Xinfa Group – Low-Cost Aluminium’s High Cost to the Environment
Shandong Xinfa Aluminum & Electricity Group Ltd. (China) is one of the largest private aluminium companies in the People’s Republic of China and among the top ten aluminium producers on Earth. The firm is made up of over six dozen individual companies, controls nearly US$25 billion in assets, and employs upwards of 60,000 people.
It is also responsible for a staggering litany of environmental carnage. As one of China’s low-cost aluminium producers, Xinfa Group has ridden roughshod over the country’s land, air, and water to undercut its competition.
In order to keep overhead low, Xinfa utilizes a vertical-integration business model wherein it conducts in-house mining, power generation, heating, and alumina refining operations. The firm meets its significant power needs via aged thermal power plants fired by gargantuan amounts of coal. These “off the grid” power plants belch forth CO2 into the atmosphere at alarming levels – according to the latest data, Xinfa’s captive power plants add almost sixteen tons of CO2 to the atmosphere for every ton of primary aluminium the company turns out.
The CO2 pollution is egregious enough on its own, but it is not the only manner in which Xinfa mars China’s atmosphere. The firm’s two smelters both emit particulate levels far above the nationally-allowed standard of 10.0 mg/m3 – its smelter in Guangxi pollute at a rate of 17.0 mg/m3, and the smelter in Shandong loads the atmosphere with 19.0 mg/m3. The latter smelter is particularly nasty, putting off double the allowable limit of dust (60 mg/m3) and almost eight times the permissible level of nitrogen oxides (790 mg/m3).
Xinfa is one of China’s biggest bauxite importers, having adopted a strategy of bringing the raw material into China and processing it domestically. Subsequently, all the waste from alumina refining remain in the area where it plants are based, whereas historically foreign companies adopted a different strategy: they arranged for the processing of bauxite in the countries where bauxite was mined and where high standards and regulations for processing are followed (Australia, Brazil, Jamaica). Meanwhile, the increase of Chinese bauxite importers have already caused environmental degradation in Indonesia and Malaysia, where the governments had to step in to ban bauxite mining operations due to pollution caused by Chinese demand and lack of adequate regulations.
The problem of disposing of red mud (a side product of refining bauxite to alumina) has long plagued the aluminium industry. While most modern aluminium firms have found environmentally responsible methods for properly handling the highly basic mixture of solid and metallic oxides, Xinfa has done precious little in this regard. In the summer of 2010, protests erupted outside the Xinfa Aluminium Plant in Guangxi Province. Villagers said that the plant had been polluting the area’s water supply with red mud since 2007, causing it to become undrinkable. After armed police and government officials blocked the plant’s entrance, Xinfa sent approximately 300 plant employees into the crowd to bludgeon protesters, leading to several injuries. Two injured elderly protesters were reportedly shoved into a river in the melee.
Chiping, Shandong province, is the birthplace of Xinfa and it is where a significant amount of the firm’s operations take place. Unfortunately for the city’s residents, the company has essentially encircled it with a number of plants that have polluted the area almost continuously since the company’s founding in 1972. An investigation carried out by a reporter from China Youth Daily in 2014 revealed that the area was plagued by significant pollution in its groundwater and the waters of the Yellow River. According to locals, the water was toxic to both humans and crops. Groundwater was yellow and oily, and all potable water was imported from neighboring counties. Xinfa maintained red mud reservoirs in the area and, upon investigation by the reporter, red mud was found to be streaming from the reservoirs on a continual basis and in large quantities. Further, approximately six miles outside of town Xinfa was discovered to be maintaining several 1,400’-deep wells in which the firm has pumped wastewater, which is assumed to consist largely of red mud.
As a result of the pollution problems in Chiping, Xinfa was investigated by the government’s environmental protection agency. The 2013 investigation found a red mud retention pool containing up to 1.8 million cubic feet of the substance was improperly constructed and leaked as a result. The improper storage led to seepage into ditches and ponds and, ultimately, reached the local water table. The firm was added to the groundwater pollution list and fined as a result. The agency again took notice of the problem in 2015, indicating that the company lacked desulfurization and denitrification facilities in its sewage-treatment plant, leading to a “significant social impact.”
Due to the bad press it faced as a result of this behavior, Xinfa engaged in a token green washing campaign in an attempt to salvage their reputation. In the summer of 2015 the firm organized a public environmental impact assessment involving the construction of a new red mud discharge facility in Guanxi province. Later that year Xinfa made a show of destroying seven cooling towers in conjunction with a modernization of its facilities. Possibly as a result of this green sheen activity, Xinfa was removed from the groundwater pollution company list in 2015.
Though it has found itself subject to punitive action by the state over its rampant polluting activities, it has not appeared to slow them down. Over the past three years Xinfa has been cited thirty separate times by various government authorities for environmental transgressions including building without proper environmental impact assessments, significant dust emission, mismanagement of wastewater, red mud discharges, and emission of prohibited levels of nitrogen oxides and sulfur dioxide.
Xinfa has gone a long way to obtain and retain its reputation as a low-cost provider of aluminium. Unfortunately, the low-cost aluminium it sells comes at a high cost to the people and the environment that have the misfortune of finding themselves in the vicinity of its operations. There is scarcely any reason to believe that this intolerable situation will change anytime soon.