Alumina Limited to expand bauxite production on anticipating bauxite shortage in China

On anticipating the shortage of bauxite availability in China within the next three years, Alumina Limited would consider acquiring new bauxite assets. It would even consider ramping up the production capacities of its existing mines.

Alumina and its joint venture partner Alcoa have exposure to bauxite assets in Western Australia, Guinea and Brazil. Mike Ferraro, the company’s chief executive, indicated that he would be interested in growing the company’s bauxite output through organic and possibly inorganic means.

He told the Australian Financial Review, "We've got bauxite in Western Australia, Guinea and in Brazil and each of those has different advantages and disadvantages, so I think we would certainly look to not only growing organically those mines for third-party exports, but also if there are opportunities to develop new mines or acquisitions closer to market, good quality bauxite, we would certainly be looking at it pretty closely."

Being the world’s largest bauxite producer, Alumina always showed its keen interest in expanding its commodity production. In 2017, it grew its capacity by 5. 2%. Mr. Ferraro’s optimism towards the outlook for bauxite echoes that of Rio Tinto, which is currently spending US$ 1.9 billion to expand its Amrun bauxite operations near Weipa.

Mr. Ferraro said, “Our strategy is to continue to grow our bauxite production to meet the growing demands of the third-party market”. He expects bauxite price to go up, by the time China will run short of bauxite from 2021. He also said, "We are expanding production of our interests in Guinea and Brazil in addition to the expansion currently under way in Western Australia. We are able to increase capacity at our bauxite mines for a relatively modest capital cost."