Domestic Bauxite Prices Rose Slightly, Guinea Pressures Mining Companies to Build Alumina Refineries Locally

SHANGHAI, Jun 20 (SMM) - As of June 17, bauxite in north Shanxi with Al/Si ratio of 5 and alumina content of 58%, traded between 425-450 yuan/mt (including VAT, excluding resource tax, delivery to factory), and 435-475 yuan/mt in Shanxi’s Xiaoyi. Bauxite in Sanmenxia, Henan with Al/Si ratio of 4 and alumina content of 58%, traded between 435-480 yuan/mt (excluding resource tax, including VAT, delivery to factory). Prices of bauxite with Al/Si ratio of 5.5 in Guizhou were 325-370 yuan/mt (excluding tax). In Guangxi, bauxite with Al/Si ratio of 5 and alumina content of 58% was sold at 305-320 yuan/mt (excluding tax). This month, the price of domestic bauxite in the northern regions has risen slightly by 5-10 yuan/mt as it became increasingly difficult for alumina refineries to obtain bauxite.  

According to foreign media reports, the military government of Guinea said in a statement recently that it asked bauxite mining companies to submit a timetable for the construction of alumina refineries in the country within 10 days. These companies were previously required to submit project proposals and precise timetables for the construction of the alumina refineries to the Ministry of Mines by the end of May. Thus, the deadline for submission of timetables has been extended. In addition, the Guinean government indicated that Guinea is considering setting a reference price for bauxite, and the President ordered several departments to review the world price of bauxite and submit a report to the Prime Minister for review on June 15.
 At present, Chinese leading companies such as Chinalco and Weiqiao Group have maintained stable ore mining and transportation in Guinea, which will be little impacted in the short term. However, in the long run, Guinea may impose restrictions on the export of bauxite. Indonesia has repeatedly proposed a ban on ore exports, and the export from Guinea also faces uncertainty due to the unstable regime in the country. The supply of domestic bauxite has hardly increased. Increasing demand from Chinese alumina refineries will boost prices of imported bauxite. In the future, the gap of different alumina refineries in terms of bargaining power, cost control, production and operations will be further widened. Alumina refineries with stable ore supply can still maintain current production, while those in Shanxi, Henan and Guizhou, who did not sign long-term orders and are far from the ports will face growing bauxite costs. 
[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]