Rising aluminium demand is driving up the entire value chain. China lays at the centre of aluminium and alumina production, which makes it the predominant player when it comes to capacity and production developments. Yet, with limited domestic supplies, China must reach out to international markets to meet the demand for bauxite, the feed material of the industry.
Global
bauxite resources are estimated at 55-75Bt. Grades are dependent on region and
deposit formation. High quality bauxite contains high alumina content of over
47%, and low reactive silica content of less than 4%. China’s domestic supplies
of bauxite are diasporic and while high in alumina concentration, 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 Vietnam (5.8Bt), Australia (5.1Bt), Brazil (2.7Bt) 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,
Indonesia announced a ban on bauxite exports from June 2023 in order to
accelerate the development of its domestic refining and processing of the
mineral. This is not the first time Indonesia has banned the ore, as it had
previously placed a restriction on the export in 2014, before lifting the ban
in 2017. The ban back then had seen China rework its bauxite supply chain to
largely rely on Guinea, who has since become the biggest exporter after rapidly
increased production.
Once
the largest supplier of bauxite to China, Malaysia has since maintained a
bauxite mining ban since 2016 but was lifted in 2019 on account of strong
demand for the ingredient. Instead, a cap on bauxite exports was imposed at
600kt per month. The upcoming bauxite export ban in Indonesia will see China shift
to alternate countries to supply the mineral, of which Malaysia will likely be
a key supplier. In recent years, the export cap has not been met, leaving room
for the country to meet the demand from China without any modifications.
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.

The
vast majority of the seaborne bauxite find their way into China. 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 leaves the country hungering 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 demand. Chinese alumina refineries, by necessity, are having to
undertake these developments offshore. While a processing plant can be built
anywhere, the locations of raw materials are fixed—high quality bauxite that do
not require expensive processing are not in China.
It
is likely China will look to develop refineries near bauxite resources outside
of the country, 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, Chinese companies could develop local
capacity to increase the contained value of shipments.
It is understood that SMB is
already constructing a refinery associated with its Guinea resources, though
development has been slow. Though the country is rich in bauxite resources,
there remains the need to set up a supply chain for caustic soda and
energy.

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
focused 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. In February
2023, the Koumbia bauxite project was launched. Elsewhere in West Africa there
are bauxite projects in Sierra Leone, Cameroon and Ghana.

Australia
Built on the back of its
significant alumina refining capacity and large bauxite reserves, Australia has
been the largest producer and was also the largest exporter of the mineral
before the rise of Guinea. Typically, a third of production would be exported while
the remainder is converted into alumina. Seaborne production predominately come
from Rio Tinto’s Weipa deposits in Queensland—now including the Amrun mine.
Alcoa trialled a 5-year bauxite plan ending in 2021, in which the company
exported an additional 2.5Mt of bauxite. The export plan was dropped in favour
of maintaining its current output to focus on value-adding to the bauxite
operations.