A multibillion dollar effort to green an aluminum market that accounts for almost 60 % of global production and, according to some estimates, emits more carbon monoxide than Australia is hampered by the region’s torrential rains in China’s south.
China Hongqiao Group and a few other coal-reliant metals started moving 6.56 million metric tons of capacity, or about 15 % of China’s complete, from the northern rust belt to the mountain, culturally diverse Yunnan territory, known for its tea, coffee, and wild vegetables, spurred by official claims of cheap electricity.
It seemed a good idea to lower energy bills and support the world’s best polluters in tackling global warming. But as Yunnan’s rivers and reservoirs dwindled amid bad precipitation, which some researchers attribute to climate change, so did the consistency of light.
Insufficient hydropower, according to Reuters interviews with about 20 business figures and analysts, as well as company filings and formal documents, has resulted in the realization of only about half of the anticipated shift in aluminum capacity. Some metals are reversing their already-daily programs, while others are looking for alternate locations.
One Yunnan industry figure who, along with others, spoke on the condition of anonymity because the issue is sensitive, said,” The power cuts in the last two years have made it clear that Yunnan ca n’t be sustained as a major producing region.”
Eight Yunnan smelters employees reported having to reduce production by 10 % or 40 % despite the rising demand for low-carbon products and recent high industry profits.
Because metal is used in many clear systems, adjunct fellow Muyi Yang, an adjunct researcher at the University of Technology Sydney, said any offer problems would halt China’s wider energy transition.
According to analysts and industry sources, the liquid squeeze has hampered China’s climate goals by causing volatility in international aluminum prices and putting a strain on the ability of producers to capitalize on the demand for “green” metallic.
The construction of two plants in Wenshan and Honghe regions, each with a capacity of around 2 million tons, was part of Hongqiao’s plan to move about 4 million tons of generation from Shandong province to Yunnan.
The director of the industrial area where it is located, according to state media, that the 17 billion yuan ( US$ 2.35 billion ) Wenshan mill, which opened in 2020, was scheduled to be operational by August 2022. Two business statistics claimed that hydropower’s unpredictable nature prevented that.
Production at Honghe was scheduled to start in March 2023, according to a Yunnan Department of Industry and Information Technology ( YIIT ) project overview from December 2021. According to a person with knowledge of the situation, the first production capacity of only 500, 000 lots will be prepared by the middle of this year.  ,
Chen Xinlin, a mature metals and mining expert at Wood Mackenzie, said Honghe’s ability may not be commissioned this time due to the “hydropower bottleneck”.
The Yunnan government and its parent, Shandong Weiqiao Pioneering Group, did not respond to Reuters ‘ questions about the situation.
China’s environment and industry ministries, and the top planning agency, the National Development and Reform Commission ( NDRC ), did not respond to requests for comment.
GREEN DREAMS
The International Energy Agency estimates that aluminum accounts for about 3 % of the world’s direct industrial carbon dioxide.
That meant that China’s 2020 goals, which were formalized in 2020, required the country to achieve net zero carbon emissions by 2060.
Producers may be able to charge premiums as global manufacturers raise their carbon standards for materials, even though only a small percentage of green aluminum currently pays such a premium. This is a part of the attraction of aluminum made from hydropower or other clean energy.
Producers in Yunnan, including industry leader Aluminium Corporation of China ( Canton ), were drawn to Yunnan by the provincial authorities ‘ offer of discounted green power at 0.25 yuan per k Wh, which is less than half of what northern Chinese residents were paying.  ,
Suppliers, including anode producer Sunstone Development, followed Chinalco’s announcement to move 1.2 million tons to Yunnan in 2018. neither responded to comments on the website.
To give workers a taste of home, the new smelters hired workers from China’s north, who had factory canteens serving braised noodles and shaobing, a flatbread stuffed with meat.
The plants produce square-shaped bundles of silver-colored ingots made of molten aluminum. These are transported by trucks to factories where they are transformed into items like beer cans, window frames, and car parts.
A 2022 World Economic Forum report anticipated that 2 to 3 million tons of primary aluminium production would move annually to China’s southwest, mostly Yunnan, from 2020 to 2025, tapering to 90, 000 to 100, 000 tons per year by 2060.  ,
The pace has been much slower.
Power may have been a potential constraint, officials knew.
In 2021, He Chun, deputy bureau chief of the Wenshan Energy Bureau, stated that the first step in developing a green aluminum industry is to address power supply issues.