China Hongqiao expects 1st cargo from Guinea bauxite mine in Sept

China Hongqiao Group Limited , the country's second-largest aluminium producer, expects to receive the first shipment of bauxite ore from a joint venture mine in Guinea in September, its Chief Executive Officer Zhang Bo said on Monday.

Bauxite is used to produce alumina, the base material for the production of aluminium.

China Hongqiao and a Singapore-based dry-bulk shipper each hold a minority stake in the bauxite project, with a Guinean company as the majority shareholder, Zhang told reporters in a results briefing in Hong Kong on Monday.

Total investment in the project will run less than $200 million, with the capacity expected to be about 10 million tonnes a year. The project will increase bauxite supply to China Hongqiao after Indonesia halted export of the ore early in 2014.

"The first shipment (of bauxite) will leave in July and arrive (Shandong) in September," Zhang said.

China Hongqiao has applied to resume bauxite exports from its mining project in Indonesia as the government there may allow some companies building alumina refineries in the country to export some of the ore, Zhang said.

"There is an 80 percent chance (we can get the Indonesia export permit). We should know by June or July," he said.

The company has been building a $1 billion alumina project with 2 million tonnes a year of capacity in Indonesia. The first phase of the Indonesia project, with 1 million tonnes of annual capacity, will start production by the end of 2015 and reach full production in the first quarter of 2016, Zhang said.

He said alumina from the project would be sold in Indonesia and also exported.

China Hongqiao on Sunday reported a net profit of about 5.3 billion yuan ($853.21 million) in 2014, down 5 percent from 2013 due to lower prices for aluminium.

Prices of the most-active aluminium contract on the Shanghai Futures Exchange fell nearly 10 percent in 2014, weighed down by overcapacity in the sector.

The company produced 3.158 million tonnes of aluminium products in 2014, up 33.4 percent from the previous year as it expanded capacity 36.2 percent to 4 million tonnes.

($1 = 6.2118 Chinese yuan)