Analysis of supply and demand trend of bauxite in China
Recently, with the tightening of environmental protection policies in some major bauxite resource producing areas, many alumina plants are concerned about the supply of raw materials. So, how to determine the demand for bauxite? How to solve the supply problem of bauxite?
Insufficient supply of bauxite compared to demand
There is a voice that hopes to broaden the channels of mineral resources and consider the possibility of replacing domestic minerals with imported bauxite. In fact, China is still in the middle to late stages of industrialization, with infrastructure construction and social wealth accumulation levels far lower than those of developed countries. In addition to crude steel and cement, the consumption of major mineral resources will still be on the rise overall. Over the years, China has continuously increased its ability to safeguard aluminum resources through measures such as increasing exploration efforts and improving the production and storage ratio. However, it is very difficult to significantly reduce the external dependence of aluminum resources.
On the one hand, China's bauxite resources are relatively poor compared to the huge consumption. Global bauxite resources are abundant and distributed in more than 50 countries. Guinea and Australia account for about half of the world's bauxite resources. Relatively speaking, China's bauxite resources are relatively scarce, accounting for only 2.96%. In terms of demand, nearly 40% of the global alumina production capacity is concentrated in China, which directly leads to difficulties in coping with the increasing demand for bauxite resources in China. In addition, with the surge in domestic demand, the scale of bauxite development and utilization in China continues to expand, and the domestic bauxite production has increased significantly. According to statistics, in 2009, China surpassed Brazil to become the world's second largest bauxite producer. Currently, China is using less than 3% of the world's reserves to produce about 17% of the world's bauxite. Following this trend, China's bauxite resources will face depletion in the future.
On the other hand, China's bauxite has a poor grade and does not have advantages under the same conditions. The main type of bauxite in China is diaspore, with poor ore quality, which directly leads to difficult processing. The combination method with higher energy consumption is often used for alumina production. Under the same conditions, Chinese enterprises are more inclined to import high-grade ore from abroad. In order to reduce logistics costs, alumina plants using imported ore will mainly focus on new production projects in coastal areas, especially Guangxi and Liaoning, which can directly connect with the main downstream electrolytic aluminum production areas.
The reality is that manufacturing companies do rely heavily on imports from abroad. According to statistics, the total export volume of bauxite in the world in 2016 was 51.78 million tons, accounting for 27% of the world's output. However, China's bauxite production accounted for a very small proportion, and showed a downward trend year by year. Therefore, China needs to import a large amount of bauxite from Australia, Brazil, Guinea, India, Malaysia, and Ghana every year. In the first half of 2017, China imported about 32 million tons of bauxite, an increase of 27.3% year-on-year. Among them, the import volume in June was about 6.89 million tons, a significant increase of 21.6% month on month.
For aluminum oxide plants, with the increasing consumption of high-grade bauxite resources in China, the deployment of new capacity in domestic aluminum oxide plants is bound to be affected. Especially in the context of strict and normalized environmental supervision, the supply of bauxite is likely to become a bottleneck in the increase of capacity in domestic aluminum oxide plants in the future. Using imported ore to produce alumina will gradually show its advantages in the next 3-5 years. According to statistics, the capacity of imported mineral alumina to be invested and newly built in the future will reach 14 million tons (accounting for 18% of the current capacity), including Chinalco Fangcheng Port Alumina Project, Bosai Mining Yingkou Port Alumina Project, and Dalian Miaoyi Group Jinzhou Port Alumina Project. These three projects are expected to be completed and put into operation from 2018 to 2019. Among them, the Chinalco Fangchenggang Project plans to build an aluminum industrial park integrating aluminum oxide, aluminum smelting, and aluminum processing. At that time, the aluminum oxide will directly support the smelting needs of downstream electrolytic aluminum plants, while the aluminum oxide produced by the Bosai Yingkou Port Project and the Miao Yi Jinzhou Port Project will mainly be supplied to electrolytic aluminum plants in Inner Mongolia and northwest regions for use.