The Ministry of Industry and Information Technology(MIIT) released on January 17 a “Notice on Implementation of Aluminum Capacity Swap through Mergers and Acquisitions and Other Ways”. Due to the previous capacity swap policy expiring on December 31, 2017, the notice officially announces a one-year extension. However, it also clearly states that the door for capacity swap will close after December 31, 2018. In addition, it emphasizes that the policy is only applicable for projects completed or under construction, new projects not included.
In order to address the overcapacity, the Chinese government rolled out a combination of policies to clamp down on illegal capacity. The capacity swap policy issued in April 2015 allows smelters to legalize their capacity through the purchase of the equivalent amount of obsolete capacity. A total capacity of more than 6.5 million tons has been swapped since the policy was implemented, according to statistics compiled by China Aluminium News. A big part of these capacities will be put into operation in 2018.
Despite the policy, the central government also gave special permission to more than 2 million tons of aluminum capacity in such underdeveloped regions as Yunnan and Guangxi. These projects are under construction and will be operational in 2018 and 2019.