Guyana bauxite export still a priority even as the economy shifts its focus on oil & gas

Guyana bauxite export continues to remain a strategic priority area even at a time when the economy is considering to switch from its dependence on traditional foreign exchange earners such as aluminium ore to one dominated by oil and gas following the discovery of oil reserve by US oil giant, ExxonMobil in mid-2015. The country which started exporting bauxite about a century ago has been on a downside in the recent years with countries such as Australia, Brazil, China, Guinea and India moving ahead as top bauxite producers of the world. However, the government of Guyana has recently taken note of the changing industry needs and called for a review of the domestic industry to decide on the further course of action.

{newsStudioGallery}

While the decision as to whether restart the alumina refinery or expand/reduce bauxite operations remains pending on the part of the government, this is what analysts suggest could be the possible strategic options for the country’s mines ministry:

Restart alumina refinery: It is true that current alumina market is reflecting a dimmed demand appetite but this is not going to last for long term. The world’s biggest aluminium producers are firing up new plants and restarting idled capacity to take advantage of improved aluminium prices- this is ought to boost demand (pull factor) for alumina and buoy up prices from the middle of 2017 onward.

Reduce bauxite operations: Production cut at the bauxite plant could be considered as a short-term strategy as that would help manage cost (and stock). The government should see to it that the operational efficiency of the bauxite plant is improved so that cost can be optimized.

{googleAdsense}

Explore bauxite export avenues: Guyana should explore a wider export market for the aluminium ore as that would help increase revenue and contribute to overall growth of the economy that is heavily export dependent.

International trade data shows Guyana exported 16980341.56 tonnes (1.69 MT) of bauxite in 2015, which came down drastically to stand at 443175.662 tonnes in 2016. Revenue from bauxite export fell in tandem year-on-year. Guyana’s total bauxite export was valued at around US$19 billion in 2015 which fell at US$199.5 million in 2016. In 2017, the country is estimated to export 1564397.27 tonnes of bauxite worth US$262.7 million, up 31.6 per cent from last year.

Presently, UC Rusal is running the Bauxite Company of Guyana- the biggest in the region with an annual production capacity of 2.3 million tonnes of bauxite. Equipped with technically advanced mining facility the plant continues to develop a number of rich deposits of high quality bauxite in this part of the world.