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3-year aluminum plant delay

CHINA will not approve new aluminum plants or expansion projects for the next three years as part of a plan to revitalize the nonferrous metals industry.

The government also aims to create three to five major nonferrous metals companies by 2011, with the top 10 domestic players controlling 90 percent of copper production, 70 percent of aluminum, 60 percent of lead and 60 percent of zinc in their respective markets, the State Council, China's Cabinet, said yesterday. A draft of the nonferrous sector rejuvenation plan was unveiled in February when it was approved.

China is encouraging consolidation, technology innovation and elimination of inefficient capacity to ensure sustainable growth in the nonferrous sector, which directly employs 3 million people and was hit hard by the economic slowdown and slumping commodity prices.

The government is also studying to expand a mechanism for the purchase of these base metals as state reserves to help smelters, it said without giving details. It also plans to adjust export tax rebates for metals and push forward a program which allows aluminum smelters to buy electricity directly from power producers to reduce costs.

The decision to halt new aluminum projects may affect Aluminum Corp of China (Chalco)'s plan to expand the capacity of an aluminum plant in Pingguo in Guangxi Zhuang Autonomous Region to 250,000 tons a year from 140,000 tons now.

A Chalco spokeswoman wouldn't immediately comment on the project but Xinhua news agency, citing Chalco's Guangxi head, said last month that the plan was still pending because of oversupply and costs.

China plans to eliminate 800,000 tons of aluminum capacity by the end of 2010, the National Development and Reform Commission said last week. Wen Xianjun, deputy head of China Nonferrous Metals Industry Association, reportedly said last month that China's idle aluminum capacity stood at 10 million tons.

The government would also encourage the exploitation of nonferrous metals both at home and abroad, supporting companies to invest in mines overseas - either on their own or with foreign parties.


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