Growth in the global demand for aluminium and alumina over the period to 2011-12 will support an expansion in Australia’s bauxite production.
By the end of the outlook period, bauxite output is expected to be about 75 million tonnes.
The increase in output assumes that at least one of the project expansions currently planned for Australia proceeds.
A continuing expansion in world economic activity is expected to underpin solid growth in the demand for aluminium, and hence the production of alumina and bauxite, over the forecast period.
China is expected to account for a substantial proportion of the growth in world aluminium consumption over the period to 2012, reflecting strong growth in that country’s manufacturing output and investment in infrastructure.
The expansion at Alcan’s Gove mine is expected to be complete by the end of 2006, lifting bauxite output by about 2.5 million tonnes. Similarly, small upgrades at the Pinjarra and Worsley refineries, both completed in 2006, will each call for an additional 2 million tonnes per year of bauxite.
Other major expansions are also in prospect.
The joint venture participants in Queensland Alumina Ltd (Rio Tinto, Alcan and Rusal) are considering lifting the capacity of that alumina refinery in Gladstone, Queensland by 1.3 million tonnes.
Alcoa is considering expanding its Wagerup refinery by 2 million tonnes, having gained government approval for its plans, and the Worsley joint venturers are still reviewing plans to expand output at that operation, despite having deferred the commencement of work in mid 2006 due to cost overruns.
Rio Tinto may also expand its alumina refinery in Gladstone by 1.4 million tonnes.
In addition to these proposed expansions, the Aluminium Corporation of China Limited (Chalco) lodged its final bid for development rights over the bauxite deposit at Aurukun at the end of June 2006.
Chalco’s proposal involves the construction of a 2.1 million tonne per year alumina refinery to process the ore mined.
At least one or two of these projects is likely to proceed during the outlook period, prompting further increases in bauxite production.
The unit value for bauxite will continue to be strongly influenced by production costs, the market outlook for aluminium, and trends in the $US/$A exchange rate.
Strong growth in the demand for aluminium, especially from China, is expected to keep unit values for bauxite relatively buoyant.
Real industry revenue is expected to rise during the outlook period, supported by higher production and higher prices.
Overall, industry revenue is expected to increase at an average annual rate of about 2%.
N IBISWorld
03 9655 3881
www.ibisworld.com.au