Cayman Aluminium (Sanmenxia) Co Ltd, a new alumina producer in China, is already expanding its capacity, a company official said yesterday, which will potentially reduce the country's imports of the commodity.

China is the world's top buyer of spot alumina, from which aluminium is made, and imports nearly 40 per cent of its alumina.

Cayman started producing alumina last month from its refinery, which has 400,000 tons of capacity. The facility will eventually house three such units of equal capacity, one of which the company this week started building, according to the official. "We used 18 months to finish the first unit. The second one should be done within this year," the official said. He did not say when the third 400,000-ton unit would be built.

Cayman planned to invest 4.6 billion yuan (US$570 million) for the entire 1.2 million-ton-a-year refinery, the official said.

The company operates a mine in Sanmenxia city in Central China's Henan Province and will produce at least 400,000 tonnes of alumina in 2006.

Analysts see China's alumina production jumping nearly 30 per cent to 11 million tonnes this year, from about 8.5 million tons in 2005.

Prices of spot alumina in China have risen 28 per cent over the past year to about 6,100 yuan (US$753) a ton, supported by strong demand from the country's expanded aluminium capacity and high world prices.

Robust prices are prompting existing refineries to expand capacity and investors to build new refineries in the country.

Under current planned projects, nearly 12 million tons of alumina capacity was likely to be built, of which 6.4 million tons would come on stream between 2005 and 2006, according to China Nonferrous Metals Industry Association.

Aluminum Corp of China Ltd is the country's dominant alumina producer, whose capacity will rise to 12 million tons by 2010 from 8.5 million last year.

Other Chinese alumina refineries, including Cayman, that had combined capacity of one million tonnes in 2005 will boost capacity to 5 million tons by 2010.

Cayman is owned by the privately-held Hangzhou Jinjiang Group in East China's Zhejiang Province.

Jinjiang intended to build an aluminium smelter in Shizuoshan city in northern China's Ningxia Autonomous Region, said an official for the group. "We signed a letter of intent with the local government in December," he said.

(China Daily 01/12/2006 page11)