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Thursday, 01 May 14
INDONESIA EXPORT BAN POINTS TO QUESTIONS OVER CHINA'S LONG-TERM BAUXITE SUPPLY - WOOD MACKENZIE
 China’s Bauxite demand forecast to reach 240 million tonnes by 2030
In light of the Indonesian mineral ore ban that came into force on January 12th 2014, Wood Mackenzie says the aluminium industry - particularly in China - faces a challenge to address a growing shortage of the raw material bauxite, an aluminium ore. It poses a compelling question for China - the world’s largest aluminium producer and consumer – with it's alumina refinery production forecast to rise by almost 17 million tonnes (Mt) by 2018 and a further 40Mt by 2030. Wood Mackenzie estimates China will need access to an additional 130Mt of bauxite over 2013 levels and expects China to consume as much as 240Mt of bauxite by 2030.
Until now Indonesia was the main supplier of bauxite to China, accounting for around 65% of overall supply in 2013. However, the mineral ore export ban that came into force in January this year, created a significant supply gap for China to fill. Wood Mackenzie believes the ban could be transformative to the global bauxite market in the longer term, but in the short to medium term the impact will be less significant due to swollen stockpiles and source diversification. Julian Kettle, Head of Metals and Mining Research for Wood Mackenzie explains: "China is the main global player in the aluminium market representing between 40% of supply and 60% of demand. Our most recent forecasts indicate that global alumina refinery production will rise to almost 140Mt by 2018, which means we'll see bauxite demand rise by almost 80Mt to 350Mt. With China's alumina demand set to increase so sharply, there will be huge implications for bauxite demand. We estimate China will need access to as much as 240Mt of bauxite by 2030 and as it only produced 72Mt domestically in 2013, huge uncertainty remains over the import versus domestic supply mix."
So where will China now source its bauxite from? Undoubtedly if Indonesia sticks to the ban in the longer term, China will have to look to alternative import sources or develop new mines domestically. However Wood Mackenzie suggests that China has in fact been making moves to diversify supply for some time in preparation for the ban. Carl Firman, Aluminium Analyst for Wood Mackenzie says: "In recent years we've seen China sourcing additional quantities of bauxite from a variety of other countries, most notably Australia and India - and while the alternative sources are not supplying huge volumes to China currently, in time they could do."
Wood Mackenzie believes that China has been actively increasing imports of bauxite since the mineral ore ban was first mooted in 2009. "This is a strategic move by China to ensure it can firstly meet the direct needs of the coastal aluminium refineries it's built up over the years, but secondly in preparation for the ban coming into force. We estimate that China has accumulated more than a year’s worth of bauxite supply. This works out at about 40Mt, or four-fifths of the entire volume of bauxite exported by Indonesia in 2013," Mr Firman adds.
Mr Kettle asserts: "Ultimately China's vast bauxite stock piles mean that in the short-term at least, there won't be any immediate impact on metal production. This strategic effort on China's part has ensured the breathing space required to either develop new bauxite mines domestically, or establish new sources of supply through imports."
Wood Mackenzie suggests one viable option that China is exploring is the utilisation of coal fly ash. "By investing in the development of new technology to extract alumina from the by-product (which occurs when burning coal for power generation) China could significantly reduce its bauxite requirement, but then again if it doesn't produce enough, it will still have to explore other options," Mr Kettle adds.
There are plenty of opportunities to develop bauxite production domestically and elsewhere in the world, and Wood Mackenzie suggests that three major basins in Guinea, Australia and Vietnam could more than meet China’s needs, but there are significant challenges to be overcome. Mr Firman cautions: "Is China going to put all of its eggs in three baskets – its history of diversifying supply would suggest otherwise."
"China does have options, but they come at a price. Developing new bauxite sources in other parts of the world will require significant investment as host governments don't just want mines - they want added value in the form of refineries and smelters. There are also the high cost hurdles of resource nationalisation, surrounding politics and developing infrastructure that China will have to negotiate in order to establish new trade routes. The big question is, will China look to these alternative sources and significantly increase imports or will it develop its own domestic resources to meet its insatiable demand? One thing that is for sure is that there are lots of opportunities for host governments open for China's business." Mr Firman offers in closing.
Editor’s notes:
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions. For more information visit: www.woodmac.com
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Friday, 23 February 24
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Gujarat Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Planning Commission, India
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- The Treasury - Australian Government
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
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