China’s Heavy Dependence on Guinea for Bauxite Supplies: Mitigating Risks and Finding Alternatives

Top Aluminum Producer in the World Faces Supply Risk of Raw Materials from Guinea

In recent years, China has become increasingly reliant on Guinea as a supplier of bauxite, a key raw material for the production of alumina and aluminum metal. This dependence has put Aluminum Corp. of China Ltd. (Chalco) at a vulnerable position, as any disruptions in supply from Guinea can have a significant impact on its operations.

To mitigate these risks, Chalco has taken several steps. Firstly, the company plans to ensure supply continuity from its single mine in Guinea while also exploring opportunities to develop additional mines in the country’s north. Secondly, Chalco aims to collaborate on bauxite projects in other regions and enhance domestic supplies.

Despite these efforts, Guinea remains an increasingly crucial supplier for China. The country has emerged as the largest bauxite exporter, surpassing Australia and Indonesia in the 2010s. Most of its bauxite is shipped to China, where it is processed into alumina and aluminum metal. With China’s own bauxite production declining and Indonesia reducing exports, Guinea is becoming an increasingly vital source of bauxite for the world’s largest consumer of aluminum products.

Bloomberg Intelligence analyst Michelle Leung warns that China may eventually rely on Guinea for 90% of its bauxite imports. She suggests that Guinea could follow Indonesia’s lead by requiring foreign companies to establish refineries locally. Despite Chalco’s net income rising 60% last year, the company remains cautious due to uncertain global economic conditions and geopolitical risks impacting commodity markets. Challenges such as insufficient demand and weak expectations persist in the domestic market setting.

In conclusion, Chalco faces significant risks in its heavy dependence on Guinea for bauxite supplies

Sophia Reynolds

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