Toyota Motor Corp and Contemporary Amperex Technology Co Ltd (CATL, 新能源科技), the world’s top battery maker, are closing plants in China’s Sichuan Province as a drought-induced power crisis worsens.
The Japanese automaker shut a factory in the provincial capital of Chengdu and would keep operations suspended until Saturday, company spokesperson Shiori Hashimoto said.
The Chengdu plant produces about 30,000 vehicles a year, including the Landcruiser Prado, the manufacturer’s Web site says.
CATL halted activity at its major lithium battery base in the city of Yibin through the same date, a local business publication reported.
The company did not respond to an e-mailed request for comment.
The power cuts have affected more than 70 percent of steel mills in Sichuan, which have either halted production or started rationing, Mysteel said in a note this week.
Henan Zhongfu Industry Co (河南中孚), an aluminum smelter, is halting production for a week for some production units in Sichuan.
The Chinese price of aluminum is up about 3.5 percent since Monday’s close.
Sichuan, one of China’s most populous provinces, is highly reliant on hydropower. That makes it particularly vulnerable to a heat wave and drought that have pushed up air-conditioning demand and dried up reservoirs behind hydro dams. It is a key manufacturing hub and is also important for the production of materials, including polysilicon and lithium, that are vital to the energy transition.
The southwestern province has become a key development hub for battery makers aiming to harness hydropower to reduce emissions in their production processes.
CATL has about 100 gigawatts of existing and planned capacity in the province, the most after Fujian, according to BloombergNEF.
Volkswagen AG on Monday said its factory in Chengdu is affected by power shortages, but that it was only expecting slight delays in deliveries to customers. Foxconn Technology Co (富士康科技集團) also makes Apple iPads in the province, but said it was seeing only limited impact from the drought so far.
While other regions in China are dealing with curtailments on a smaller scale, a major power crisis is likely to be mostly limited to Sichuan because of its unique reliance on dams for electricity.
Many Chinese provinces rely more on coal for power, and generators stocked up on the fuel in the run-up to summer as COVID-19 lockdowns weighed on demand. The heat wave has reversed that, with coal consumption for the first two weeks of this month rising 15 percent from a year earlier, the government’s top planning agency said on Tuesday.
Temperatures in Chengdu yesterday were as high as 38oC after soaring above 40oC in parts of Sichuan on Tuesday, with humidity making it feel hotter.
Some office buildings in the city have stopped air-conditioning as the power shortage becomes more severe, Securities Times reported.
Sichuan is a major rice and corn producer, and the National Meteorological Center said this week the drought could damage crops and hinder growth.
The heat wave is not limited to just Sichuan and is affecting the wider Yangtze River basin. There is only light-to-moderate rain expected in the next week and the Three Gorges Dam, the world’s largest, in neighboring Hubei Province, would release more water in the next five days to help replenish the middle and lower reaches of China’s largest waterway, Xinhua news agency reported.
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