Chinese firms cautious about building alumina refineries in Indonesia

Despite the Indonesian bauxite ban, Chinese firms are more careful about building alumina refineries in Indonesia, officials at one of the refineries in China said. One firm had cancelled its plans entirely.

Bosai Minerals has withdrawn their plans to build a two million-tonne-a-year complex in Indonesia. An official said, the company was focusing on the development of the two existing bauxite mines in Ghana and Guyana and may ship bauxite from these two mines to China if the price of domestic bauxite were sufficiently high.

However, China Hongqiao Group Ltd's alumina refinery located in Indonesia was due to be finished by the end of the year 2014, an official said. It is expected that Hongqiao firm would start exporting bauxite from Indonesia in the second half of the year 2014, after they have got a policy break from the government as it was building a refinery.

Shandong Nanshan Aluminium and Aluminum Corp of China Ltd (Chalco) also plan to build refineries. A Nanshan spokeswoman didn’t want to comment on the progress of the work, while a Chalco spokesman was not immediately available.

Chinese refiners relying on Indonesian bauxite imports would use their stocks while looking for other ore suppliers, the analyst and officials at alumina refineries said. Hongqiao's refinery in China has an annunal capacity of 3 million tonnes of alumina production and had 17-18 million tonnes of bauxite in their stocks, a company official said.

With the stocks, the company will be able to produce over 6 million tonnes of alumina, assuming the use of average 2.7 tonnes of Indonesian bauxite for 1 tonne of alumina, which will be further used for aluminium production. Chalco's Shandong unit was the only refinery the company had, using imported bauxite and hasmore than 3 million tonnes of bauxite stocks currently, considered enough for about four months, a company source said.

Boosted by the expectations of China’s higher import demand, spot alumina prices had gone up to $336 a tonne, free-on-board compared to $326 in December in international market, traders said.