It is important to take great care
when citing production capacity for fused alumina as it can be
very difficult to get accurate figures for production. Many
companies will not reveal their actual production data and will
sometimes only indicate their total fusion capacity, which can
be used to produce a range of products other than fused
alumina, and either brown fused alumina (BFA) or white fused
alumina (WFA) can be produced in the same furnaces.
The largest volume fused material
is commonly BFA and production levels, even during the
recession, may have been as high as 1-1.2m tpa. Current world
production of BFA is estimated to be 1.9-2.0 tpa, of which some
1.5m tpa is in China and represents a significant recovery from
levels seen in the depths of the recession.
Current global production of WFA is
estimated at 450-500,000 tpa, well below the peaks of about
550,000 tpa. However, production is on an upward trend and
there has been considerable volumes of WFA coming out of China
more recently, an unusual situation as China has traditionally
been a modest WFA producer in past years.
Around 60% of produced BFA is used
in the refractories industry, with most of the remainder being
used in abrasives, while there is a more even split for WFA.
China is the largest producer of BFA, with Europe, in its
broadest sense and including Russia, being the largest
producing region for WFA by far. Many fusing plants can produce
either WFA or BFA, as well as a number of other fused
products.
While capacity figures can be
misleading because of the possibility of fusing a range of
different products in a plant, it is estimated that total
effective capacity for BFA is 2.3m tpa. Although much higher
figures are often quoted, these may include capacity from
older, inefficient small plants that may never be able to
produce effectively. Additionally, there may be a capability
for fusing around 600,000 tpa of WFA, but this may include
operations fusing alumina zirconia mullite and other
products.
China
China has by far the largest fused
alumina capacity estimated at about 1.6-1.7m tpa in terms of
effective capacity, the vast majority of it BFA, based on local
bauxite, and representing more than 70% of world capacity,
although production of WFA is now understood to be
considerablyÊhigher than the 40,000 tpa of recent years.
WFA output has traditionally been variable as production is
relatively small and purchases of alumina feedstock are often
on a spot basis. If spot prices are high - and they have hit
more than $600/tonne in recent years - but have been as low as
$170/tonne, it is often unfeasible to produce WFA
economically.
There are only about ten Chinese
BFA producers with capacity of more than 50,000 tpa. However,
that only represents about 40% of total capacity and there are
numerous small plants, some with capacity to produce only a few
thousand tonnes. Rationalisation of the industry is expected,
with many of the smaller plants being absorbed by larger
producers or simply closed down. Energy shortages may force the
closure of some of the smaller and least-efficient plants in
the short term. However, China is expected to remain the
dominant supplier of BFA for the foreseeable future because of
the local supply of calcined bauxite. Bosai Group is by far the
largest single producer having acquired Guizhou Kaifeng Mining
China. It recently announced it is adding four new kilns
dedicated to production of abrasive grits to FEPA, ANSI and ISO
standards that will bring its capacity up to a total of 235,000
tpa from four plants.
Rest of the
world
Outside of China, the largest
producers are Treibacher, with nine plants in a number of
countries for both BFA and WFA, Washington Mills with plants in
Canada and the US, Elfusa in Brazil, and Saint Gobain with
plants in several regions. While there has been little change
in the capacity of these producers in recent years, current
output in not at capacity. However, Treibacher has announced
that it is to build a new fusing plant in Bahrain.
Issues and
trends
Raw materials
In recent years, there has been a
significant issue regarding the availability and quality of
abrasive-grade calcined bauxite for making BFA as discussed in
more detail by Alison Saxby (see p41-46). This is even
the case for Chinese producers, who have to compete with the
ever- growing demands of the domestic metallurgical alumina
industry for raw materials. Such is this competition, there
have even been instances where companies have positioned staff
with signs at the side of roads leading to alumina refineries
offering premiums for truckloads of bauxite destined for the
refinery if they have low iron. There is also the potential for
additional competition for bauxite resources from the proppants
sector, with large increases in bauxite-based proppant
manufacture in China and elsewhere, although the specifications
for that material tends to be lower than those for either
abrasive-grade or refractory-grade bauxites (See
p16).
A few companies, such as Bosai,
ChenQian and CMP, have integrated bauxite mining and calcining
operations largely dedicated to non-metallurgical use, and many
of the small operations that had concentrated on mining
non-metallurgical grades of bauxite have either closed or been
merged into larger operations, mainly concerned with supplying
the local alumina industry.
Bosai is further integrated as the
largest producer of BFA in China. The cost of the raw bauxite
has subsequently increased, at least for those without in-house
sources of bauxite. There have also been questions regarding
the quality of the bauxite, with indications that there has
been a slow reduction in the quality of grades used. This had
become quite pronounced before the recession, when there was
high demand for all grades of calcined bauxite as well as the
constant pressure on supply from the metallurgical alumina
industry. During the recession, the quality variation has been
less as the demand fell, particularly for exported material.
However, there may be further problems with future supply once
demand levels throughout the world recover.
There are few alternative sources
of abrasive-grade calcined bauxite. There is considerable
supply in Brazil, through Mineracao Curimbaba (see pp
56-59), but much of it is used in-house for the production
of proppants for the oil and gas industry or by its sister
company, Elfusa, for the production of BFA, and there are other
producers in Brazil, as outlined by Alison Saxby (see
p43-49). This could potentially include Imerys, which
bought the MSL Minerais reserves in 2012. There are also
supplies out of Guyana, where Bosai is currently the sole
calcined bauxite producer, although the operations in Guyana
tend to concentrate on higher-value added refractory grades.
First Bauxite’s proposed new operation in Guyana will add
to capacity there, but again is aimed primarily at the
refractories market.
There is also considerable
production capacity in India by Ashapura, Orient Abrasives
Limited, Carborundum Universal Ltd, Saurashtra Calcined Bauxite
& Allied Industries and Gujarat Mineral Development Corp.
(GMDC), although it is understood that the GMDC calciner is not
currently operating due to a lack of suitable ore. Most of this
would be regarded as abrasive grades, but it is also sold to
the local refractories industry. There are developments in
Russia that should add to calcining capacity, but at least some
of this is aimed at proppants markets and they are also looking
at refractories markets. It is not thought that export markets
will be targeted, at least for the calcined bauxite, although
there may well be exports of products derived from these.
Supply and exports
While there does not seem to be any
critical shortages in the supply of calcined bauxite raw
material for BFA in the current market conditions, there could
well be shortages once there is a more robust recovery in the
world economy. Chinese supply has been restricted through
export controls, but actual exports have been falling below the
export quotas due to low demand. The export quotas are being
replaced with a different system, but it looks unlikely that
the availability of calcined bauxite for export markets will be
able to increase rapidly once the economy picks up, given the
competition for material from the metallurgical alumina
industry. Increased local consumption in BFA, proppants and
refractories may well mean that export quantities will be
restricted because of availability, rather than by export
controls. It may also mean increased costs for local producers,
which will eventually feed through to BFA prices. Exports of
all grades of calcined bauxite (and the category also includes
calcined clays) fell from 650,000 tonnes in 2011 to 611,000
tonnes in 2012.
New projects
It can take many years to develop a
new project and there are few indications of any large-scale
new projects that could serve the abrasive- grade markets once
the economy recovers and demand increases. There have been many
large projects for the development of metallurgical- grade
bauxites, but not for calcined abrasive grades. Guinea was at
one time a major source of abrasive-grade bauxites, but has not
supplied for many years. While there are probably suitable
bauxites among the huge developments proposed, there is no
indication that any calcining capacity will be included in
these projects. The Weipa bauxite operation in Australia used
to supply calcined abrasive-grade bauxite, but was closed some
years ago at a time when Rio Tinto was expanding its
metallurgical bauxite output. Given that the calciner was one
of the major sources of carbon emissions at the plant and
controversial carbon taxes have been introduced in Australia,
it seems unlikely that there will be any incentive to initiate
a new project for abrasive-grade production.
For WFA, the supply situation for
raw materials is much less of a problem. The raw material is
calcined alumina from Bayer alumina plants, although often a
lower soda specification than for metallurgical grades is
required or preferred. In the current market, there is a
more-than- adequate supply of this material. All new plants and
many of the older Bayer alumina plants are now fitted with
fluidised bed calciners that have lower calcination
temperatures and much shorter residence times than the rotary
kilns traditionally used. As a result, the product is not
calcined as hard, but it can still be used as a raw material in
fusing plants, as long as the soda content is low enough.
Trends and
prices
Before the recession, there were
large increases in some prices, with spot prices rising to more
than $600/tonne. Alumina producers are moving away from tying
prices to the London Metal Exchange prices, and most have moved
to a link to indices published by Platts, Metal
Bulletin or CRU. Prices are currently around $335/tonne
and look to remain fairly stable, although small volume sales
of low soda grades will be a slightly higher.
The outlook is that there will be
no shortages of production through to 2017, with projects in
the pipeline and projected demand to metallurgical grades of
alumina. Chinese WFA producers do face higher prices for their
alumina raw materials, with prices of more than $400/tonne
locally. Traditionally, Chinese WFA producers were relatively
small and bought on the spot market, which could be very
volatile due to even small differences in supply and demand,
falling well below contract prices when there was excess supply
and soaring when there were shortages.
Industry
drivers
As mentioned earlier, the main uses
for fused aluminas are in refractories and abrasives, with
about 60% of BFA used in refractories and 40% in abrasives, and
an approximate 50:50 split for WFA. The prime driver in the
refractories sector is production of crude steel. About 70% of
all refractories are used in the steel industry and possibly a
higher proportion of the fused aluminas.
While the fundamental drivers of
the refractories industry, particularly steel, have not changed
and in the long term will be the main influence on the
consumption of refractories, the global financial situation is
still having a negative effect on an industry yet to recover
from the effects of the recession. In most cases, production
and consumption of refractories is still not back to levels
seen before the recession, although the peak levels were
probably at a time when the economy was overheating.
With both steel and cement output
down in many areas and lower reported refractories sales by
some of the larger refractories manufacturers in 2012, total
world production of refractories is expected to have declined.
While steel production and cement production in China may have
grown in 2012, continuing improvements in refractory practice,
reducing unit consumption from what, in world terms, is a high
level, is likely to have resulted in flat production, with
local demand staying stable and possibly a reduction in the
approximate 2m tpa of exports.
Production of refractories in North
America is likely to have risen because of reasonable growth in
steel and cement production, although a note of caution here is
that demand was strong in the first half of the year with
growing steel production, but weaker in the second half.
However, it is expected that production of refractories
elsewhere will have declined because of reduced demand,
particularly in Europe. There is expected to have been
reductions in the former CIS, Latin America and Japan, although
there perhaps a few bright spots, with more than 5% growth in
the Turkish steel industry and more than 4% growth in
India.
The outlook for 2013 is still
uncertain. Many observers expect that the industry will start
to improve in the second half of 2013, although there is a
perception that this is hope and belief, rather than a strong
conviction, and further financial crises can still not be ruled
out. Steel production is predicted to rise again in 2013, again
driven by China. Steel production is also expected to recover
in the EU as well as some other countries that saw falls in
2012, but, as a whole, it is predicted that steel production
outside of China may fall again in 2013. Any recovery is
expected to be seen in the second half of 2013, and there will
be stronger growth in 2014 and 2015 as this recovery gathers
pace.
The abrasives industry is also, in
a way, related to the steel industry, with the main drivers
including automobiles, aerospace, durable goods production and
construction, all of which have an influence on the demand for
steel - although aerospace is more for non-ferrous metals. All
of these sectors have suffered during the recession (see pp
56- 59). Automobile production had been recovering through
to 2011 from low levels in the recession, but this was boosted
in some countries by scrappage schemes, which have now
expired.
There is still uncertainty about a
sustained industrial recovery, with strong recoveries seen in
some markets such as the US in 2011 and into 2012 tempered by
generally weak markets in much of Europe. Emerging markets,
such as in China and India, will have a greater influence on
longer-term demand, with China already the world’s largest
producer of automobiles and expected to become a significant
exporter in the future.
The aerospace industry is a major
consumer of abrasive products and there is continuing optimism
in an area that has been growing with significant increases in
production and orders, including a new generation of large
aircraft in the commercial sector. There has to be some caution
here, however, as the military sector is suffering because of
defence cutbacks in many countries introduced to help balance
budgets.
Construction markets are showing
some signs of improvement in the US and certain European
countries, but are still well below peak levels and the
recovery from the recession is expected to be slow, with
restricted finance available and in many cases still an
overhang of excess properties.
Little stock is being held in the
industry, either of raw materials or finished products. Orders
tend to be short term, and that has not changed since the
recession when many were caught with high stocks and acerbated
the situation by running down inventories. Orders for raw
materials, such as fused alumina for refractories and
abrasives, are frequently being made only two-to-three months
ahead, as opposed to planned purchases of perhaps a year being
negotiated prior to the recession.
With industry still operating at
below capacity in many areas, there is the capability of
supplying orders on a short-term basis, but should there be a
strong recovery in the economy, there may well be shortages for
a period before a balance is reached. The problem is still
uncertainty and the fear of being caught by further crises.
Competitive
trends
China has for long been the
dominant producer of BFA, with an estimated 1.5m tonnes of
production in 2012 out of a world total of around 1.9-2m tpa.
It has not been seen as a significant source of WFA as it has
not had the competitive advantage of being the major world
producer of the raw material, calcined bauxite in the case of
BFA. The raw material for WFA, in contrast, is readily
available in many parts of the world without having to face
export taxes and, in the past, licence fees that were imposed
on exports of calcined bauxite - fees that were not imposed on
local producers of BFA. In reality, feedstock alumina prices
for WFA in China are probably higher than in many other parts
of the world. However, low-cost WFA is now being exported from
China at very competitive prices compared with other world
sources, with some observers noting that WFA prices being
offered out of China are getting close to prices for BFA in
international markets.
Current prices for BFA out of China
are $660-750/tonne for refractory grades and $800-840/tonne for
FEPA F8-220 grit. Prices for BFA in the US have been reported
at about $890-915/tonne for a refractory grade. Ex-works prices
in China have been reported at about $610-630/tonne, although
it should be remembered that there is a 15% export tax, which
was introduced to discourage exports in 2008.
In the case of WFA, Chinese FOB
prices are less commonly quoted as the country is not
traditionally a large source of the material. However, price
indications of $1,000/tonne FOB China have been given for
refractory grades about 1mm size. There have been reports of
ex-works prices in China of $820-840/tonne for refractory-sized
grades and even lower prices being offered to traders for cash
settlement as most consumers in China tend to delay payments
for a long time.
Prices for FEPA grades of WFA in
Europe are currently quoted at €850-890/tonne, currently
equivalent to about $1,140-1,200/tonne in 25 kg bags. Low-cost
WFA out of China is likely to put some pressure on prices in
the EU and North America, although some consumers are wary of
longer-term supply out of China, which has been variable in
quantity and quality in the past, and in and out of the market
if raw material prices rise. However, prices now seem to be
stabilising, at least in the short term.
BFA producers with excess capacity
in China or an inability to obtain sufficient or suitable
grades of calcined bauxite for BFA, may have shifted production
to WFA as calcined alumina may be more readily available,
currently at reasonable prices. Even metallurgical alumina
producers may be getting involved in the sector, especially
when producing at under capacity and at times when they may
have electricity supplies available greater than their current
needs.
Quality
declining
There have been some concerns about
a slow decline in the quality of some BFA products out of
China. This involves lower alumina content and higher silica,
carbon and sulphur content, some of which may be related to
variable raw material supplies, especially for those companies
without their own production of bauxite, and, in some cases,
higher sulphur fuel being used in the calcination of the
bauxite.
Although the changes are not
universal and seem relatively modest, some manufacturers of
vitrified abrasive wheels have reported problems with cracking
and wheel breakage. As a result, some consumers are willing to
pay a premium to guarantee quality raw material deliveries.
Another competitive issue involves
the choice between tabular alumina and WFA in refractory
applications. There has been a tendency in Europe to use
greater amounts of tabular alumina in refractories with WFA
generally being of a higher cost and some consumers preferring
tabular alumina for technical reasons. However, in the US,
companies seem willing to switch between fused and tabular more
readily based on price, and the differential between fused and
tabular in the US tends to be less than in Europe. The relative
level of the exchange rate between the dollar and the euro is
also a factor here.
There is expected to be increased
use of fused or tabular alumina above the general growth rates
in refractories. This is due to higher-quality refractories
being used to achieve longer campaign lifespans, cleaner
steels, or to counteract the adverse effects of alternative
fuels in cement production. The use of spinel refractories,
formed using high-quality alumina and magnesia either pre-fired
or fired in-situ, in steel ladles or cement kiln
burning zones, is expected to grow.
Trade
China is by far the largest
exporter of fused alumina as shown in figure 1 and the
trade data table. The drastic effects of the recession are very
evident from this data, and while there was a rapid recovery in
2010, this slowed considerably in 2011 and did not fully
recover to pre-recession levels. As always, trade data must be
regarded with some caution. The category is defined as
artificial corundum, which will include both BFA and WFA, but
other materials can get mis-classified, including tabular
alumina or even calcined alumina. Still, the general trends can
be indicated from these figures.
The second-largest exporter is
Germany with just 51,000 tonnes in 2011 compared with more than
800,000 tonnes from China. It is expected that exports from
China will have grown again in 2012, but may well level off or
even decline in the first half of 2013. However, once the
recovery in world economies gathers pace, it may be that
Chinese export growth will be modest or stable and other
sources of fused alumina will need to be developed outside of
China in the longer term. If calcined bauxite is not available,
that may mean a shift to alternatives to BFA, possibly
including WFA, despite its higher price.
Contributor: Ted Dickson, TAK Industrial Mineral
Consultancy
Ted Dickson has been an
independent consultant specialising in minerals markets for
more than 20 years operating as TAK Industrial Mineral
Consultancy. Prior to that had spent 12 years on the Industrial
Minerals’ editorial team. At the end of February he
published a multi-client study on the world refractories
industry (through Materials Technology Publications) including
a chapter covering fused alumina. He is based in
Buckinghamshire, UK.