Australia Expected to Dominate Bauxite Exports to China

Researched by Industrial Info Resources Australia (Perth, Australia)--China's demand for bauxite is expected to increase dramatically, since the Indonesian government said in January that it would cease all exports of unprocessed ore, including bauxite. Statistics show that Indonesia supplied more than 68% of China's purchases in 2013, which is nearly 42 million metric tons, and the race is on for Australian companies to fill the void.

There are currently four operational bauxite plants in Australia, after Rio Tinto's (ASX:RIO) (Melbourne, Australia) Gove site was shuttered earlier this year. When combined, Australia's total production capacity exceeds 56 million metric tons of bauxite, which is more than enough to fill the void left by Indonesia's recent export ban.

At least six new active grassroot bauxite projects are in planning and under construction in Australia, which would increase the country's total production capacity by more than 18.5 million metric tons. The largest site is Cape Alumina Limited's (ASX:CBX) (Brisbane, Australia) Bauxite Hills Project, which aims to produce 5 million metric tons of bauxite per year for export, followed closely by Australian Bauxite Limited's (ASX:ABX) (Sydney, Australia) Binjour mine, which will produce 4 million metric tons of bauxite by 2015 for direct shipping.

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It has been suggested that China has built up an estimated 12-month stockpile of bauxite imports. However, China's bauxite inventory will continue to shrink throughout 2014, leading to an increase in non-Indonesian bauxite imports. The benefit to Australia more than likely will be delayed until between 2015 and 2016, when many of its grassroot projects are scheduled for completion.

When China exhausts its stockpiles, the country will require a considerable amount of imported bauxite to satisfy its growing demand, most likely forcing the price of the ore upward. Australia is expected to dominate the list for most favored bauxite exporter, thus becoming the largest exporter of bauxite to China.

Australia's large-capacity grassroot projects, and the potential to become China's favored bauxite trading partner, suggests a positive outlook for the Australian bauxite industry within the next few years--especially if Indonesia's government refuses to lift its ore export ban anytime soon.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.