Final Thoughts
19 June 2025
FT - Can the West catch up with China on aluminum smelter costs?
Written by Greg Wittbecker
Some elements of the Chinese model just aren’t realistic for the rest of the world. But others are. Here’s a breakdown of what producers outside China might adopt, and where the real constraints lie.
State support is still alive
Government subsidies aren’t unique to China. The EGA smelter in Oklahoma shows there’s still political appetite for helping big metal projects, especially if it brings jobs. The bigger challenge in the West isn’t capital support, it’s energy cost support. That’s politically touchy and often WTO-problematic, but we may be entering a post-WTO world anyway.
Build bigger – if the power’s there
Western producers would love to go beyond 600,000 tons/year. The problem is securing that much cheap power. No one’s going to build big unless the energy supply is stable, low-cost, and long-term.
Prefab design can help
This is low-hanging fruit. The West can absolutely use modular, prefab designs to cut costs and timelines. It requires a mindset shift away from “custom everything,” but the economics make sense.
Get the permit clock moving faster
Delays kill projects. One or two years just to get permits approved is hard to justify, especially in today’s inflationary environment where construction costs rise every quarter. Any regulatory streamlining will help.
Design for obsolescence, not longevity
China got this one right. If inert anode tech or other breakthroughs are coming, why build a plant that’s supposed to last 30 years? Western engineers tend to overbuild. That has to change.
Do you really need an anode plant?
If inert anode is viable in the next decade, you may regret building a traditional anode shop. Outsourcing that part of the operation makes more sense now. Casthouses still pencil out, but they need to be more focused and flexible.
Commissioning costs need more scrutiny
We’re probably not going to copy China’s accounting rules, but we should push harder for faster ramp-up and more accountability. Too many Western projects bake in delays and ballooning budgets.
One final challenge: Internal expertise
Western companies haven’t built many smelters in the past 20 years. That expertise gap has been filled by engineering firms like Bechtel or Hatch. They’re good, but expensive. If producers want to control capex, they may need to bring more project management in-house.
Western producers may never match China’s capital cost structure, but they don’t need to. What they do need is a smarter, faster way to build that reflects today’s economic reality, not yesterday’s playbook.
