Aluminium giant warns of relatively high risks associated with bauxite supplies from Guinea

Aluminium Corporation of China (Chalco) expressed concerns about the "relatively high" risks associated with bauxite supplies from Guinea, highlighting the nation's increasing reliance on a single source for this crucial raw material. Last year, Guinea accounted for 70 per cent of China's bauxite imports, essential for aluminium production.

This heavy dependence left the company, formerly known as Chalco, significantly vulnerable to the unrest and uncertainties in Guinea. "The company's bauxite mines in Guinea are subject to supply fluctuations due to local policy changes and frequent strikes," stated Chalco.

Chalco's plan for continuous supply

Chalco has outlined plans to ensure a continuous supply from a single mine in Guinea while also aiming to develop additional mines in the country's northern region. They are open to collaborating on bauxite projects in other areas and expanding domestic supplies.

During the 2010s, Guinea surpassed Australia and Indonesia to become the largest bauxite exporter. A significant portion of this bauxite is sent to China, where it undergoes processing into alumina and, subsequently, aluminium metal.

What the expert said

With China's domestic bauxite production declining and Indonesia ceasing exports to prioritise domestic processing, the reliance on Guinea's supply has increased. In a recent note, Bloomberg Intelligence analyst Michel Leon suggested that China might eventually depend on Guinea for up to 90 per cent of its bauxite imports. He also mentioned the possibility of Guinea following Indonesia's model, requiring foreign companies to establish refineries.

Chalco reported a 60 per cent increase in net profit last year, reaching RMB 6.72 billion. However, the company cautioned about the uncertain outlook for commodities due to slowing global economic growth and escalating geopolitical risks. Challenges persist in the domestic market, including insufficient effective demand and weak expectations.

Image source: China's General Administration of Custom