Nov 3 (Reuters) - Aluminum Corp of China Ltd , or Chalco, said on Tuesday it would sell a 135,000 tonnes annual aluminium smelting capacity quota to Yunnan Aluminium, continuing the sector’s migration to China’s hydropower-rich southwest.
Yunnan Aluminium, which like Chalco is a subsidiary of state-owned Chinalco, the world’s biggest aluminium producer by capacity, came out on top in an auction for the quota, bidding 538.65 million yuan ($80.64 million), excluding tax, Chalco said in an exchange filing.
The quota was available after Chalco shut down its Shandong Huayu smelting unit early last year due to high costs.
Aluminium capacity transfers between regions are permitted in China as long as they keep within overall quotas.
China, the world’s biggest producer and consumer of the metal, is seeking to cap overall smelting capacity at around 45 million tonnes per year to control emissions.
In its own filing, Yunnan Aluminium, which is based in southwest China’s Yunnan province, said winning the quota would “help accelerate implementation of the company’s integrated hydropower and aluminium development strategy and further enhance competitiveness.”
It is the second time in two years Chalco has transferred a capacity quota to Yunnan Aluminium. In 2019, it sold a 170,000 tonnes quota after shuttering its Shanxi Huasheng subsidiary, making a 800 million yuan gain from the disposal.
Chinalco took over Yunnan Aluminium in 2018 as it sought to tap cleaner hydropower for the energy-intensive smelting process. Chalco itself also holds a 10% stake in Yunnan Aluminium and 38.9% in Yunnan Aluminium’s Yixin Aluminum unit.
$1 = 6.6795 Chinese yuan renminbi Reporting by Tom Daly; Editing by Mark Potter