Australian Bauxite Ltd: bauxite sales strategy avoids market glut problems

<p>Australian Bauxite Ltd (ABx) currently sells bauxite into cement and fertiliser markets at prices higher than could be achieved in the over-supplied metallurgical bauxite market.</p> <p>There have been developments in the metallurgical bauxite market in the last few days which indicate that the metallurgical bauxite market could worsen further due to a glut of new supply during 2017.</p> <p><img style="vertical-align: middle; display: block; margin-left: auto; margin-right: auto;" src="http://www.alcircle.com/uploads/images/bauxite(1).jpg" alt="News" width="517" height="226" /></p> <p>ABx diversification avoids the metallurgical market glut.</p> <p>The clean chemistry of ABx's bauxite allowed ABx to sell cement-grade bauxite which:</p> <p>1.Consistently increases the late strength of concrete;</p> <p>2.Is quartz-free &amp; salt-free for corrosion-resistance;<br />&nbsp;<br />3.Eliminates stoppages &amp; pressure problems in kilns, lowers kiln temperatures &amp; reduces emissions.</p> <p>Many cement manufacturing plants are converting from coal-fired to gas-fired production which increases demand for cement-grade bauxite to add aluminium oxide and lesser amounts of iron oxide that would normally have been provided by the coal.</p> <p>Infrastructure construction in USA is increasing demand.</p> <p>North American cement-grade customers are advising that the rate of construction of North America's infrastructure is set to grow rapidly in 2017 which is making cement-makers seek ways to maximise output by eliminating stoppages and by increasing late strength of the cement. ABx's cement-grade bauxite does both.<br />&nbsp;<br />ABx's recent 5-fold increase in the resource tonnages at its Fingal Rail Project shows that ABx can enter into long-term contracts with major cement-grade customers, subject to satisfactory contract terms which are currently being negotiated.<br />&nbsp;<br />TasTech: ABx has increased testwork on the TasTech technology that separates ABx's bauxite into its 3 product-components: metallurgical-grade, cement-grade and fertiliser-grade bauxite. During this research, ABx encountered two additional technologies that can produce pure bauxite and high-value products. Testwork will continue throughout 2017 with the objective to commence production in the 2017/18 summer period.<br />&nbsp;<br />{googleAdsense}<br /><br />Chinese metallurgical bauxite market to November rose off the lows of mid-2016 but new suppliers in 2017 could mean metallurgical market will be grossly oversupplied.<br />&nbsp;<br />- Imported tonnes down 40% since Dec'15 and prices remain stable at US$48.74/t. <br />- Malaysian tonnages down to only 0.26Mt of low-value bauxite averaging US$37.70/t.<br />- Guinean Bauxite keeps flooding into China: 1.18Mt at a low price of US$56.93/t CIF price.<br />- Indian Bauxite supply is rebuilding to 0.20Mt as Chinese refineries buy Guinean bauxite instead.</p> <p>Recent new developments increase potential for a glut of metallurgical bauxite in 2017. <br /><br />- Alcoa has been given permission to export 2.5 million tonnes of metallurgical bauxite per annum from its WA operations for the next 5 years.<br /><br />- Indonesia is showing signs of relaxing its ban on exports of bauxite.<br />&nbsp;<br />Australian bauxite is dominating at 2.05Mt or 48% of the total, mainly from Rio's Weipa and Gove mines. Australian bauxite prices are falling as Rio buys market share? <br /><br />Indian bauxite sales into China have begun rising slowly as Indian-type gibbsite-trihydrate bauxite has been replaced by Guinea bauxite whilst it is cheap and shipping costs are low. Prices are low at US$37.53/t.<br />&nbsp;<br />Bauxite from Guinea in West Africa floods into China at 1.184Mt in October at US$56.93/t CIF China.</p> <p>Malaysian bauxite supply fell 62% to only 261,000 tonnes in October as Malaysian producers struggle to achieve grades above 45% Al2O3 by washing its bauxite. The 15% collapse in Malaysian prices to US$37.70/t CIF China is unsustainably low, except for cowboy operators.<br /><br /></p>