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Australian miners step up exports to China amid strong demand for bauxite

  • Categories:Industry Info
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  • Time of issue:2014-05-15
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(Summary description)Tighter global supply and strong demand growth in China are driving a recovery in bauxite prices. With Indonesia and Malaysia constrained, Chinese smelters are turning more to Australian bauxite, which is abundant and has a unique quality advantage.

Australian miners step up exports to China amid strong demand for bauxite

(Summary description)Tighter global supply and strong demand growth in China are driving a recovery in bauxite prices. With Indonesia and Malaysia constrained, Chinese smelters are turning more to Australian bauxite, which is abundant and has a unique quality advantage.

  • Categories:Industry Info
  • Author:
  • Origin:
  • Time of issue:2014-05-15
  • Views:19
Information

Tighter global supply and strong demand growth in China are driving a recovery in bauxite prices. With Indonesia and Malaysia constrained, Chinese smelters are turning more to Australian bauxite, which is abundant and has a unique quality advantage.

Rising demand for bauxite from Chinese smelters is reportedly pushing up global bauxite prices. Before the price drop in May 2014, global bauxite prices stood at a high of US $78.3 (A $104) a tonne. Bauxite prices are slowly recovering, with the price of high-quality bauxite in the Chinese market approaching $50 a tonne.

Malay exports may slip quality advantage to boost Australia's exports

Australia and Malaysia are the two most important sources of bauxite for China after Indonesia banned ore exports in 2014. China imported about 16.4m tonnes of bauxite from Australia in the first 10 months of 2015, just below the 18m tonnes it imported from Malaysia, according to customs data.

Malaysia has replaced Indonesia to mine and ship large quantities of bauxite to the Chinese market to fill the gap, but the uncontrolled mining has led to severe environmental challenges. News that the local government is considering new regulations that could restrict bauxite mining and exports could mean that more of China's bauxite imports will come from Australia.

Metro Mining (ASX:MMI), a Mining exploration and Mining company based in Brisbane, Queensland, which operates bauxite projects in western Cape York, has pointed out in an interview that Australian bauxite sources are of higher quality compared to Malaysian products and have a significant quality advantage. This will ensure "substantial, long-term and stable demand for high-quality bauxite" from Chinese customers.

Australia's bauxite is in the spotlight amid strong Chinese demand

Data show that the world's largest bauxite production countries are Australia, China, Brazil, Indonesia, Guinea and India. Australia is the world's largest producer of bauxite, producing 81 million tons in 2014; Due to the implementation of the mine ban policy in 2014, the output of Indonesia dropped sharply, from 55.7 million tons in 2013 to 500,000 tons in 2014. In 2014, China became the world's second largest producer of bauxite, with an output of about 47 million tons. However, the quality of the ore is not good, and it is difficult to develop and smelt it, which is not conducive to the production of alumina. Therefore, China has long relied on imports.

ANZ analyst Daniel Hynes said Chinese demand for Australian bauxite was particularly strong at the moment. Speaking to the Australian Broadcasting Network, Hynes pointed out that China's aluminium industry is currently suffering from overcapacity and producers want to fully tap spare capacity for bauxite smelting and aluminium alloy production to export high value-added aluminium products to overseas markets. There is no doubt that demand for high-quality bauxite in China is rising rapidly. Australia's bauxite status, which "not only has the largest mine in the world, but also the highest quality ore in the world", will attract the attention of Chinese smelters.

Bauxite miners aim to tap export opportunities to China

Australia now has five operational bauxite mines and six smelters, including Rio Tinto, one of the world's top three suppliers of iron ore. In addition, junior companies such as Metallica Minerals (ASX:MLM) are also looking at bauxite exports.

Metalik, which was listed on the Australian Stock Exchange in 2004, is engaged in the exploration and mining of bauxite, zirconium, rutile, nickel and graphite. The company and its Chinese partner, Ozore Resources, have major project assets in Queensland's northernmost bauxite-rich Cape York Peninsula, with potential for direct grade ore exports.

Simon Slusarewich, chief executive of Metalik, said there was no shortage of bauxite in the market, but there was strong demand for high-quality bauxite from smelters, particularly new companies. "The bauxite they need is different from normal ore, and quality assurance is very important."

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