HENAN Shenhuo Coal & Power Co. will transfer more than 450,000 tons per year of aluminum smelting capacity to the southwestern province of Yunnan, according to a provincial government notice.

The move illustrates Yunnan’s increasing popularity as a location for aluminum smelters in China, the world’s biggest producer of the metal. The companies are keen to tap the province’s large hydropower capacity to replace their current coal-fired plants for the power needed during the electric-intensive smelting process.

The Yunnan Industry and Information Technology Commission said late Monday that Yunnan Shenhuo Aluminum Co., a unit of Henan-based Shenhuo, had completed the formalities to transfer 451,100 tons per year of smelting capacity to the province.

This represents the first phase of a 900,000 tons per year two-phase integrated hydropower and aluminum smelting project Shenhuo is building in Yunnan, it said. Construction is expected to start July 18, with production to begin in a year.

The Ministry of Industry and Information Technology allows smelters to move or acquire new capacity in regions that have available quotas.

“Yunnan is a hot spot,” said Jackie Wang, an aluminum analyst at consultants CRU in Beijing, noting that another Chinese smelter, Sichuan Qiya, had recently decided to relocate 350,000 tons per year of capacity to the province.

The Yunnan Industry and Information Technology Commission announced that transfer May 10, saying the company was having trouble building a planned project with the same capacity in Xinjiang.

Yunnan’s hydropower provides an alternative to coal-fired power generation and that will help smelters produce “green metal,” said Wang. Aluminum Corp. of China, or Chinalco, is planning to link up with existing companies in Yunnan. (SD-Agencies)