Sichuan cuts industrial power supply amid heatwave

BEIJING/SINGAPORE • Producers of lithium, fertilisers and other metals shut plants or curbed output in China's south-western Sichuan province yesterday after it rationed industrial electricity consumption amid its worst heatwave in 60 years.

Industrial users across 19 out of 21 cities in the province were ordered to suspend production from yesterday until Aug 20 to prioritise residential power supply, according to a notice issued on Sunday by the Department of Economy and Information Technology of Sichuan.

An official at the department confirmed to Reuters that it had implemented power rationing but declined to discuss details.

There have been some power curbs in place since late July that affected industry production, but the latest policy was more severe, according to industry sources.

Sichuan relies on dams to generate more than 80 per cent of its electricity.

But soaring temperatures and little rain this summer have reduced hydropower generation in the province of 83.75 million people, while also boosting power demand for air-conditioning.

Several cities will see temperatures of 42 deg C this week, said the China Meteorological Administration, which has been issuing a high-temperature alert for four consecutive days since Aug 11.

The move by a province that produces about half the country's lithium, used in electric vehicle batteries, is expected to push up metal prices which have surged this year.

Top Chinese producer Tianqi Lithium and Sichuan Yahua Industrial Group both operate plants in the province.

Tianqi did not respond to a request for comment on the curbs, and Yahua could not immediately be reached.

One major producer of the metal has halted production, analysts at Daiwa Capital Markets said in a note, without identifying the firm.

Ms Susan Zou, an analyst at Rystad Energy, said: "This will definitely give a boost to lithium prices especially when the dynamics of EV (electric vehicle) sales in China look promising during the remainder of this year."

"In addition, since the high temperature in Sichuan province is not easing significantly next week, the supply chain is also wary of extended power restriction in the region."

Several electronics manufacturers, including Taiwan's Foxconn, also have production sites in Sichuan.

A company spokesman declined to confirm the status of its operations but said that "at present, the impact is not big".

Some companies are continuing to operate at limited capacity, however.

REUTERS