Bauxite

Bauxite Supply and Demand Fundamentals

METAL USAGE IS LINKED TO ECONOMIC DEVELOPMENT 

  • Iron ore and copper usage maturing following rapid industrialisation in China and other emerging markets
  • Aluminium demand in China is still in its early stages with saturation not expected to match current levels of steel or copper for 30 years
  • As an economy matures, requirements shift from building and infrastructure development to consumer goods, transport etc
  • The urbanisation of China is forecast to shift toward internal consumption which will benefit demand for aluminium. Chinese policy supports this

CHINA FUNDAMENTALLY CHANGED THE ALUMINA INDUSTRY 

  • China’s aluminium production up 400% in last 15 years
  • China began importing significant amounts of alumina to supply rapidly expanding smelting industry
  • China’s aluminium industry began to move upstream leading to massive development of alumina refining capacity
  • Since 2002, China has developed over 50Mt of alumina refining capacity
  • Chinese alumina production was based on two approaches:
    •   Development of merchant refining capacity in Shangdong based on imported Indonesian bauxite
    •   Processing of domestic ore
  • New refining capacity has lead to record increase in bauxite demand and imports
  • Declining quality of domestic bauxite in China and diminishing global reserves of high quality ore
    •   Impetus for refiners and smelters to secure a long term supply of ore

1Source: World Aluminium