Shandong’s action on Illegal aluminum projects

By: Kathy Liu | Comments: | Category: Aluminium AZ China

People are talking about Shandong cutting around 2 million tons of illegal aluminum capacity. Finally, Shandong issued the formal document regards to this topic with the title Notice on the Issuance of Special Action Plan to Rectify the Illegal electrolytic aluminum industry in Shandong.

This document was issued by four major departments in Shandong: Shandong NDRC, Shandong MIIT, Shandong MLR (Ministry of Land and Resources), and Shandong MEP.

We have gone through the document and found the content was nearly same as the control illegal aluminum project document issued by same departments, but in the national level.

There are two differences from Shandong’s notice compared to the Beijing document:

  1. Shandong’s notice did not repeat the words “Implement responsibility”. In the state document, it showed clearly that each province will take the responsibility to manage and control new capacity. If local enterprises have problems, the provincial government can deal with those problem following the relevant laws.

This might be the reason why Shandong had issued this notice, to show its attitude to follow the instructions from the top government.

  1. Another difference is the date differences for the rectify action.

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The timeline Shandong gave to local smelters should be long enough for them to make illegal capacity becomes compliant.

We did a calculation based on MIIT’s aluminum industry compliance list. Shandong Province had total of 6.6 million tons of approved capacity. Filings to Shandong Province come to 8.1 million tons plus around 1 million tons of replacement capacity. It showed there was around 2.5 million tons of illegal capacity in Shandong.

If we go back to check the historical information and found it was not the first time for China to issue notice to control the illegal aluminum projects.

In 2003, November 25, NDRC, Ministry of finance, MLR and other six ministries and the people’s Bank of China had jointly issued the document with the title Several opinions on stopping the illegal construction of the electrolytic aluminum industry and blind investment. It called for the prohibition on approval the aluminum and alumina project which could not meet the industry policy and development planning.

In 2011, between June 15th to June 30th, MIIT and other 8 ministries and departments did a joint investigation on 10 provinces’ without approval, but in aluminum construction projects.

In May 2014, Binzhou government released a document called Notice on carrying out the work of rectifying the illegal construction of the electrolytic aluminum industry in the province. It showed Shandong province did the illegal aluminum project control work in 2014.

In 2015, NDRC and MIIT issued a document which was a benchmark for the 2017 aluminum illegal project control action called: Notice of the Ministry of industry and information technology of the national development and Reform Commission on printing and distributing the opinions on the elimination of illegal items in iron and steel, electrolytic aluminum and shipbuilding industry. It gave clear instruction on how to deal with the illegal aluminum projects built after May 2013.

China had aluminum surplus problems for more than decade. MIIT tried very hard to control the illegal aluminum projects for years.

These actions to control aluminum capacity have been running since April.  As we know, some illegal construction projects had stopped in Xinjiang, though it is already clear that the rule is not being strictly followed.   We think the ruling for Shandong will not necessarily lead to a cut of 2.5 million tons.  We think that the plan is to get as much of the illegal capacity to become legal as soon as psosible.  Based on our calculation, China will continue with aluminum surplus supply issue in 2017.

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