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Bauxite Resource Guarantee And Development Prediction In China

Summary: For now, aluminum industry is facing external and internal challenges: national policy on industrial upgrading and updating, and overcapacity led by disordered investment within the industry. It is very difficult for traditional aluminum industry to present high-speed growth again. Updated policies and market will gradually eliminate low-end and high-cost capacity.

1. Supply and demand analysis of bauxite in China

In 2018, capacity of aluminum oxide in China was about 88 million tons and its yield was about 72 million tons, accounting for nearly 59.8% globally in 2018; yield of bauxite was about 100 million tons, accounting for 30% globally. These made China the biggest country in the yield of bauxite and aluminum oxide. However, as of the end of 2017, identified resource reserve of bauxite in China was 5130 million tons, of which bauxite reserve that is of economic significance and that is exploitable was merely 970 million tons, accounting for 19% of national identified resource reserve and accounting for merely 3.2% of total bauxite reserve all around the world. From the perspective of recoverable reserve, static guarantee of bauxite in China is no more than 10 years. There is a huge imbalance between resource reserve and yield of bauxite, so China is a country lacking in bauxite resource. Production of aluminum oxide pretty much relies on imported ores. In 2018, our imported aluminum bauxite accounted for 41% of total ore supply. Furthermore, due to the tension supply led by environmental protection policies, aluminum oxide plants in inland areas commenced debugging their production line to adapt to imported ores. Meanwhile, Chinese aluminum companies are making their further deployment in oversea investment. However, considering the geographical features and technological characteristics of aluminum oxide plants in inland of China, excessive cost of raw material transportation will hinder economic effectiveness of application of imported ores by inland aluminum oxide plants. It is predicted that in the future 5-10 years, production of aluminum oxide in inland of China will still rely on inland ore as primary supply and imported ore as supplementary supply. Domestic bauxite supply will still remain tight.

2. Characteristic analysis of bauxite in China

Bauxite resource presents highly concentrated distribution in China, mainly in Shanxi, Henan, Guizhou and Guangxi, accounting for nearly 94% of total in China. Shanxi enjoys high-grade bauxite and its exploitation increases year by year. With the acceleration of bauxite exploitation, alumina-silica ratio of ore is decreasing and bauxite supply is getting tight. Henan is a historically big city of bauxite exploiting, with bauxite concentrating in Sanmenxia City, Zhengzhou, Luoyang and Jiaozuo, etc., ore grade being about 60%. Currently, bauxite resource in Henan suffers severe damages and non-compliance mining operations are frequently seen. Therefore, Henan government decided to suspend new and expansion exploitation projects and to govern mine environment as priority, which further leads to tight bauxite supply. With shallow embedded depth of bauxite, grade of 52%-58% and high alumina-silica ratio, Guangxi boastsstrengths in exploitation cost. Although its exploitation volume is lower than that of Shanxi and Henan, the volume increases year by year. Its exploitation volume is further going to increase in the future; Guizhou boasts abundant bauxite reserve with average grade of over 60%. Among it, bauxite grade in Qingzhen area exceeds 70%. Due to under-developed aluminum oxide-related technologies, yield of bauxite is relatively low. However, as iron sulphide treatment technology advances, Guizhou is going to unleash its great potential.

3. Application prospect of domestic bauxite and competitiveness analysis of aluminum companies

In spite of relative shortage of bauxite resource reserve, 90% of global high-grade bauxite concentrates in China. Currently, newly-exploited bauxite resource is characterized by high-aluminum content and high-sulfur content, so the application of this batch of bauxite also yields profound influence to the development pattern of aluminum industry in China.

Firstly, extensive researches and tests have been made by domestic academic institutions in ore desulfurization technologies. Current high-sulfur dressing technologies include ore floatation, roasting predesulphurizing and solution desulfurization, of which ore floatation and roasting predesulphurizing are well ready for industrialization. With the acceleration of industrialization process of ore desulfurization, high-sulfur ore in Guizhou and aluminum under coal in Henan and other high-sulfur ores will be effectively utilized. Bauxite resource guarantee will be prolonged for another 10 years, firmly securing raw material supplying for aluminum oxide plants in inland of China, full of promise.

Secondly, beside production of traditional metallurgical-grade aluminum oxide and aluminum hydroxide, aluminous ore (AO≥70%) is also widely used. It is a kind of rare ore in the world, with the majority lying in Xiaoyi of Shanxi and Guiyang of Guizhou in China. With the swift development of Chinese industries including steel, military industry, instruments and apparatus, mechanical engineering and fine chemical engineering, the demands of fireproofing material, wear-resistant material, fine casting powder, fireproofing fiber, ceramic material and catalyst also multiply. Grinding-grade fireproofing bauxite clinker obtained through calcining high-aluminum bauxite in clinker kiln is indispensable raw material for the process. Therefore, demands for high-grade bauxite also multiply. In addition, calcining in clinker kiln can help remove sulfur in ores, which means a great deal of high-aluminum and high-sulfur bauxite that can’t be applied in Bayer process to produce aluminum oxide also enjoys promising exploiting prospect. With the slowdown of aluminum consumption, the demands for metallurgical-grade aluminum oxide is hitting the top, so is the capacity of metallurgical-grade aluminum oxide. However, aluminum companies that boast high-aluminum ore resource can go on developing the application of chemical of aluminum oxide and bauxite clinker so as to have room for manoeuver in the market.

For now, aluminum industry is facing external and internal challenges: national policy on industrial upgrading and updating, and overcapacity led by disordered investment within the industry. It is very difficult for traditional aluminum industry to present high-speed growth again. Updated policies and market will gradually eliminate low-end and high-cost capacity. Therefore, abundant ore resource and low cost will be the two biggest competitive strengths in aluminum companies. Among domestic companies, beside CHALCO, GALUMINUM Group and SPIC not only have major medium-and-high-grade aluminum ore resources in control but also have made low-cost industry chain deployment. They may rely on their own resources and cost strengths to grow into the most competitive companies after the reshuffle in future aluminum industry in China.