Fitch: global bauxite production will continue to grow at a high level in the next few years

SMM8, March 15-Fitch International Macro Research Weekly has released a new report updating a previous study of the global bauxite market. In the latest version of the document, the company said it was driven by the launch of new bauxite projects in Australia, the expansion of bauxite exports and production in Indonesia, and the growth of existing bauxite projects in Guinea. Global bauxite production will continue to grow at a high level in the next few years.

Australia, the world's largest bauxite producer, will maintain steady growth in bauxite production, driven by the stable operation of about 40 projects, according to Fitch. In particular, Fitch market researchers say Rio's expansion of the Weipa bauxite project in Queensland is the main driver of Australian bauxite production growth. In 2017, production breakthroughs at the mine and Gove led to a 6 per cent year-on-year increase in Rio Tinto's total bauxite production to 50.8 million tons.

Australia still dominates global bauxite production

In addition to the bauxite assets under production, Rio is developing a $1.9 billion Amrun bauxite project that is expected to expand mining activities under some of Rio's existing leases. The mine is expected to start operation in 2019 with an initial capacity of 22.8 million tons per year. Fitch also said another major driver of the increase in bauxite production in Australia was the Urquhart bauxite project, which is about to go into production in northern Queensland. The company is run by Metallica Minerals, which has obtained mining leases from the local state government.

In the case of bauxite in Indonesia, Fitch estimates that bauxite production will increase significantly over the next decade as Indonesia relaxes its ban on bauxite exports. The forecast is based on Indonesia's benchmark of 2.6 million tons of bauxite exports between January 2017 and March 31, 2018.

In Fitch's view, Indonesia's improving outlook is also the result of its government's decision to allow PT Dinamika Sejahtera Mandiri to export 2.4 million tons of bauxite in 2017. In addition, Indonesia also gave PT Laman Mining Company an export quota of 2.9 million tons.

"Indonesia is beginning to recover its share of bauxite exports to China because it is closer and cheaper to produce than mines in Australia or Guinea," Fitch wrote in its report. We predict that bauxite production in Indonesia will grow at an average annual rate of 12.9 per cent between 2018 and 2027, compared with 72.6 per cent in the previous 10 years. Indonesian bauxite production is expected to increase from 5.4 million tons in 2018 to 11.4 million tons by 2027.

Strong domestic consumption in India stimulates bauxite production growth

In India, on the other hand, the increase in bauxite production is not driven by export growth, but by strong consumption in the domestic market. Indian bauxite production is expected to increase from 30.9 million tons in 2018 to 50.7 million tons by 2027. Fitch said in the document that the plan to increase production is also supported by new policies of the Indian government, such as the cabinet of the state of (Odisha) in Orissa, which has decided to approve a long-term bauxite-linked policy. This will make it easier for Vedanta's Lanjigar alumina smelter to accept supplies of bauxite from Odisha Mining's state-owned mines.

India's market share of global bauxite production is rising

In addition, projects to be auctioned by the Indian government in the next few years from the country's 71 major mining areas will also boost production of the country's bauxite mines, which contain eight bauxite resources. These are three bauxite mines in (Gujarat), Gujarat State, one bauxite mine in Jakande (Jharkhand) State, and four bauxite mines in Maharashtra (Maharashtra) State.

But Fitch also said its forecasts for India are not as optimistic as they seem. The study shows that "despite the optimistic prospects for the bauxite industry as a whole, there is a risk of a decline in production due to increasingly stringent environmental regulations in India, tensions between localities and a slowdown in the progress of new mining projects.

Rapid development of mining projects in Guinea is the main driving force for bauxite production growth

Fitch believes that Guinea's bauxite production is expected to increase from 53.3 million tons in 2018 to 78.2 million tons by 2027, the second largest bauxite project in the world after Australia.

Mining projects in the West African country will be the main driver of future bauxite production growth. The main projects of the Guinean bauxite mine include Alliance Mini è re Responsable and Socii é t é Mini è re de Boke in France. The two projects are mainly aimed at developing 430 million tons of bauxite reserves near Boke. Another bauxite project that the market is more concerned about is Alufer Mining's Bel Air project. The project is expected to increase the current annual production of 5.5 million tons to 10 million tons over the next 15 years.

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