South Africans are Boosting Bauxite Production in Guinea, a Rich Reserve for Bauxite

South Africans are spearheading a new bauxite thrust in Guinea, which hosts a quarter of the world’s bauxite reserves.

Adonis Pouroulis, better known as the initiator of Petra Diamonds – now listed on the main board of the London Stock Exchange – is leading Alufer Mining Limited’s thrust from London, where the company is set to raise up to $40-million and seek admission to London’s Alternative Investment Market (Aim).

Both chairperson Pouroulis and Alufer CE Danny Keating were formerly South Africa based.

The Pouroulis-founded Pella Resources, Alufer’s major shareholder, is an African mining house with more than 20 years exploration and mine development experience on the continent.

Alufer reports that new sources of bauxite are required as the industry faces potential supply constraints including declining quality from traditional suppliers, restrictions on exports of unbeneficiated ore from Indonesia and the lack of investment in new mines globally.

The RBC Capital Markets-advised Alufer intends becoming a bauxite producer by exploiting three-billion tons of compliant bauxite resources in Guinea, where Pouroulis notes investment in new mines does not match the country's high bauxite endowment.

A prefeasibility study has advanced its Bel Air project, located 15 km from the Guinean coast in West Africa and its Labé project, in the northwest of the country, is also earmarked for development.

First Bel Air production is expected in late 2013, or early 2014 and the company aims to ramp up annual Guinean production to 10-million-tons during 2015.

Capital raised will fund the completion of a bankable feasibility study for Bel Air, a prefeasibility study for Labé and asset acquisition and development.

Bauxite, the primary raw material used in aluminium production, is refined into alumina before being smelted into aluminium.

Alufer reports that China's alumina capacity increased to 37% of global capacity in the first quarter of 2012 from 11% in 2004, to meet demand from the aluminium smelting industry. China's bauxite imports have consequently increased from about three-million tons in 2005 to 45-million tons in 2011.

The company expects global bauxite demand to grow 6.9% a year, from 220-million tons in 2011 to 750-million tons in 2030.

Pouroulis makes the point that the closeness of Bel Air to the coast results in reduced infrastructure requirements and Keating describes bauxite’s supply-and-demand fundamentals as particularly attractive against the background of continued high demand from developing economies.

Alufer, incorporated in Guernsey in 2010, is set to be the first Aim-quoted bauxite company, with four bauxite exploration licences covering 2 977 km2, in the Boffa region, which hosts Bel Air, in the Labé region, which hosts the Labé project, and in the Kindia region.

Besides Petra, which has seven producing diamond mines in South Africa – Cullinan, Finsch, Koffiefontein, Kimberley Underground, Helam, Sedibeng and Star – and one in Tanzania – the Williamson mine, Pella Resources is also associated with the Aim-quoted Chariot Oil & Gas.

Petra, which produced more than 1.1-million carats in 2011, is targeting production of more than five million carats by 2019.