Cheap hydropower lured energy-intensive aluminum producers to China’s Yunnan province, but more frequent droughts due to climate change are upending what seemed like a win-win.
Around 80% of the southwestern province’s electricity comes from hydropower. That’s attracted producers of the metal that takes so much power to produce it’s been described as congealed electricity. Yunnan now accounts for around 13% of Chinese aluminum output.
The province’s reservoirs are running dry this year amid a historic drought that also hit neighboring Sichuan. Authorities in Yunnan have ordered smelters to lower production by 10%, according to people with knowledge of the issue, with the duration and scale of the cuts dependent on when it gets enough rain. Yunnan Aluminium confirmed Tuesday evening that it’s reducing output.