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

Aluminum Corp. of China Ltd. (Chalco) has expressed concerns about the risks to its bauxite supplies from Guinea, which provided 70% of China’s bauxite imports in 2019. This heavy dependence on Guinea for the raw material puts 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 plans to ensure supply continuity from its single mine in Guinea while also exploring opportunities to develop additional mines in the country’s north. Additionally, the company aims to collaborate on bauxite projects in other regions and enhance domestic supplies.

Guinea 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 crucial supplier for China.

Bloomberg Intelligence analyst Michelle Leung warned that China may eventually rely on Guinea for 90% of its bauxite imports. She suggested 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.

By Sophia Gonzalez

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