and influence of the Chinese manufacturing sector on the global stage, he said.

Many Chinese aluminum producers, including Aluminum Corp of China, have been focusing on Yunnan as the province has easy access to cleaner hydropower, just what the energy-intensive smelting process needs.