Aluminium Gains Strategic Importance in China

Aluminium is gaining strategic significance for China as the nation emphasizes AI, renewable energy, advanced manufacturing, and power infrastructure, according to Fitch Ratings. The nation's 15th five-year plan, announced in early 2026, has elevated "resources security" to a national priority, following food and energy security.

China's recent Mineral Resources Law Implementation Regulations, set to take effect in June 2026, require the incorporation of strategic minerals into the national reserve system, further highlighting aluminium's importance.

Aluminium's unique attributes of conductivity, durability, corrosion resistance, and lightweight make it a key material for sustainable development. As China transitions to clean energy, aluminium plays a crucial role in supporting the energy infrastructure, with over 40% of China's aluminium demand linked to energy-transition and power infrastructure sectors.

Aluminium is integral to various energy-related sectors, including transmission lines, substations, transformers, solar installations, wind-power projects, electric vehicles, battery systems, and grid infrastructure.

The rapid expansion of AI-related computing capacity is expected to further bolster this trend, as data centers require more electricity, necessitating additional investment in generation, transmission, and distribution infrastructure. Structural supply constraints in aluminium production also contribute to its strategic importance.

China currently limits aluminium smelting capacity to 45 million tonnes, which is unlikely to be increased due to high electricity consumption and China's decarbonization goals. Existing industry utilization rates are close to full capacity, leaving limited spare capacity to address supply disruptions. Global supply flexibility is also constrained, as aluminium smelting requires reliable and affordable electricity, and new entrants face environmental regulations and lengthy development timelines.

China's Aluminium Corporation of China (Chinalco) plays a critical role in supporting the country's resource-security and energy-transition objectives. Chinalco accounts for approximately 22% of China's aluminium smelting capacity, equivalent to around 12% of global capacity. The company also holds significant positions within the value chain, including a 34% share of China's alumina market and a 26% share of aluminium product output.

Chinalco supplies about half of the aluminium used in China's new-energy sectors, making it a vital participant in supply chains supporting renewable energy deployment and power-system expansion. Given the high industry capacity constraints, any default or disruption at Chinalco would immediately impact supply chains linked to renewable energy, power infrastructure, and other strategic sectors.