Chinese companies are looking to tap into the rich energy resources of the northwest region, which includes provinces such as Inner Mongolia and Ningxia.

Wan Ling, CRU Senior Consultant, told the 15th World Aluminium Conference, organised by CRU, in Oslo, Norway, that these provinces also offer a reduced energy rate and are oversupplied with power.

They plan to export their power and are looking for attractive aluminium smelting investment.

While far-flung regions such as Inner Mongolia and Xinjiang offer a power rate of RMB0.3/kWh, the more populated regions of China’s east coast charge around RMB0.6/kWh.

However, the Chinese government, which controls the power price, announced in 2009 that it wants power producers and consumers to set the price at around 20% of total power consumed. It re-iterated in April this year it wants to reform the power tariff system.

Ms Ling said about 4Mt of aluminium smelting capacity is under construction in China, with most of it set to be commissioned late this year or early in 2011.