In January 2014, the Indonesian Government confirmed the ban on bauxite exports from Indonesia would remain. It is estimated ~42 million tonnes of bauxite was exported last year from Indonesia to China. Combined with other imports, China has built up an estimated 12 month stockpile of required bauxite imports. According to Antaike, China’s imports of bauxite reached 2.122Mt in April 2014.
During the first four months of this year, bauxite imports totalled 16.77Mt, down 37% year on year. Only 45,000 tonnes of Indonesian bauxite imports have been reported since April and imports of Indian bauxite have dropped 70% year on year to 0.882Mt in May. It is expected that China’s bauxite import inventory will continue to shrink during the remainder of 2014, and imports of non-Indonesian bauxite will increase.
Once these stockpiles are exhausted, it is expected that China will require several new significant sources of imported bauxite to satisfy demand out of China. This anticipated rise in demand has led to an increase in bauxite prices over the past few weeks. Logistically Australia is well placed to supply this demand and Western Australia is currently the largest bauxite producing region in the world.
A number of new projects need to come on stream to meet the continuously increasing demand in third party bauxite market by 2035 Australia’s proximity to China means Australia has a logistical advantage to many other alternative supply sources and positions the Company well to take advantage of the increase in demand for Australian bauxite.
Consumption of aluminium is now growing faster than any other metal, with China dominating aluminium production.
At the start of the decade China produced around 10% of global production, 2.5 million tonnes per annum (Mtpa). Today China’s aluminium capacity has grown to 19Mtpa, accounting for 57% of global production.
(Source: Australia China Business Council: The benefits to Australian households of trade with China.)
