China's low carbon aluminium output is likely to rise in 2025 through capacity replacement, technology transformation, renewable energy promotion and secondary aluminium development, according to market participants.

Beijing on 3 July released its special action plan to implement electrolytic aluminium industry energy saving and carbon reduction, with the aim of achieving 25pc of renewable energy utilisation in the aluminium industry in 2025. Market participants expect that this will lift China's green aluminium output accordingly. The country's renewable energy utilisation proportion in the aluminium industry was 24pc in 2023, with green aluminium output reaching 10mn t, data from China's Nonferrous Metals Industry Association (CNIA) show.

CNIA decided to set electrolytic aluminium as the key sector to achieve aluminium industry carbon peak targets by 2025, CINA chairman Ge Honglin said at the China International Fair for Trade in Services on 12 September. China's aluminium industry's carbon emissions reached 530mn t in 2023, of which 420mn t came from electrolytic aluminium production, accounting for 79pc of the whole industry's carbon emissions, CNIA data show.

Capacity replacement

Beijing will continue to implement an aluminium capacity ceiling of 45mn t/yr and electrolytic aluminium capacity replacement policy, and prevent new capacity start-ups in key air pollution control areas, according to the action plan.

China's aluminium producers have already transferred some of their capacities from provinces with sufficient coal resources to provinces that are rich in hydroelectric power in the past few years. Current aluminium capacity in Yunnan province, where the proportion of hydropower accounts for more than 70pc of total power generation, has increased from around 1.5mn t in 2017 to more than 6mn t in 2024, and is expected to reach 8mn t in 2025, according to market participants.

But aluminium total capacity is likely to hit a peak of 8mn t in Yunnan province because of limited electricity supplies. A shortfall of more than 1mn t of aluminium output in Yunnan province in 2022 and 2023 because of electricity shortages, driven by limited rainfall in the area, boosted spot aluminium prices at the time.

Technology transformation

China will further encourage aluminium producers to upgrade equipment and technology to reduce energy waste and carbon emissions.

Producing 1t of aluminium consumes 13,500kWh of electricity, which is much higher than 1,100kWh/t in copper production and 3,200kWh/t for zinc, CNIA data show.

Many producers have started developing energy-saving technology and expanding downstream applications over the past few years. Zhongfu, a key aluminium producer, began to promote energy-saving technology in the electrolytic cells area, which is expected to reduce electricity consumption by more than 300kWh/t, according to the company's 2024 half-year financial report.

Renewable energy promotion

Beijing encourages aluminium producers to increase non-fossil energy utilisation and promote renewable energy projects construction.

Many producers are building wind and solar power stations to support aluminium production lines in northern China in order to geographically diversify as Yunnan hits its green output peak.

Shenhuo, another major aluminium producer, has received approval to build an 800MW wind power project in northwest China's Xinjiang region, in partnership with China Electric Power. The project is scheduled to launch production by the end of 2025.

Inner Mongolia Dian Tou Energy (IMDTECL) is also building a 350,000 t/yr green aluminium plant in the Zhahanaoer region in north China's Inner Mongolia, with plans to launch output by the end of 2025. The plant's annual power consumption will be 4.65bn kWh, with green electricity accounting for 80pc of the total supply, making it the greenest aluminium production line in China, the firm said.

Secondary aluminium development

The Chinese government will support secondary aluminium development and strengthen recycling infrastructure to reach its target of 11.5mn t of secondary aluminium output in 2025. Secondary aluminium output reached 9.5mn t in 2023, CNIA data show.

China announced an easing of aluminium scrap import restrictions on 23 October. The country added secondary high-purity aluminium and secondary deformed aluminium alloys into its import permissions, in addition to secondary wrought aluminium alloys that were approved in 2020.

China imported 1.5mn t of aluminium scrap in January-October, up by 4.5pc from a year earlier, customs data show. Market participants expect that aluminium scrap imports will rise in the near term, although negative import arbitrage could prevent them from increasing significantly.