The scheme allows smelters that buy electricity directly from power plants to link the power price to the aluminium price during the low water season. Under the policy, five smelters can buy electricity directly from coal-fired power plants at prices pegged to the aluminium price.

The policy means smelters can buy cheaper electricity when aluminium prices fall, and vice versa, in the low water period, which started in December and ends in April 2010.

If the smelters, power plants and the grid company reach a consensus, the policy could be extended by seven months.

The five smelters are Sichuan Aostar Aluminium, Meishan Qimingxing Aluminium, Sichuan Guangyuan Aostar Aluminium, Leshan Qiya Aluminium Group and Aba Aluminium Smelter.

Source China Metals email