Why Chinese aluminium smelters could be spared from higher power costs

China’s coal-fired captive power plants are increasingly under closer scrutiny, as the government pushes harder on liberalising the power market, tightening environmental protection and other reform initiatives. In a draft policy released in March, China is preparing to further rationalise coal-fired captive power plants by mandating payment of government funds and surcharges, as well as forcing industrial facilities owning these captive plants to open supply options to the wider market. In this Insight, we have quantified how the proposed policy could disrupt smelters’ energy costs in China's key aluminium-producing provinces. Find out how much smelters' 2020 cash costs could jump by, but why we don’t think the policy will be fully enforced.