May 24, 2018 / 7:16 AM / a year ago

U.S. aluminium firm Novelis expands in China amid trade friction

* Company to spend $180 mln to double China capacity amid EV boom

* Says automotive aluminium demand to triple over 8 years

* Aluminium has been at centre of U.S.-China trade row

By Tom Daly

BEIJING, May 24 (Reuters) - U.S. aluminium firm Novelis Inc said it would invest about $180 million to double its automotive aluminium body sheet capacity in China, as it seeks to tap demand from the country’s growing electric vehicle (EV) sector.

The Atlanta-based company, which is owned by India’s Aditya Birla Group, said the investment would add around 100,000 tonnes of capacity at its Changzhou plant, in China’s eastern province of Jiangsu, with the new operations to begin by 2020.

“The timing of this investment is closely aligned with key customer product launches slated for 2020-2021 from both traditional automakers as well as electric vehicle startups,” Novelis said in a statement, adding that existing automotive finishing line capacity in Changzhou was already fully contracted.

The expansion comes amid a simmering trade dispute between the United States and China in which aluminium has featured heavily, with Washington slapping 10 percent tariffs on aluminium imports, as well as punitive duties on Chinese aluminium foil and common alloy sheet.

President Donald Trump’s administration on Wednesday launched a national security probe into whether imports of vehicles and parts were threatening the U.S. auto industry’s health.

China has imposed a 25 percent duty on imports of U.S. aluminium scrap.

Novelis’ statement, which was dated May 23 but issued in China on Thursday, made no mention of exports back to the United States from Changzhou, however, while stressing that China was the world’s biggest auto market.

The company did not immediately respond to a request for comment on other potential target markets.

“Worldwide, automotive aluminium demand is projected to nearly triple over the next eight years with the largest growth potential to be in China, as both domestic and global automakers increase aluminium penetration and production in the market,” Novelis said.

It expects to create around 160 full-time jobs once the expansion is completed.

“We believe China’s commitment to fuel efficiency and reducing emissions represent a large and favourable opportunity that will require greater adoption of aluminium, particularly in the rapidly growing electric vehicle market,” Novelis President Steve Fisher said in the statement.

Reporting by Tom Daly Editing by Joseph Radford

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