The depletion of China’s bauxite resources will
increase the country’s reliance on imported
material and affect operational costs for local companies,
IM heard on the sidelines of the
23rd Bauxite & Alumina conference in Miami, US,
"It’s quite clear that China’s
dependence on imports in bauxite has increased in recent years,
and this dependence will grow," a source active in bauxite and
alumina told IM in Miami.
"They have had to dig deeper and deeper to reach the ore,
and not a lot is easily available now," said a second attendee.
"Chinese bauxite resources are being depleted. They are looking
for more deposits but, otherwise, they’ll just
have to import more."
According to delegates, maintaining the required purity
standards of bauxite raw material is becoming harder within
China because best-quality ore in known local resources is now
limited, after many years of extraction.
This is reflected in the need for higher volumes from
outside the country. While China has steadily imported bauxite
(around half of national demand is covered by imports), sources
claim the ratio of local resources to imports could change as
domestic supply declines.
China’s imports of bauxite decreased in the
second half of 2016, on the back of slow metallurgical and
refractory markets. At the same time, sources claim that the
domestic lack of material is an underlying trend that will
become evident once internal demand rebounds.
"Now, with the issues you see on the metals side in China,
this is dampening demand for bauxite so they can handle it. But
once demand stabilises or goes back up – and it will
eventually happen – that’s when
you’ll see how much less they actually have," said
Another delegate added: "We estimate that by 2020 or
thereabouts, they will hit the wall. It will become too
expensive to mine and refine [local] low-grade ore."
|Delegates once again visited Miami to discuss the
bauxite and alumina market.
IM has heard cases when, to maximise
returns, some local companies chose to mine only the
highest-grade ore from their deposits, leaving non-premium
grades in the ground. This practice was not uncommon in recent
years, when market prices have been low.
At the same time, this created a scenario in which a number
of local deposits are now devoid of premium grade ore and only
have low-grade material, the extraction of which is now
"It’s feasible to go back in and extract the
rest of the stuff – you can do that if you want. But
it’s not worth it, since they took the best
material beforehand, and cannot make a profit by selling the
low-grade stuff," the first delegate said.
What this combination of factors may lead to is an increase
in raw materials and sourcing costs for Chinese processing
facilities, either through a higher share of imports or through
additional refining costs for the lower-grade ore mined
domestically, to reach the specifications required.
In the case of imports, refineries that are located in
internal areas within China, far from the main ports –
such as Shanxi – could see their logistics costs rise,
while those based close to the coast would be best
"Either way you look at it, costs of local companies will
grow," the second delegate added.
Looking to fill the gap
Today, China’s bauxite needs are covered by a
number of producing countries.
"Suppliers such as Indonesia [prior to the 2014 ban],
Australia, Guinea and also Malaysia all stepped in," one source
Indonesia was previously one of the leading suppliers of
bauxite to China, until it banned exports of unprocessed ores
in early 2014, after which Malaysia led supply and saw its
output and exports quadruple in a couple of years.
Malaysia has also now blocked extraction and exports of
bauxite, in a bid to reduce inventories and curb the
environmental damage that unregulated mining operations brought
about on local water resources.
With both players temporarily out of the game, Australia has
solidified its leadership as top bauxite supplier to China.
Guinea also gained in prominence and is now a growing exporter
to the Asian country.
Bauxite is mined in a number of provinces in China, with the
largest deposits in Shanxi (42% of the country’s
total), Guizhou (17%), Henan (17%) and Guangxi (16%).
Exploration is continuing in several areas of the country in
search of untapped bauxite deposits.