China has invested substantial sums in raw material production such as electrolytic aluminum projects, driven by global demand, but the industry faces serious excess capacity, experts said.

During the first half, China's nonferrous metals refining industry experienced "severe" overcapacity, rising power costs and falling aluminum prices, according to a report released by the National Development and Reform Commission, China's top planning agency, in mid-August.

It said smelting capacity was "extremely excessive", with a lack of stable resource supply. Yet the industry doesn't produce enough high value-added products, which must still be imported.