MELBOURNE, June 2 -- Alumina Ltd. (AWC.AU) Chief Executive John Bevan said Thursday the current system of pricing alumina does not represent market fundamentals and must change.
The alumina price is currently linked to the price of aluminum but miners like BHP Billiton Ltd. (BHP.AU) have been arguing for a shift to a system that reflects market clearing prices or shorter term contracts.
Bevan said Thursday the system must change and that this would be driven by China, which accounts for a growing share of the global market and trades predominantly on short term or spot.
"A new pricing mechanism should evolve with more spot sales outside China, possibly leading to a fundamentals-based alumina price index," Bevan said in a presentation slide.
Bevan said Alumina was well placed to take advantage of improving market conditions and expected an improving flow of dividends from its joint venture with Alcoa Inc. (AAL.LN).