Chinese Aluminium Investment Moves Beyond Borders

Chinese aluminium producers are planning a major expansion of overseas smelting capacity as restrictions on domestic output encourage manufacturers to pursue projects across Asia, the Middle East and Africa.

A Reuters review of company disclosures and government filings identified at least 15 million tonnes of additional annual production capacity planned or announced abroad. Around 2.85 million tonnes is already under construction or being brought into operation. China has maintained a 45-million-tonne ceiling on domestic primary aluminium capacity since 2017, limiting further expansion within the country.

Indonesia has emerged as a leading destination, with companies including Nanshan Aluminium, Xinfa and Tsingshan pursuing projects. Kazakhstan and Saudi Arabia could together host another four million tonnes of annual capacity. Investors are responding to longer-term demand from electric vehicles, electricity infrastructure and industrial production, although smelting requires dependable power supplies and substantial capital expenditure. The projects illustrate how domestic restrictions can redirect industrial investment towards other countries, potentially changing where production jobs and supporting infrastructure develop.

The prospective expansion also raises concerns about oversupply. Morgan Stanley forecasts a global aluminium market surplus of 830,000 tonnes in 2027 and 1.8 million tonnes in 2028, following a deficit this year. Lower prices could weaken the economics of proposed smelters, while Beijing has introduced additional oversight of overseas investments on national security grounds. Industry specialists cited by Reuters expect only part of the planned capacity to materialise. The investment pipeline is therefore substantial, but it should not be confused with factories already operating in different host economies.