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Analysis on the Supply and Demand Trend of Bauxite in China
As the environmental protection policies become tighter recently, many alumina plants in some major producing areas of bauxite are concerned about the supply of raw materials. So, how to judge the demand of bauxite? How to solve the supply issues of bauxite?
The Demand of Bauxite Exceeding its Supply
There is anopinion of broadening the channels of mineral resources and considering the possibility of importing bauxite to replace domestic mines. In fact, China is still in the mid-late stage of industrialization, and the level of infrastructure construction and social wealth accumulation is much lower than that of developed countries. In addition to crude steel and cement, the consumption of major mineral resources will generally keep rising. For many years, China has continuously increased the support capacity of aluminum resources by increasing exploration and enhancing the ratio of exploitation and reserve. However, it is still very difficult to substantially reduce the dependence of aluminum resources on foreign countries.
On the one hand, the bauxite resources in China are relatively poor compared to the huge consumption. The bauxite is rich in more than 50 countries all around the world. Guinea and Australia account for about half of the world's bauxite resources. The bauxite resources in China are relatively scarce, accounting for only 2.96%. On the demand side, nearly 40% of the global alumina productivity is concentrated in China, which directly leads to the difficulty of China's bauxite resources to cope with the increasing demand. In addition, with the surge in domestic demand, the scale of development and utilization of bauxite in China has continued to expand, and the output of domestic bauxite has increased significantly. According to statistics, China has surpassed Brazil and become the world's second largest producer of bauxite in 2009. At present, China is producing about 17% of the world's bauxite mines with less than 3% of the world's reserves. If the current trend continues, the bauxite resources in China will be exhausted in the future.
On the other hand, thegrade of bauxite in China is poor, and there is no advantage under the same conditions. China mainly produces diasporic bauxite, and its quality is poor, which directly leads to processing difficulty. Combination method of higher energy consumption is usually adopted for alumina production. Under the same conditions, the domestic enterprises are more inclined to import high-grade ore from other countries, and the alumina plants who use the imported ore will invest the new production projects mainly concentrated in coastal areas, especially in Guangxi and Liaoning so as to reduce the logistics costs, because these areas can connect with the downstream electrolytic aluminum main production areas directly.
The reality is that the manufacturers depend greatly on imports from other countries. According to the statistics, in 2016, the bauxite exports all around the world totaled 51.78 million tons, accounting for 27% of the world's production, while China's bauxite production accounted for a very low proportion, and showed a downward trend year by year. Therefore, China needs to import bauxite from Australia, Brazil, Guinea, India, Malaysia and Ghana every year. In the first half of 2017, China's bauxite imports amounted to approximately 32 million tons, an increase of 27.3% year-on-year. Among which, the import volume in June was about 6.89 million tons, a sharp increase of 21.6% compared with the previous month.
As for alumina plants, with the increasing consumption of domestic high-grade bauxite resources, the new capacity of the domestic alumina plants will be affected.Especially,under strict and regular environmental supervision, the supply of bauxite is likely to become the bottleneck for the increase in productivity of the alumina plants of domestic ore. The use of imported ore to produce alumina will gradually show advantages in the following 3-5 years. According to statistics, in the future, the productivity of the proposed newly-built alumina plants of domestic ore will reach 14 million tons (accounting for 18% of current productivity), including the Alumina Projects of ChinalcoFangcheng Port, Bosai Mining Yingkou Port and Dalian MiaoyiGroup’s Jinzhou Port. These three projects are expected to be completed and put into operation in 2018~2019. Among them, the project of ChinalcoFangcheng Port plans to build an aluminum industrial park integrating alumina-aluminum smelting-aluminum processing. At that time, alumina will be directly provided for the smelting demand of the downstream electrolytic aluminum plants, while the alumina produced by Bosai Mining Yingkou Port and Dalian MiaoyiGroup’s Jinzhou Portis mainly used in electrolytic aluminum plants in Inner Mongolia and Northwest China.