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Chinese refiners step up search for alternative bauxite supplies

(Platts)
Updated: 2013-07-01 10:09
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Chinese bauxite importers, in particular alumina refiners, are continuing to explore alternative supplies other than Indonesia, due to continuing concerns over a possible export ban from the Southeast Asian country in 2014 as well as high Indonesian bauxite prices.

Indonesia is a major supplier of bauxite to China, accounting for 70-80% of the country's total imports. In May 2012, Indonesia tightened export policies and imposed an export tax of 20% on bauxite, in a move to encourage more foreign investment in its local industry.

The Southeast Asian country had also earlier announced plans to ban exports starting in 2014. Although many are skeptical that the ban would actually be imposed due to economic factors, some Chinese importers have been actively seeking, and stepping up their search, for alternative supplies.

"Rising Indonesian bauxite prices over the year have also been a major issue... they're so high now we've not signed any new contracts for cargoes recently," a Shandong refiner source said. "Instead, we may buy more cargoes from Guinea."

The refiner is currently expecting delivery of three previously signed Indonesian cargoes to arrive in July, as well as one from Guinea.

Indonesian bauxite prices are now pegged at $50-55/mt CIF China basis, up from $43-45/mt in first half of 2012 before the country's export policy changed.

"Prices are quite stable now, but they're high, so costs for the importing refiners are high," a Chinese trader said.

Another Shandong refiner has been trying out supplies from Fiji, while a third has been in talks with Indian suppliers.

Chongqing Bosai, which imports from Indonesia, also has plans to cut bauxite imports from Indonesia, and is trying to use more of its own supply from its Ghana investment, a company source said.

"We're planning to bring in more from Ghana, and trying to evaluate the difference in cost and quality between using that and Indonesian supply ...this is all due to concerns over the possible Indonesian ban on bauxite exports next year," he added.

Bosai in 2011 received approval from the Ghanaian governments to purchase an 80% stake in the Awaso bauxite mine from Rio Tinto Alcan. That venture now has a 3 million mt/year capacity.

Aluminum Corp of China (Chalco) has in recent years tied up with Vietnam Coal and Mining Industry Group to invest in a Vietnam bauxite-alumina project, and have also been working with an Indonesian partner on a planned bauxite-alumina venture.

China's Hongqiao Group also has ties with Indonesian companies on a planned alumina project in the country.

 

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