Calcined bauxite is a raw material primarily used in the
refractory and abrasive industries. The product is also used in
other applications, including proppants and welding fluxes.
There are no official global figures on non-metallurgical
(non-met) bauxite and barely a handful of countries produce the
material. Estimated world bauxite production for 2014 was 244m
tonnes, according to the US Geological Survey (USGS), while
global bauxite reserves are 28bn tonnes. More than 95% of
bauxite production goes into metallurgical uses, mainly to be
converted into alumina for the aluminium industry.
Refractory-grade bauxite production is estimated to be
around 2m tpa. Guyana and China are the top producers of
calcined bauxite for refractories. According to the USGS,
Guyana produced around 1.6m tonnes bauxite, which includes
refractory grade bauxite, in 2014. In 2012, global reported
bauxite production peaked at 2.2m tonnes.
Even though there are no clear figures on current production
of calcined bauxite from China, IM understands
that the country remains the leading supplier of the material.
It is estimated that China produces more than 3m tpa calcined
bauxite for the refractories, abrasive and welding sectors.
Bosai Minerals Group Co., claims to be the largest producer of
calcined bauxite in China, with a refractory bauxite mine which
has a capacity of 600,000 tpa.
China, the largest consumer and producer of many of the
world’s natural resources, is facing a slowdown in
its economy, which has is having an impact on calcined bauxite
consumption. Raymond Ding, CEO of Chinese mineral trader
Wuxi Ding Long, says that domestic demand for
calcined bauxite is declining as industries such as the steel
sector require fewer refractories to produce steel.
He adds that due to environmental protection measures,
manufacturers in China are required to improve processing
equipment and raw material quality, which brings extra
production costs. This has caused some suppliers to reduce or
stop processing calcined bauxite. "As a result of this, it is
obvious that the processing capacity will keep going down in
the near future if market demand doesn’t come
back," Ding says.
Jess Roberts, senior analyst at Roskill Information
Services, dismisses suggestions that supply of refractory grade
bauxite is under threat. "Despite industry concerns in 2008 and
2011 that Chinese refractory-grade bauxite availability was
declining, recent export data shows that Chinese shipments have
continued to ramp up."
"Exports in 2012 totalled more than 610,000 tonnes at an
average value of $308/tonne FOB China. By the end of 2013,
exports increased to nearly 770,000 tonnes, but the average
value fell to $261/tonne," she adds. "This trend continued into
2014, when exports surged again to nearly 870,000 tonnes, but
values inched down slightly to $252/tonne. From January to
August 2015, exports remained stable compared to the same
period in 2014 at 560,000 tonnes, but average values have again
slipped to $232/tonne."
According to Roskill’s analysis, Chinese
consumption of refractory-grade bauxite has fallen in tandem
with domestic refractories production, which has made more
material available for the export market. However, with global
refractories output also muted, there has been little support
for prices and this has been reflected in falling export values
– which typically reflect contract pricing.
Elsewhere, one market expert, who wished not to be named,
says that the current situation for calcined
bauxite from China is "complex and very messy".
"A massive reduction in Chinese domestic demand for
refractory and non-met usage has produced an oversupply of
calcination and crushing capacity in China. This has led to
prices falling," he says.
"The previous bottleneck of supply to the export market
— the export licence system — has changed.
Currently, an export licence is still required but anyone can
apply for one. The licence is free of charge. What this means
is that anyone can export bauxite."
The source alleges that export VAT is not being paid by some
Chinese bauxite exporters which is causing massive differences
in prices from different suppliers. The current price for
calcined bauxite (min 88% Al2O3)
after calcining is estimated at Chinese renminbi
(Rmb) 1,540/tonne ($243/tonne*), without 17% VAT.
IM understands that prices in general range
Brazil, India, Turkey, Greece and Russia also produce
calcined bauxite. As well as being used for refractories, the
material is used to produce proppants. These small ceramic
beads, around the size of a grain, are pumped into hydrocarbon
-bearing rock formations to "prop" open the fractures and
stimulate oil or gas production.
The market for proppants is not as buoyant as was prior to
the middle of last year, due to the decline in the oil price.
All of the US major ceramic proppant producers have been forced
to idle capacity in the face of falling demand, including Carbo
Ceramics, which announced in March that it would mothball its
125m tpa proppant facility in Georgia, US.
Earlier in the year, Carbo Ceramics’ CEO, Gary
Kolstad, said the company’s actions were in direct
response to low oil prices, which is having a negative impact
on demand for ceramic proppant.
Alan Roughead, CEO of Canada-based First Bauxite, concurs
with Kolstad. "Demand for sintered bauxite proppants is
extremely weak following the decline in oil and gas prices and
reduced levels of fracking activity and switch from ceramic
proppants to cheaper sand proppants," he says. "There is a
large amount of idled ceramic proppant capacity in US, China
and other parts of the world. However, this idled capacity does
present lower cost opportunities for new entrants into the
In conclusion, he says: "The market is expected to remain
weak for some time but recover in the medium term. We are
confident there is a future for high quality, high strength
bauxite-based ceramic proppants."
*Conversions made October 2015