With the help of both the government's macro-control policies and the market's regulation, the over-investment of electrolytic aluminum has been basically curbed in China.

Statistics from the China Nonferrous-Metal Association show that since last August, there have been no companies starting new electrolytic aluminum projects. Those projects under construction or waiting for construction have been postponed or canceled.

Since 2001, China's domestic demand for electrolytic aluminum increased at a speed of 1 million tons per year, which gave rise to blind development and over-investment of the industry, said Kang Yi, director of the association.

In 2003, more than 25 billion yuan (US$3 billion) was invested in the sector and the production capacity reached 8.34 million tons by the end of the year and is expected to reach 10 million ton in 2005.

The overheating of the industry makes the energy and resources strain even worse.

As a high energy consumption industry, every ton of electrolytic aluminum costs 15,000 kw/h of electricity. In 2003, four percent of total consumption of electricity was used in the sector. Besides, half of alumina, raw materials for electrolytic aluminum, depends on import.

To curb the over-investment of the sector, the central government has banned approval of new electrolytic aluminum project since last May. At the end of last year, the State Council repeated its request.

Currently, 12 percent of companies are still using the backward self-calcine slot technique in the production. But the situation is changing, said Kang, adding that new projects built in the past three years are all using advanced, environmentally-friendly techniques.