There is a great deal of bauxite produced worldwide; an
estimated 210m tonnes was extracted in 2011. However, in terms
of grades suitable for refractory manufacture, there are
relatively few deposits and producers. This is because there
are stringent specifications attached to refractory grade
material. Iron oxide levels must be lower than 2.5%, compared
with ten times that for metallurgical grades, and the alkali
content has to be minimal. In addition, the alumina content of
the ore must be over 60%, which is required to reach at least
87% after calcination.
Deposits which can satisfy these
requirements are not widespread, hence the relative scarcity of
refractory grade bauxite sources.
Refractory bauxite production and
international trade is dominated by Chinese supply, and
currently Chinese ownership. Figure 1 shows the relative
production of key supplying countries, with China representing
over three quarters of world production. Other countries such
as India, Russia and Brazil supply material, but this is almost
entirely for their own domestic requirements. The concentration
of supply from so few countries to the international market has
been a concern for buyers for a while.
In 2011, Chinese bauxite exports
were 650,000 tonnes, which was lower than the 2010 figure by
200,000 tonnes. Refractory grade bauxite is exported from
Guyana, but China accounts for the majority of global
Chinese production and exports of
refractory bauxite have been affected by a number of factors
over the last five to ten years, which have changed the shape
of the industry. With such a large market share, events in
China can cause repercussions throughout the marketplace.
Growth in Chinese domestic demand
for calcined bauxite, and additionally metallurgical grade
bauxite, has put pressure on the supply chain. At the same
time, restrictions have been placed on mining and calcining
operations, for both environmental reasons and to preserve
depleting resources. This has meant a squeeze on its domestic
resources, and China is now the largest importer of
metallurgical bauxite in the world, importing some 30m tonnes
in 2010 - and this figure is estimated to have climbed
even higher in 2011.
One major trend has been
consolidation of both suppliers and exporters in China over the
last ten years, from over 50 producers to around 15 today. The
major producers are shown in Table 1. However, the ban on
refractory grade bauxite mining in 2011 in Shanxi province
meant that official refractory bauxite production was in the
hands of even fewer players, for a while, mainly those based in
Another major factor which has
affected the non-met. bauxite industry is the implementation of
Chinese export trade policies and fiscal policies, both from
central and provincial governments. This means that the prices
and availability of Chinese bauxite are not fully market
driven; the effect that these measures have had on prices are
discussed further below.
In Guyana, Bosai Minerals Group
produces about 250,000 tpa of refractory and chemical grade
bauxite from its East Montgomery and Montgomery North mines.
Bosai is the producer of refractory grade A
super-calcined bauxite (RASC), which is considered the industry
standard for refractory brick production. Output from the mine
was 248,489 tonnes in 2010, slightly lower, by 0.3%, than in
There are reports that Bosai plans
to invest $100m over the next five years to expand the mine
capacity to increase bauxite production to 2m tpa, and then
invest further to build a 1m tpa alumina refinery and 500,000
tpa electrolytic aluminium smelter in Guyana. However, this
expansion will produce metallurgical grade bauxite, rather than
increasing supply of refractory grades.
The main refractory grade bauxite
producer in Russia is Severo-Onezhsky Bauxite Mine (SOBR). The
company is located in the Arkhangelsk region and mines the
Iksinkoe deposit. SOBR mainly produces refractory and cement
grade bauxite, and also bauxites for open-hearth steel
production. Refractory grade bauxite production is estimated to
now be around 300-350,000 tpa, having increased from 230,000
tonnes in 2006.
In India, refractory grade bauxite
production is used in the domestic market, and this is
supplemented by imports. Total production in FY2009-2010 of
refractory grades was 200,312 tonnes. Refractory grade bauxite
represents only around 1% of all bauxite mined in India and is
mostly sourced from Gujarat state. Important suppliers of
refractory grade include Ashapura Minechem, Bombay Minerals,
Gujarat Development and Orient Abrasives.
In Brazil, Mineracao Curimbaba
produces calcined bauxite mainly serving the abrasives and
proppants markets, but also supplies some refractory grade
Two new projects could ease the supply pressure for refractory
grade bauxite in the short-term. In Guyana, a new source of
refractory grade bauxite is being developed by First Bauxite
Corp., which is conducting a definitive feasibility study for
two projects based on the Bonasika and Waratilla deposits.
The company is aiming to bring its
Bonasika project into production by the end of 2012 with
construction at the site scheduled to start in late 2011. Total
investment in the projects will be $161m.
Under the updated feasibility study
the mine will operate at 298,500 tpa of dry raw bauxite, and a
wash plant will produce an engineered bauxite feed
at a production rate of 162,000 tpa. This will be fed to two
vertical pressurised shaft kilns at the sintering plant, which
will produce 100,000 tpa of high quality calcined refractory
grade bauxite. The sintered bauxite finished product will be
marketed under the registered trademark GUYSIN¨.
Mining will begin at the Bonasika 7
deposit, which has an anticipated mine life of 22 years. The
wash plant and sinter plant will be located at Sand Hills, on
the west bank of the Demerara River. The deposit is located
26km from a river, and 45km upstream from the capital,
In 2011, Russias UC Rusal
announced a project to produce a low-iron bauxite or refractory
grade bauxite from the Republic of Komi through its subsidiary,
Timan Bauxite. The bauxite will contain less than 4%
Fe2O3 in calcined material. Production is
also scheduled to begin in 2012 with an initial output of
90,000 tonnes. Full production of 250,000 tpa is expected to be
reached in 2013.
The bauxite in Komi will be
extracted by open-cut mining at the Middle Timan bauxite
deposit, and preparatory work at the new mine was being carried
out in 2011 to enable production in 2012. This project is a
departure for the current focus of the mine, which produces
1.9m tpa of metallurgical grade ore, and means that much of the
infrastructure is already in place.
According to the company, it
already has a number of agreements with prospective buyers,
although Rusal is considering calcination of the bauxite at its
Boksitogorsk alumina refinery, Leningrad Oblast, for direct use
in the refractories industry.
The refractories industry is the principal market for
refractory bauxite, which is split into several sectors
including iron and steel, cement, glass, ceramics, and
non-ferrous metals amongst others. The most important of these
for bauxite is the steel industry, which takes around 70% of
world refractory grade bauxite demand.
Total consumption of refractory
grade bauxite has been declining. In 2000, world consumption
levels of refractory bauxite, excluding China were close to 2m
tpa. By 2007, this had fallen to 1.2m tpa and in 2010 to an
estimated 0.95m tpa. This explains in part why some of the
factors impacting Chinese supply have not had more of an effect
on global trade.
The decline in consumption has been
due in part to technological changes, which have reduced the
consumption of refractories per tonne of steel produced, and an
increase in alternative alumina sources. When the price of
refractory grade bauxite began to rise steeply, alternative
alumina sources became more viable.
This completes a circle, reversing
a trend from 20 years ago when cheaper bauxite stepped in and
replaced the alternative alumina-silicate sources in
refractories. Substitutes such as andalusite, mullite, fused
alumina, and recycled materials are now eating into
bauxites refractory market share.
There has been increasing demand
for andalusite, and producers in Peru, South Africa and China
are lifting production levels to meet the rising demand, while
a new producer in Spain is expected to begin production this
It is relatively simple to switch
to andalusite from refractory bauxite. However, although there
will be further substitution in some select areas, a complete
replacement of bauxite is not likely to happen at the moment,
especially in large-volume applications.
There has also been a production
shift so that refractories are now being produced in volume in
China rather than Europe and North America, which has reduced
the requirement for refractory grade bauxite in the west.
Consumption in China has been increasing along with growth in
alumina refractory output to service expanding domestic iron
and steel production.
In 2011, China accounted for 46% of
world steel output of 1.53bn tonnes, an increase of 9% over
2010. Refractory production has increased to keep pace and
grown from an estimated 14.8m tonnes in 2003 to 28m tonnes in
2010, compared with an estimated world total of 39m tonnes in
At the end of 2011, and early in
2012, demand for refractory bauxite is weak from overseas
buyers for Chinese material. In the second half of 2011, the
financial uncertainty in Europe and the US and the slow
recovery in construction markets have conspired to create lower
In particular, demand from the US
and India is lower. Producers in India have turned to
domestically produced bauxite, while in the US refractory
producers are using other alumina sources, such as mullite.
In China, the domestic market for
refractory grade bauxite fell back in 2011 under tremendous
cost pressures placed on the industry, largely from higher
energy costs. In Shanxi, towards the end of the year, shortages
of raw bauxite were reported, and some calciners closed
The major market for refractory grade bauxite is high alumina
refractories used in the steel industry, particularly in China,
and this will remain the case. Roskill forecasts that steel
industry output will exhibit an average annual growth rate of
5.8% until 2016, which will see demand for refractories also
Chinese refractory grade bauxite
consumption will continue to increase, but at a slightly slower
rate than growth in steel output. This is because of a
continued decrease in specific refractory consumption per tonne
of steel produced, especially as new refractory plants are
built and old technology replaced. There will also be growth in
refractory bauxite demand in other areas such as other Asian
countries, India and Brazil.
From levels of $65-85/tonne ten years ago, Chinese refractory
bauxite is now priced five times higher, at $500/tonne FOB
China or over, for many grades. Chinese prices lead the way and
dominate the marketplace, and will continue to do so.
International prices have been
increasing gradually since 2004. Then prices for refractory
grade material were around $90/tonne, which had increased to
$150/tonne by 2007. By 2008 they rose further, not only on
scarcity of supply but also on increasing freight and energy
rates and a re-evaluation of the remimbi.
This has brought more parity in the
market as prices are now more in line with what had been up to
then more expensive Guyanese material. It also shows why
alternative materials are now being considered.
In 2012, Chinas export quotas
for bauxite have been reduced to 700,000 tonnes from 830,000
tonnes in 2011, according to an announcement by Chinas
Ministry of Commerce (MOFCOM). This was in response to an
oversupply of licences which became apparent in the last
quarter of 2011. It is now likely that the government will keep
the quota at this level in 2013 and beyond, even if demand
increases beyond it.
However, a complaint lodged by
Europe and the US with the WTO, claimed Chinas trade
practises were inconsistent with its WTO obligations. China
argued that its export and quota policies were necessary in
order to conserve its mineral resources and limit environmental
damage. The WTO upheld the complaint in August last year,
recommending that China brought its trade policies into line
with its WTO obligations. China appealed but, at the end of
January 2012, the WTO appeals panel upheld the ruling that the
restrictions were unjustified (see p.8).
To date, the Chinese authorities
are examining the ruling and will continue to enhance
scientific administration of resource products based on WTO
rules. Although some of the export policies may be
modified, exactly how and when is not yet clear. This makes any
impact on Chinese refractory bauxite exports and prices from
the WTO decision difficult to predict. If China cancels its
export licence system, then refractory bauxite prices could
drop by around $60/tonne.
If China drops its export quota
then exports of refractory grade bauxite might increase,
although alternative measures (such as a domestic production
quota like that now in place for fluorspar) could be
established to restrict bauxite exports, therefore supporting
the case for new sources of supply outside China.
Contributor: Alison Saxby, senior consultant, Roskill