China’s ambitious push to shift its massive aluminium industry towards greener production has hit a roadblock due to erratic rainfall patterns and power cuts in the southwestern Yunnan province.
Lured by promises of cheap hydropower, major Chinese aluminium producers like Hongqiao Group had started relocating a significant portion of their capacity, around 15% of China’s total, from the northern rust belt to the hydropower-rich Yunnan region. The goal was to cut electricity costs and help China, the world’s top polluter, tackle its carbon emissions.
However, interviews with industry figures, analysts, and company filings reveal that insufficient and unreliable hydropower supply in Yunnan has meant that only a little over half of the planned aluminium capacity shift has materialized so far. Experts attribute the dwindling water levels in Yunnan’s rivers and reservoirs to climate change-induced erratic rainfall patterns.
As a result, several smelters have had to slow down or scale back their already-delayed plans, with some even seeking alternative locations. Eight employees at four Yunnan smelters reported cutting production by 10% to 40% due to the power cuts.
Despite strong industry profits in recent years and growing demand for low-carbon products, the power reliability issues in Yunnan have made it clear that the province cannot be sustained as a major aluminium production hub, according to one industry figure.
The setback in China’s green aluminium push highlights the challenges of transitioning an energy-intensive industry like aluminium towards more sustainable production, particularly in the face of climate change-related disruptions to power supply.