Australia to remain global leader of bauxite production

Bauxite production in Australia is expected to grow over the next few years as a result of expansion plans by Rio Tinto and Alcoa, allowing the country to remain the largest global producer of bauxite, according to Fitch Solutions.

Rio Tinto is the largest bauxite miner in Australia and reported production of 54.3 million tonnes (mnt) of bauxite from all its mines for 2021, down 3 per cent from the previous year primarily due to the severe wet weather from La Niña.

Alcoa’s bauxite production in the 2021 financial year declined 0.8 per cent to 47.6mnt while shipments of bauxite declined 1.2 per cent to 48.1mnt.

The curtailed production from Alcoa’s Intalco smelter in Western Washington, USA, during the third quarter of 2020 weighed on production in 2021.

Higher prices raised the company’s revenue by 31 per cent to $US12.2bn ($16.7bn), with third-party prices of primary aluminium rising 50 per cent.

Alcoa’s guidance for 2022 calls for 48-49mnt of bauxite shipments, with an announced restart of Portland Aluminium in Australia.

While junior firms will also remain present in Australia’s bauxite sectors, Fitch remains constructive towards Australian bauxite production, due to the heavy presence of major miners in the sector.

Rio and Alcoa will push ahead with their expansion plans as a result of their stronger balance sheets compared with the juniors.

There are currently five large bauxite mines in Australia supplying to the country’s six alumina refineries, which in turn supply alumina to the four Australian aluminium smelters and the export market.

The major Australian bauxite mines are South32’s Boddington mine in WA, Rio Tinto’s Gove operations in the Northern Territory and its Weipa mine in Queensland, and Alcoa’s Huntly mine and Willowdale mine in WA.

Australia usually exports a third of its bauxite production while the remainder is converted to alumina.

In the long term, Fitch predicts additional capacity expansion of aluminium capacity in Xinjiang powered by captive power plants with captive coal mines will help to sustain bauxite demand as will the acceleration of the energy transition.

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