To be precise, China’s Ministry of Industry and Information Technology (MIIT) said the country had released a development plan that calls for reducing energy consumption in the steel industry. At the same time, MIIT aims for an “urgent” green development raw materials industry during the 14th five-year period (2021-2025). Market watchers tell S&P Global Platts that this is the first time China has issued a strategy for the whole raw materials industry at once, instead of drafting a plan for each sector individually.
Petrochemicals, steel, and nonferrous metals are some of the primary priorities of the strategy’s raw materials sector.
Compared to present levels, Chinese steel production will be reduced by 2% under the proposal. According to the MIIT paper, the strategy also asks for a 5% reduction in primary aluminum sector carbon emissions by 2025. According to a document cited in the article, the demand for bulk raw materials, such as steel, primary aluminum, and cement, would gradually reach a peak and then drop. China’s ambitious carbon objectives and environmental limits necessitated a green and safe growth of its raw materials business, according to MIIT.
As a result, the global commodities markets were rattled by China’s announcement of high carbon emission goals in 2021, which led to a clampdown on industrial electricity use and rationing power to energy-intensive industries. The paper intends to establish a capacity replacement program for the steel and primary aluminum sectors, reducing surplus capacity and effectively limiting capacity expansions.
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The paper said that China would limit the growth of copper smelting and alumina sectors. The strategy also intends to help the raw materials business expand moderately so that supply chains and the economy aren’t put under as much stress.
China plans to build steel smelting clusters using current steel-producing locations as a base. In contrast, alumina projects that use seaborne resources would be located along China’s coastline, according to the paper. According to the report, the government wants to create electric arc furnace mills for its steel sector, which relies on urban mining and transforms its principal aluminum business to clean energy.
Primary aluminum capacity in China was formerly fixed at 45 million metric tons per year. Although it is difficult for Chinese primary aluminum smelters to get clearance for capacity expansions, they may readily move a part of their capacity to other locations where clean energy sources, such as hydropower, are plentiful. Most of China’s smelters use coal-fired energy, which results in substantial carbon emissions. China is the world’s biggest producer of primary aluminum. However, as production and power consumption has declined, the country’s rise in carbon emissions has decreased. Antaike, China’s state-owned research body, predicts that primary aluminum production will peak in 2024 and fall afterward, with secondary aluminum taking its place.
End-of-December Antaike statistics indicated China had a primary aluminum capacity of 43.25 million mt/year, up 0.93 million mt/year over the same time last year.