why china needs more bauxite mines?

Below is one of the reasons. Cars!

http://www.pr-inside.com/global-and-china-automotive-aluminum-wheel-r1509268.htm

Global and China Automotive Aluminum Wheel Industry Report, 2008-2009 - new market analysis released

China has become a manufacturing center of aluminum automotive wheels in the world now. The export of wheels mainly focuses on the retail market. In the recent years, many foreign OEMs have begun to purchase aluminum automotive wheels directly from China because:

In the cost structure of Chinese aluminum automotive wheels, raw materials account for 55%-60% of the total cost, and


labor cost takes 4%-5%. For developed countries, raw materials account for 50%, and labor cost takes 15%-20%. Therefore, China has competitive advantages in labor cost. At present, the average profit margin of foreign automotive aluminum alloy industry has fallen to 2%, so there is no possibility for the decline of selling price. In order to control the cost, international automobile giants have begun to purchase from China aluminum automotive wheels with price advantage or set up joint ventures in China. Japanese manufacturers have already established joint ventures in China.

China also has advantage in upstream resources, but the advantage is reflected in the quantity of alumina manufacturers instead of rich bauxite resources. The competition in the prices of alumina is fierce. After breaking the monopoly of Chinalco, private alumina factories emerged everywhere. To the aluminum wheel industry, raw material cost is the most important factor, in which Chinese manufacturers have advantage. Roaring alumina prices in 2008 made many manufacturers suffer losses. Although alumina price decreased in the second half of 2008, it was kept stable with a slight increase after major manufacturers made efforts to reduce output.

China´s output of aluminum automotive wheels rises rapidly. In 2001, China exported 3.5 million aluminum automotive wheels; in 2003, nearly 10 million; in 2008, 35 million, 10 times that in 2001. China produced 35 million aluminum automotive wheels in 2008, of which 30 million ones were for OEM sale, 1.5 million for inventory, and 1.5 million for after-market. Aluminum-alloy motorcycle wheel industry is an important branch of China´s aluminum wheel industry, with the annual output of 15-20 million.

Prosperous automobile industry stimulates a number of cities and enterprises to start aluminum wheel projects. In Baotou, Chongqing, Xining, Luoyang, Fushun, Zunhua, Guangyuan, Yuncheng, Kangping, Tongliao, Baise, Shenyang, Jiamusi, Peixian, Baiyin, Xuzhou and Wenchuan, aluminum wheel projects with the investment of RMB in millions have been under preparation or construction. In fact, aluminum wheels are applied to 68% of passenger cars in the world, so the development space for aluminum wheel hubs is limited. Majority of small Chinese enterprises rely on the after-markets of Europe and America, which get inflicted seriously by the economic crisis. As for the field of OEM, it is hard to enter, and requires efforts and funds for continuous years.

Although China has nearly 100 aluminum wheel manufacturers, but few of them have real strength. In China, large aluminum wheel manufacturers are generally supported by foreign investors. Manufacturers funded by Taiwan investors are mostly export-oriented, with the export mainly to Japan, and usually Japanese investors have their shares, for example, Toyota holds shares of Lioho Machinery. Manufacturers funded by Hong Kong investors often cooperate with larger enterprises, aiming at OEM market. Large-scale local enterprises also target OEM market, while small enterprises are engaged in after-market. Citic Dicastal is backed up by the super-large enterprise --- CITIC Group, so it has no difficulty in gathering capital and it has the courage to invest in large scale, which is the key to its success. Besides, Citic Dicastal started to work in aluminum wheel industry earlier than others. Wanfeng Auto is also a pioneer in the industry and was first listed in 2006, and its development depends on financing. Jinfei Machinery is an enterprise restructured from a state-owned enterprise with adequate fund, and motorcycle wheel business takes a large proportion of its business. Jinfei Machinery has set up joint ventures with Indian manufacturers. In the initial phase of 2001, Huatai was supported by foreign investors, who held 60% shares of the first Huatai factory in Shenzhen. At present, Huatai has branches all over China, even merges and acquires foreign production lines directly. Lizhong Wheel is listed in Singapore, depending on Lizhong Group that has aluminum mines, and it has great development potential. Zhongnan Aluminum Wheel enjoys technology strength and cooperates with Japanese investors to produce products with good quality. Fucheng aims at export. Mingqi mainly cooperates with BYD. Jingyuan Heavy Duty Machinery is backed up by the largest tire enterprise --- GITI Tire Group. Shanghai Youfa is a member of Youfa Group and listed in Singapore, aiming at after-sale market. Wuxi Zhenfa is an Indonesian enterprise listed in Indonesia.

Currently, European and American manufacturers of aluminum wheels are at the verge of bankruptcy, for example, Hayes Lemmerz filed for bankruptcy on May 11, 2009. In German, the annual sales of the best-known enterprise --- BBS was less than 8 million euros in 2008, declining 40% with huge losses. However, the situation will benefit Chinese enterprises, especially large enterprise like Citic Dicastal.

In Japan, the giants --- CMW, ENKEI and TOPY cooperate with Toyota, Honda and Nissan respectively. Asahi Aluminum, Hitachi Metals and UBE that have smaller scale cooperate with Honda, Nissan and Mazda respectively. UBE has less than JPY10 billion. In German, the giants --- BORBET, RONAL and UNIWHEEL are unlisted semi-private family enterprises with a history of one hundred years and they acquired a number of small manufacturers. The scale of UNIWHEEL is relatively smaller, but has much shares in after-market. BORBET and RONAL cooperate with BMW, Mercedes-Benz, Audi and Porsche. American SUPERIOR and Hayes Lemmerz are surviving difficultly.