The Chinese government on Monday put the brakes on the feverish expansion of electrolytic aluminum production by stopping approval of any projects to expand or construct electrolytic aluminum plants.

An official from the State Development and Reform Commission, which oversees the country's economic restructuring, said the government would not allow new electrolytic aluminum projects in any form to be started.

Proposed foreign-funded projects would also undergo strict scrutiny according to due procedures, the official said.

Ma Kai, minister in charge of the commission, total local reporters that bank loans and funds raised from the security market could not be used for the construction of electrolytic aluminum plants without government approval.

China, already the top electrolytic aluminum producer in the world with an annual capacity of 5.1 million tons, is likely to double the capacity in a few years if the projects under construction or to be launched are taken into account. At that time, the output will far exceed market demand.

However, as the cost of electricity climbed and prices of raw materials soared, most of the electrolytic aluminum plants were expected to lose money in the next few years, according to the commission.

The commission encourages regrouping of the existing electrolytic aluminum companies by means of merger or acquisition so the sector can improve efficiency and international competitiveness.

(Xinhua News Agency August 19, 2003)