Guinea Goes From Zero to Hero for World’s Top Aluminum Maker

(Bloomberg) -- Guinea will pass Australia to become China’s main source of bauxite next year as the world’s biggest aluminum maker boosts imports of the raw material from the West African nation that supplied almost nothing just two years ago.

Shipments from Guinea to China will reach as much as 13 million metric tons this year, up from just 300,000 tons in 2015 and negligible volumes in 2014, according to Ron Knapp, secretary general of the International Aluminum Institute. That will take Guinea past Malaysia to become the number two supplier, and shipments will advance in 2017 to beat Australia, Knapp said Thursday in an interview at an industry conference in Shanghai. He didn’t give specific volume forecasts for 2017.

“Guinea has a medium- and long-term role in world bauxite supplies,” Knapp said during a presentation at the conference. The world will need between 45-and-50 million tons of extra annual bauxite supply by 2020, and “the arrival of Guinea bauxite in the Asian region will help determine market boundaries for other entrants,” he said.

Rapid Growth

China accounted for 55 percent of world aluminum output last year, up from 25 percent a decade earlier, and its top producer China Hongqiao Group Ltd. is now the world’s biggest maker of the metal. That rapid growth has boosted demand for bauxite, with China’s total imports rising from 30 million tons in 2010 to 56 million tons last year. Guinea has about a quarter of the world’s known reserves, according to the United States Geological Survey.

China has “succeeded in diversifying” its bauxite purchases after Indonesia banned shipments of unprocessed ores in 2014, and shipments from Malaysia slumped this year, Yin Zhonglin, senior engineer at Aluminum Corp. of China Ltd., said at the conference. “Guinea and Brazil with stable grades have emerged as major suppliers along with Australia. In the longer term, Laos and Cambodia could also become main suppliers, but are currently limited by transportation infrastructure.”

Closely held Hongqiao group controls bauxite resources in Guinea and ships the raw material to its own refineries in China’s coastal Shandong province. Investment in bauxite mining in Guinea will exceed $2 billion in a few years, giving the country a major role in the global market, its mining minister Abdoulaye Magassouba said in July.

Australia will ship an estimated 19 million tons of bauxite this year to China, down from 19.6 million tons in 2015, while Malaysia’s shipments will sink below 8 million tons, down from 24 million tons in 2015 after the government banned mining on environmental grounds, according to the institute’s data. A moratorium on mining, put in place this year, was extended on Wednesday until Dec. 31. Malaysia has relatively small reserves and was only a “short-term hot spot” for the industry last year, Knapp said.

--With assistance from Winnie Zhu To contact Bloomberg News staff for this story: Martin Ritchie in Shanghai at mritchie14@bloomberg.net. To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net, Keith Gosman

With assistance from Martin Ritchie