AICE Expert Insights | Metro Mining to Drive Growth Through "Resources + Market" Dual Strategy in China-Indonesia Aluminum Sector

Introduction to Metro Mining and Current Status of Alumina Capacity Expansion in Indonesia

Metro Mining

Metro Mining, an Australian company, focuses on bauxite development and exports. Its core asset is the Bauxite Hills mine in Queensland, Australia, with a resource reserve of approximately 150 million mt and an annual capacity of around 4 million mt of bauxite. Its major clients are alumina refineries in China, the Middle East, and Southeast Asia, with the Chinese market accounting for over 70% of its sales. The company employs open-pit mining and benefits from proximity to ports (simplifying logistics), with cash costs ranking among the lowest in the global bauxite industry. The bauxite has an average alumina content of about 50%, with low impurities (low silicon content), making it suitable for China's high-temperature Bayer process. The company uses reclamation techniques to restore mine ecology and has committed to achieving carbon neutrality in mining operations by 2030. In recent years, it has expanded its resource reserves through acquisitions and exploration while exploring cooperation opportunities in emerging bauxite regions such as Guinea and Indonesia.

Current Status of Alumina Capacity Expansion in Indonesia

Since 2020, Indonesia has banned the export of raw bauxite ore, mandating local value-added processing (promoting the construction of alumina refineries). The country plans to build over 10 alumina refineries by 2025, with annual capacity exceeding 20 million mt. Indonesia has abundant bauxite reserves (approximately 1.2 billion mt), but the grade is relatively low (alumina content of 40%-45%), necessitating reliance on imported high-grade ore (such as Metro's Australian ore) for blending to improve efficiency.

Operational Projects: Projects led by Chinese companies such as Hua Chin Aluminum (part of China Hongqiao Group) and Huafon Group in Indonesia. In 2023, Indonesia's alumina capacity was about 5 million mt, accounting for 5% of the global total.

Projects Under Construction/Planning: Investments by international companies such as Rusal and EGA are expected to make Indonesia the world's third-largest alumina producer by 2025 (after China and Australia).

Potential Impact of Indonesia's New Capacity on China

1. Changes in Market Competition Landscape

• Import Substitution Effect

China currently imports about 3 million mt of alumina annually (mainly from Australia). The release of Indonesia's capacity may divert some demand, reducing China's reliance on Australian ore.

• Price Pressure

Indonesia's low-cost alumina (benefiting from cheap energy and labor) may impact domestic alumina prices in China, squeezing profit margins for high-cost domestic producers.

2. Industry Chain Adjustments

• Strategies for Chinese Alumina Companies

Accelerate capacity relocation to Indonesia (e.g., Nanshan Aluminum and Chalco's projects in Indonesia) to avoid raw material import tariffs and stay close to resources. Enhance domestic refinery technologies (e.g., low-carbon electrolysis, waste heat recovery) to reduce costs.

• Changes in Bauxite Trade Flows

Increased local processing demand in Indonesia may reduce its bauxite exports, forcing China to diversify its import sources (Guinea, Australia, Vietnam, etc.).

3. Long-Term Challenges and Opportunities

• Challenges

Risks related to Indonesia's policy stability (e.g., adjustments to export bans, tax fluctuations) and infrastructure bottlenecks (insufficient port and power supply).

• Opportunities

China-Indonesia capacity cooperation under the Belt and Road Initiative may foster regional aluminum industry clusters (integrated mining-alumina-aluminum-processing).

4. Response Strategies

Sign long-term offtake agreements with major Chinese aluminum companies (e.g., Chalco, Weiqiao) to secure demand; explore equity stakes in Chinese alumina refineries to bind downstream. Provide high-grade Australian bauxite to Indonesian refineries (compensating for local low-grade ore), with supply agreements already in place with multiple Indonesian smelters. Promote "customized blending solutions" to help customers optimize alumina extraction rates; invest in digital logistics systems to improve China-Indonesia shipping efficiency.

More in-depth analysis will be unveiled at the Alumina & Aluminum Raw Materials Forum on April 16, 2025!

Norman graduated from the Department of Mineral Processing at Imperial College London and holds an EMBA from CEIBS in China. Before joining Metro Mining, Norman served as Sales Manager at Rio Tinto Aluminum, President of Asia Pacific at British Hardware, and President of Asia Pacific at U.S. Unisys. Currently, Norman is the General Manager of Metro Mining's Asia Market Department.

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