Bauxite production to climb sharply from 2021: Fitch Solutions

Fitch Solutions Country Risk and Industry Research says: “New projects coming on line in key producers Guinea, Indonesia and Australia, as well as a ramp-up in Indian and Indonesian production, will drive rapid production growth of bauxite in 2021.”

The bauxite mining sector of Australia anticipates towards maintaining steady output growth, braced by a solid project pipeline.  The country holds 12 of the 29 new projects in Fitch’s Key Mines Projects Database, the utmost in any country.

Bauxite accounts for less than 5% of Australian mining value, whereas, the country ranks as the global top producer, accounting for an estimated 28.8% of global output as of 2018. The country is projected to remain a top bauxite exporter to China, although it may lose some market share over the coming quarters to returning Indonesian supply.

Fitch forecasts that Australian bauxite production growth will average 20.5% year-on-year in 2020, up from 15% in 2019.

Fitch considers that Indonesia bauxite production will ramp back up over the coming years, following the relaxation of the mineral ore export ban two years ago.

Fitch expects hefty levels of exports from the country this year and says: “It is starting to reclaim its share of bauxite exports to China, supported by closer proximity and lower-cost production than Australian or Guinean mines.”

Nevertheless, in July 2019, Indonesia declared a ban on the export of raw mineral ore, including bauxite from 2022 onwards to strengthen the mineral processing industry in the country. This will constitute a downward risk to Fitch’s long-term production forecasts over the coming years. Presently, it is forecasting output in the country to increase from 9.4-million tonnes in 2020 to 14.9-million tonnes by 2029.

China, for the moment, is expected to see subdued bauxite production growth ahead, owing to the deteriorating quality of reserves and a government-led initiative to consolidate the aluminium sector in a bid to reduce pollution levels over the coming years.

Fitch expects the country’s bauxite output to head gradually higher from 67-million tonnes this year to 76.9-million tonnes by 2029.

India’s bauxite production growth is projected to fire up, to cater to the growing demand from the domestic aluminium industry and supported by government ordinance.

Fitch expects India's bauxite production to grow from 25.5-million tonnes this year to 32.2-million tonnes in 2029. It states: “Despite this positive outlook, tightening environmental regulations and tribal tensions pose downside risks, as it could lead to new project delays.”

Guinea’s bauxite sector is expected to see solid production growth over the coming years, driven by a strong project pipeline. The country holds the second largest number of new projects behind Australia, with eight in Fitch’s database.

The West African nations’ production is forecast to soar from 60.8-million tonnes this year to 82.4-million tonnes by 2029.