Indonesian President Joko announced on Wednesday local time that bauxite exports will be banned from June 2023 in order to promote the development of the local aluminum processing industry. The industry believes that China’s demand for imported bauxite is increasing due to the increase in new alumina production capacity. However, China’s bauxite import sources have been diversified and the impact of the initiative is limited.
Joko said this is the latest initiative to promote the development of Indonesia’s domestic mineral resources processing industry. More bans on bulk raw material shipments are likely to be introduced next year.
U.S. Geological Survey data show that Indonesia’s bauxite reserves account for about 3.75 percent of the world’s reserves. According to Shanghai Nonferrous Metals Network, China will import 107.42 million tons of bauxite in 2021, of which 16.61% will come from Indonesia.
Fubo’s non-ferrous aluminum research team said that Indonesia had introduced a ban on external bauxite in 2014, and this ban was lifted in 2017. At that time, this ban caused a certain impact on the Chinese aluminum market and caused a change in the trade pattern. To be prudent, China promoted the diversification of bauxite import sources, and Guinea and Australia became the two major source countries for China’s imported bauxite.
The team said that this year, with Yunnan, Guizhou and other places alumina plant new production capacity put into operation, China’s bauxite demand increased again. Due to the tight supply of domestic minerals, resulting in the proportion of alumina plants using imported ore increased. In the first 10 months of this year, China imported 103.75 million tons of bauxite, an increase of 14.04% over the same period last year.
However, due to the diversification of import sources, Indonesia’s policy of banning bauxite exports has a relatively limited impact on the country. Fubo non-ferrous aluminum research team said, from the import source countries, Guinea gradually become China’s first bauxite importing countries, and the proportion of imports is increasing. At present, China’s dependence on Indonesia’s bauxite imports is further reduced. Import source countries other than Indonesia can completely make up for the supply gap.
“At present, the bauxite mining capacity under construction and proposed to be built by Chinese enterprises in Guinea is large, and if all the bauxite mining capacity in Guinea is released, it may even trigger a global bauxite oversupply.” Fubo non-ferrous aluminum research team analysis said.
Anxin Securities previously released a research report mentioned that if the bauxite policy is implemented, it will limit the rigid supply of global bauxite, which is expected to support the electrolytic aluminum price from the cost perspective to maintain a high level. China’s bauxite resource endowment is poor, long-term bauxite and alumina self-sufficiency rate is the core point to protect the profitability of electrolytic aluminum.
Post time: Dec-22-2022