Alcan to Expand Smelting Capacity in Northwest China

Sept. 7 -- Alcan Inc., which is being bought by Rio Tinto Group to form the world's biggest aluminum maker, may build smelters in northwest China to benefit from rising demand for the metal in the world's fastest-growing major economy. "We are investigating growth in Ningxia and other options" including buying plants in northwestern China where power supply is sufficient, Pierre Arseneault, Alcan Primary Metal's vice president of strategic planning and energy, said in an interview today in Dalian. China, the world's largest producer and user of aluminum, may become a net importer of the metal starting form 2009 amid surging demand from automakers and packaging producers, Peter Finnimore, sales director of United Co. Rusal, the world's largest aluminum producer, said Aug. 27. "Clearly China is going through its urbanization process and aluminum is certainly a preferred material for that," said Arseneault. "In the past 25 years China has been growing 9.6 percent. It's likely to be sustained," supporting metal demand. China's northwestern region experience fewer electricity shortages than in the coastal areas like Zhejiang and Guangdong. Power accounts for more than a third of the production costs for aluminum smelters. Packaging Plants Alcan has been in talks to raise its investment in building a 250,000 ton smelter with Qingtongxia Aluminum Group, China's second-biggest maker of the metal, in the western province of Ningxia. Alcan paid about $150 million for a 50 percent stake in a 150,000 ton production line in 2004 in Qingtongxia. Rio is buying Alcan for $38.1 billion including 3.5 million tons of aluminum capacity and low-cost power rights to surpass Rusal as the world's top producer. It plans to sell some assets to help pay for the purchase, including Alcan's packaging unit. Alcan will sell its five packaging plants in China as part of the global move, said Arseneault. Eighteen percent of Alcan's packaging was aluminum, with the rest comprising steel, plastic and others, he said.