Aluminium
Feature Articles
Where the Bauxite At?
August 2021
Surging aluminium demand is pulling the whole value chain along with it. As the centre of aluminium and alumina production, China is predominately the focus of capacity and production developments. However, China is struggling to meet its demand for bauxite—the raw material of the industry—from domestic resources.

Global bauxite resources are estimated at 55-75Bt. Grades are dependent on region and deposit formation. High quality bauxite is considered to have a high alumina, >47%, and low reactive silica content, <4%. China’s domestic supplies of bauxite are diasporic and while high in alumina, are costly to process due to high silica content. This has led alumina producers in China to increasingly look to the seaborne market to import bauxite.

Guinea has the largest bauxite reserves in the world, with the USGS reporting 7.4Bt, followed by Australia (6Bt), Vietnam (3.7Bt), Brazil (2.6Bt) and Jamaica (2.0Bt). Australia was historically the largest producer, followed by China and Guinea. Including supplying its significant refining capacity, Australia was also the largest exporter until Indonesia ramped up its own exports to feed the rapidly increasing capacity in China.

 

 

However, following Indonesia’s raw ore export ban, Guinea has rapidly increased production on the back of the demand from China, becoming the largest exporters and is expected to soon become the largest producer. Malaysia has maintained a bauxite mining ban since 2016 which it is now looking to lift under newly defined operating procedures – though will not be a major supplier in the long term. Indonesia announced further easing of its export ban, allowing exports by companies in the process of developing alumina refining capacity.

Previously, alumina refineries were developed near bauxite resources, or were directly associated with an owner’s mine elsewhere. The rise of Chinese capacity and its inability to meet its bauxite demand economically from domestic resources has changed all that.

 

Seaborne Market

Significant volumes of bauxite remain captive to or associated with local refining capacity and does not reach the seaborne market. As such, there are a relatively small number of countries with sufficient bauxite production available for export.

 

 

And where is all this seaborne bauxite going? Mostly to China, of course. Beyond some European—and previously US refineries—without access to domestic resources, the sheer size of China’s alumina refining industry has seen a seaborne market for bauxite grow. China’s declining bauxite grades has led the country’s growing appetite for imported bauxite.

Mine developments are being undertaken by both alumina refinery operators—looking to secure upstream resources—as well as third parties looking to take advantage of the ever-rising increase in demand. Chinese alumina refiners, by necessity, are having to undertake these developments offshore. While a processing plant can be built anywhere, the raw resources are where they are. Quality bauxite without prohibitively expensive processing costs is not in China.

What is likely to be seen is new refinery developments near bauxite resources a long way from China, such as those in Guinea—which are currently limited to the small 640ktpa Fria refinery operated by Rusal. Despite the associated risks with developments in West Africa, it is likely Chinese companies could develop local capacity to increase the contained value of shipments. It is understood SMB is already constructing a refinery associated with its Guinea resources.

 

 

Guinea

Home to the largest estimated reserves of bauxite, Guinea has seen a rapid rise to become the largest producer and exporter of the material. The country has a long history producing ~20Mtpa largely from the CBG and Rusal mines and supplying refineries in Europe. However, since the arrival of China backed SMB in 2015 and development of its mines around Boke, exports of bauxite from the country have surged with the new volumes headed in the one direction.

Looking to secure supplies, Chinese companies have been particularly active in developing the vast resources of quality bauxite available. SMB has been most active—supplying Hongqiao Group’s vast refining capacity in China—but Chalco also started operation of a 12Mtpa mine in 2020. Additionally, a number of Chinese companies currently have mining licenses allocated to them. Guinea is trying to encourage development of refining capacity in the country, attaching (weak) conditions to the granting of mining licences, though any development is likely to be met by additional bauxite supply, without eating into export volumes.

 

 

Export focussed developments such as Bel-Air are also largely targeting the China market. Activity has not been limited to Chinese companies; Emirates Global Aluminium (EGA) started its 12Mtpa GAC project in the country. Rusal also started the 3Mtpa Dian Dian mine in 2018, adding export volumes to its existing tonnages from Kindia.

Elsewhere in West Africa there are bauxite projects in Sierra Leone, Cameroon and Ghana. With no domestic refining capacity, bauxite has entered the seaborne market.

 

Australia

Built on the back of its significant alumina refining capacity, Australia has been the largest producer and was also the largest exporter of bauxite before the rise of Guinea. Seaborne production predominately come from Rio Tinto’s Weipa deposits in Queensland—now including the Amrun mine. All production at Western Australian mines in the Darling Ranges was consumed at the associated Alcoa and South32 refineries, however relatively recently, Alcoa’s Huntly mine started exports. Any additional bauxite production from Australia is expected to be for export.

Rio Tinto completed commissioning and made first shipment in 2018 of its Amrun mine, situated in Cape York, Queensland, Australia in 2019—which is reported as containing 628Mt of Resources at ~51% alumina. The majority of this additional ~23Mtpa bauxite production is destined for China.

The Aurukun deposit, believed to contain up to 350Mt of resources in Queensland is the largest potential new source of bauxite in Australia. With likelihood of a refinery development limited/non-existent, production is likely to be destined for the seaborne market and China. The mining licence covering the project is currently held by Glencore Though limited progress has been seen to date with a history of rightful ownership challenges.

 

Indonesia

Indonesia holds significant bauxite resources but is increasingly taking a protectionist view of raw materials and wanting to force value-adding domestically.

Prior to a total ore export ban in 2016, Indonesia was China’s largest source of bauxite. Malaysia partially filled the gap, but the policy saw China look more closely at Guinea, with Malaysia not being a long-term solution. Indonesia eased its raw ore export ban, allowing exports under licences granted if the proponent could show meaningful development of downstream capacity.

A full export ban, à la nickel, will be forthcoming. Initially planned for the start of 2022, events around the pandemic have seen this pushed back to June 2023 and remaining with the proviso that exporters are involved in the development of downstream capacity. Alumina capacity is being developed in the country and it is anticipated Indonesia as a source of seaborne bauxite will come to an end.