Bauxite Market Commentary Chinese bauxite imported tonnes &...

Bauxite Market Commentary

Chinese bauxite imported tonnes & prices are rising as predicted. Indonesian bans on bauxite
exports being imposed longer than expected

• Bauxite import tonnages rose from 1.58 million tonnes in April to 2.93 million tonnes in June 2014
• Indonesian tonnes shipped to China ceased after bans imposed 12 January
• Prices continue to rise above trend, averaging US$60.80/t CIF China, 25% higher than 2 years ago
• A$ prices average A$64.54, 35% higher than 2 years ago when ABx commenced project approvals
• China is sourcing bauxite from non-traditional suppliers at prices up to US$90/t averaging US$70.76/t –
a stress reaction due to Chinese stockpiles of bauxite being consumed faster than expected.

Indonesia: Indonesian bauxite shipments to China have ceased and the bans have remained effective to date.

Australia: Rio’s Australian tonnages are returning to normal levels of 1.4Mt/month after wet season.

India: Indian tonnages were 0.8Mt in June but new Indian export taxes of 20% on bauxite are taking effect.

Others: “Other bauxite” comes at high prices from Dominica, Guinea, Ghana, Brazil, Fiji and others. This pattern
is a sign of stressed buying because the transport costs from West Africa, Dominica & Brazil are punitive.

Note that shipping costs were unusually low in June and trending lower. Because prices are quoted CIF China
including shipping cost, the underlying rising bauxite price trend is stronger than shown in the graphs.

China’s bauxite stockpiles falling: Chinese refineries are using bauxite purchased and
stockpiled before the Indonesian bans. Some is low quality bauxite, requiring more tonnes
of this low-grade, silicarich bauxite to produce sufficient alumina.

This had led to a faster reduction in China’s stockpile than planned. ABx had predicted prices reaching above
US$60/t in 2015 but that was exceeded in April’14.

Alumina Limited has predicted bauxite prices will reach US$80/t by 2019.