Projects in the Pipeline: Calcined bauxite – are there enough projects in the pipeline?

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Published: Friday, 22 February 2013

Recent press reports have quoted a leading consumer as describing high-grade bauxite as “a rare commodity in China”. Alison Saxby, Roskill Information Services, explores whether supply can cope with future demand

By Alison Saxby, Roskill Information Services Ltd

Recent press reports have quoted a leading consumer as describing high-grade bauxite as “a rare commodity in China”.

 
Global abrasives markets are currently depressed (see pp56-59), and refractories demand is relatively flat, so any supply shortfalls of raw materials are not being keenly felt. However, should markets such as refractories start to recover, then supply issues could begin to pinch in two to three years’ time, particularly in North America and Europe.

A new bauxite project under development in Guyana could fill the gap, and other developments in Guyana, Russia, India and Brazil could also provide some of the answers. But what is in the pipeline in the short term for calcined bauxite supply?

China has dominated the supply of calcined bauxite for the refectories and abrasive industries during the past two decades. But there has been a notable decline in exports since 2005, resulting in exports of 611,000 tonnes of calcined bauxite in 2012, a figure which also includes fireclay and chamottes. This is now about half the export volume of 1.25m tpa seen in 2005 (see Figure 1). Following the spike in 2009, average export values have also declined, but are still much higher than historic levels. Although the economic situation is playing a major part in the depressed export levels, the decline raises questions about the future supply of Chinese calcined bauxite and whether production levels could be increased to meet future demand.

Guyana - new high-grade production in 2014?

A significant portion of the bauxite mined in Guyana is used in the production of refractories and aluminium chemicals, mainly because of its low iron content, and virtually all production is exported, predominantly to the US and Europe. The mining industry is vital to the Guyanese economy, and a government priority is to facilitate growth for the mining industry. To this end, the government is constructing much-needed infrastructure in mining areas.

Taking advantage of this favourable climate for mining companies, First Bauxite is aiming to be a new significant supplier of refractory-grade bauxite from its project in Bonasika. The Canadian company is scheduled to start construction in 2013 and to commission the plant in 2014, with full commercial production commencing in 2015. Total investment in the project will be $161m, and the whole project is being carried out in a phased approach.

A report in November 2011 gave the company a total NI 43-101 compliant resource of 13.089m tonnes and mineable reserves of 11.098m tonnes, grading 57.7% Al2O3, 8.9% SiO2, 2.3% TiO2, 1.19% Fe2O3 and 29.1% LOI from the seven Bonasika deposits. The mine plan calls for 8.6m tonnes of these to be mined during 36 years.

Mining will begin at the Bonasika 7 deposit, which has a 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 26 km from a river, and 45 km upstream from the capital, Georgetown.

The 300,000 tpa mine and operation will produce dry raw bauxite, and then 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 bauxite. The sintered bauxite finished product will be marketed under the registered trademark Guysin. Exports will be aimed mainly at North American and European markets, and the company already has arrangements in place with potential buyers.

First Bauxite holds two other projects in Guyana, and will be carrying out exploration at both of them in 2013. The first, Essequibo-Demerara PGGS, was a metallurgical bauxite joint venture with Rio Tinto Alcan, which terminated in February 2011. First Bauxite acquired the Tarakuli deposit in 2010. Tarakuli is located 15km from the Guyanese-Suriname border and 90km east of UC Rusal’s Aroaima-Kwakwani mines. Half the tonnage at the deposit is classified as metallurgical and half as chemical-grade bauxite.

Chinese company Bosai Minerals is an established key producer of refractory-grade bauxite from its mines at Linden, Guyana, and has reserves of 186m tonnes. Production of calcined bauxite is in the order of 250,000 tpa and the company also produces another 150,000 tonnes of chemical and cement bauxite grades. Production levels suffered in 2012 owing to a period of unrest in Linden, and the mine and plant were closed for around a month, reducing production levels by around 20,000 tonnes. Since then, Bosai has reaffirmed its commitment to producing bauxite and investment in Guyana.

Bosai plans to invest $100m during the next five years to expand the mine capacity to increase bauxite production to 2m tpa. It is currently unclear how much of this will be high-grade material for calcination and how much will be metallurgical, but the Guyanese Ministry of Natural Resource and Environmental Protection of Guyana sold the licence to Bosai for prospecting and exploiting bauxite in the No.37 mineral region, which has proven resources of more than 70m tonnes of high-quality bauxite. The upgrade includes an expansion to mining capacity and the installation of a new calcination kiln, as well as the improvement of environmental protection systems.

Timan - on track

A relatively new development is the production of a low-iron bauxite or refractory-grade bauxite by UC Rusal in north-east Ukhta, Republic of Komi, Russia, through its Timan Bauxite subsidiary. The bauxite will contain less than 4% Fe2O3 in calcined material. Production began in 2012 with an initial expected output of 90,000 tonnes. Full production of 250,000 tpa is expected to be reached in 2013.

The bauxite is extracted by open-cut mining at the Middle Timan bauxite deposit. This is a departure for the mine, which also produces some 1.9m tonnes of metallurgical grade ore. Total bauxite production from Timan increased to 2.112m tonnes in 2012 from 2.03m tonnes in 2011. The company says it already has a number of agreements in place with prospective buyers, although Rusal is considering calcination of the bauxite at its Boksitogorsk alumina refinery, Leningrad Oblast, for direct use in the domestic refractories industry.

Rusal is also planning to sell the low-iron bauxite to ceramic proppant manufacturers, used in the oil and gas industry, and already has off-take deals with two proppants plants in Russia.

SOBR - increasing production since 2009

Severo-Onezhsky Bauxite Mine (SOBR) is another refractory-grade bauxite producer in Russia. The company is located in the Arkhangelsk Region (Plesetsk district) and exploits the west area of Belovodskaya field of the Iksinsky deposit. SOBR mainly supplies refractory- and cement-grade bauxite and refractory clays. Production levels to 390,000 tonnes in 2011 from 270,000 tonnes in 2009, with 2012 anticipated to be similar to 2011. Output serves the domestic market.

New mine in Brazil for Varginha

Minera‹o Varginha is a bauxite producer with mines in Pocos de Caldas (MG) and two bauxite processing facilities, one in Fazenda Varginha Andradas and the other in Eletro Varginha Caldas, both in Minas Gerais. Bauxite reserves are 40m tonnes. The company is investing R$23m ($12m) in a new mine in the region of Manhuau/Cataguazes to produce an additional 50,000 tonnes of washed bauxite. Varginha’s total bauxite production in 2011 was 310,000 tonnes, along with 100,000 tonnes of manganese and 120,000 tonnes of clays.

High-grade bauxite is produced from the mines at Pocos de Caldas and then calcined in rotary kilns at the plant in Electro Varginha. The calcined bauxite is mainly used for the production of brown and white fused alumina (total capacity 3,000 tpa). The company also produces aluminium sulphate for water treatment and activated aluminas and chamottes.

Imerys - Brazilian purchase

Imerys SA acquired Vale’s MSL refractory bauxite deposit in Para State, Brazil, at the end of 2012 through its subsidiary, Treibacher do Brazil. MSL owns bauxite mining rights in Monte Dourado, Brazil, and until the end of 2003 the company produced refractory-grade bauxite, mainly for export markets. In the 1990s, MSL had capacity to produce 150,000 tpa of calcined bauxite from its operations at Caracuru, Almerim region, Para State. While Imerys has not made any comment about its plans after the acquisition, it is highly likely that the company is looking to secure supply for its subsidiaries for proppant, refractories and brown fused alumina (BFA) production.

Indian producers - some captive production

In India, Ashapura Minechem, part of the privately owned Ashapura Group of Industries, is now one of the country’s largest producers and exporters of bauxite. The company mines deposits of gibbsitic bauxite at Kutch and Jamnagar in Gujarat and Western Ghats in Maharashtra.

Calcined bauxite capacity is 66,000 tpa from three rotary kilns at its operation in Jam-Khambaliya, Saurashtra region. The calcined bauxite has an alumina content of 86-87%, with the majority consumed in the domestic refractories industry and other applications include proppants, cement, chemicals and abrasives. In 2012, the company expressed an interest in state-owned Gujarat Mineral Development Company (GMDC)’s 50,000 tpa calcination plant, which was put out for tender (IM 23 November 2012). This extra capacity, if acquired, would increase significantly its share of the calcined bauxite production in India.

GMD mines low-grade, non-metallurgical bauxite at Bhatia in the Saurashtra district of Gujarat, and high-grade material at Ratadia in Kachchh district. The Ratadia mine provided high-grade material for the company’s 50,000 tpa Gadhsisa bauxite calcination plant in the Kachchh District, in Gujarat, which is the largest single rotary kiln bauxite calcination plant in India. The plant was refurbished in 2007, although it closed at the beginning of 2010 because of there was no “plant-grade” bauxite available as feed. Sales of calcined bauxite in FY 2009-2010 were 18,000 tonnes, which fell to 5,000 tonnes in 2010-2011, as stocks were sold.

Orient Abrasives Limited (OAL), headquartered in Delhi, is one of India’s largest manufacturers of calcined bauxite and fused alumina products from its plant in Porbandar, Gujarat. Raw bauxite is sourced from the company’s mines in the Jamnagar and Bhuj districts in Gujarat district and calcined alumina purchased from outside alumina refineries.

Production capacity is 74,000 tpa of calcined bauxite. The company increased its installed capacity of fused alumina grains in 2012 to 36,000 tpa and is setting up a lignite-based power plant to replace its fuel-oil fired units. Again, because of the company’s production of fused alumina, all calcined bauxite production is consumed captively.

Carborundum Universal Ltd (CUMI), part of the Murugappa Group of India, supplies all types of abrasives including BFA and calcined bauxite for refractory markets. The company mines bauxite from the Bhatia mine in Jamnagar district, Gujarat, for use as feedstock in the production of fused alumina. It operates a calcined bauxite plant at Okha with a capacity of 33,000 tpa, which is used captively for its own BFA production.

CUMI signed a memorandum of understanding (MoU) with GMDC in 2010 to develop a BFA plant in Kutch, Gujarat. Initial production at the plant will be 35,000 tpa. Gujarat already operates abrasive-grade bauxite mines and has a calcination plant (currently idled) and available supply, whereas CUMI already has the expertise in a wide range of BFA products. No further developments on this project have been reported.

A tender was put out for the sale of the plant equipment but, at the end of 2012, the calcination plant was still under GMDC’s ownership. The company is planning to increase bauxite production in 2013 by acquiring new areas. It is not clear whether this new production will be suitable for feedstock for the calcination plant.

Saurashtra Calcined Bauxite & Allied Industries has a capacity for calcined bauxite of 24,000 tpa from two plants in Porbandar and in Bhatia, Jamnagar. However, the company reports that it has been investing in its operations and is aiming at production levels closer to 60,000 tpa of bauxite. The company supplies refractor and abrasive calcined bauxite to the domestic and export markets.

Also in India, the Central Glass and Ceramic Research Group (CGCR) in Nagpur has developed a process to convert extremely low grades of bauxite into refractory-grade bauxite. Laboratory tests have shown good results, and refractory companies have already offered to scale the process up to 1 tonne capacity, according to CSGR. The process is based on the removal of impurities including calcium oxide, titanium oxide and iron oxide from the bauxite, using natural materials to absorb them, to create a bauxite suitable for use in refractories.

Developments in China

China is still the world leader in production of high-grade calcined bauxite, with both refractory and abrasive grades serving a large domestic market and dominating international supply. However, the industry structure is changing. Chinese exports of calcined bauxite, including fireclay and chamottes, fell to 611,000 tonnes in 2012 from 650,000 tonnes in 2011. This has opened the way for other bauxite producers elsewhere in the world and other high-alumina products to be reconsidered, perhaps reversing a 20-year trend where Chinese refractory bauxite was the dominant material.

The lifting of the Chinese quota and licence systems on calcined bauxite at the end of 2012 will probably not make too much of a difference to the volume of bauxite exports in the short term. However, it is likely that the Chinese government will still influence export trends indirectly, either by placing restrictions on mining, or adding resource taxes to increase prices. What may have more of an influence could be the fact that production costs are rising in China, including bauxite ore and energy prices, which mean that profit margins are slimmer than in the past.

Five years ago, calcined bauxite exports originated from the provinces of Shanxi (60-70%) and Guizhou (30-40%), with other provinces supplying the domestic market. There were 15 distinct significant producers of bauxite suitable for calcining. However, following the huge upsurge in demand to feed the country’s aluminium production, driven by the Chinese government desire to develop its aluminium capacity, higher-grade bauxite has been diverted to produce alumina. Since 2003, the legal right to mine bauxite has almost exclusively been allocated to Chinese domestic smelter-grade alumina producers. This has led to the situation where there are relatively few mines solely mining for refractory and/or abrasive grades of material.

As part of the consolidation of bauxite mining allocation towards metallurgical-grade production, there has been a legislative process to close all illegal bauxite mines, and private, small- and medium-scale mines. This is leading to regional shortages of high-grade ore for some calcined-grade producers, particularly in Shanxi Province in early 2013, following on from the fourth quarter of 2012.

These producers will be further squeezed if new environmental legislation is bought in. Latest reports from China suggest that the government is collecting public comments on its proposals on the refractories industry’s sustainable developments. Included within this are proposals that all rotary kilns with a single production line will have to a minimum capacity of 30,000 tpa and energy consumption higher than 240kg of standard coal per tonne of calcined bauxite. Tunnel kilns with single-line production capacity lower than 20,000 tpa and a coal consumption of greater than 285kg per tonne of calcined bauxite will be closed by 2015.

Bosai Minerals

Privately owned Bosai Minerals Group, based in Chongqing, has grown in recent years, and now in addition to its Chinese bauxite mines and refineries, the group has operations in Guyana and a major metallurgical bauxite and alumina project in Ghana. The company is particularly known for its refractory-grade bauxite production and is also the second-largest producer of BFA in the world and the largest in China. However, Bosai is a value-added producer in that it supplies fused alumina to the international market rather than calcined bauxite for abrasive or refractory applications.

The group operates three abrasive-grade bauxite mines in China in Kaiyang, Guizhou Province and Pingguo in Guangxi Province, with total reserves of more than 20m tonnes, and much of its abrasive-grade bauxite production is used in-house to supply its BFA operations. Total capacity of Bosai’s BFA, including its recently announced fourth plant, is 235,000 tpa. In 2012, Bosai also invested Yuan2.2bn ($350m) in two projects, including a high-quality grinding plant to supply abrasive materials for use in machinery and high-precision instruments, and another to supply proppants.

CMP Xiuwen

CMP Xiuwen, owned by China Mineral Processing UK Ltd, purchased the Xiuwen Mine in Guizhou in March 2011 in order to secure supply for its own calcining operations and bauxite requirements. The operation consists of open-pit mining and a single adit, which will initially be used to produce 100-200,000 tpa non-met bauxite. The operation previously produced both refractory and abrasive grades of bauxite. CMP is also looking to produce proppant and ceramic ball bauxite grades, with production capacity of 20,000 tpa and 30,000 tpa respectively (IM 24 May 2012).

Huang He Minerals

Huang He Minerals Co Ltd mines and calcines bauxite and produces BFA at Yima, Henan Province. The company also operates a 70,000 tpa mineral processing plant in Tianjin and completed a new refractory premix plant in 2011, which will have a total capacity of 45,000 tpa from three premix machines. The plant is 5 km from Xingang and produces mainly bauxite, fused alumina and silicon carbide. Again, the company uses its bauxite in-house.

Summary

Calcined bauxite supply will be a mineral to watch over the next few years. If, and when, the markets begin to recover, demand will rise. Among a handful of expansions and new projects reviewed here, much is destined for in-house and domestic consumption, particularly in India, Brazil and Russia. Whether supply will match demand depends on developments in China and Guyana, which remain the key to supply for both refractory and abrasive grades, and the major influence in the marketplace.

Contributor: Alison Saxby is a director and manager industrial minerals research for Roskill Information Services. Roskill has recently published its 8th Bauxite and Alumina Global Industry and Market Outlook.