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 supply from Guinea, a country that provided 70% of China’s bauxite imports last year. The company acknowledges that its heavy dependence on Guinea for raw material puts it in a vulnerable position, as any disruptions in supply from the country 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. Bloomberg Intelligence analyst Michelle Leung warned that China may eventually rely on Guinea for 90% of its bauxite imports, suggesting that the country 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.

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.

However, challenges such as insufficient demand and weak expectations persist in the domestic market setting. As such, Chalco must find ways to diversify its sources of raw material beyond Guinea while still maintaining a stable supply chain.

In recent years, China has been investing heavily in infrastructure projects related to aluminum production, including building new smelters and expanding existing ones. These investments are aimed at reducing reliance on imported bauxite and increasing domestic production.

Despite these efforts, however, there remain concerns about the long-term sustainability of China’s aluminum industry given declining global demand for aluminum products. Additionally, tensions with other countries over trade disputes and resource nationalism have further complicated matters.

Overall, while Chalco remains committed to ensuring a stable supply chain for its operations in China, it will need to be nimble in adapting to changing market conditions and geopolitical risks if it wants to maintain its position as a major player in the global aluminum industry.

By Samantha Johnson

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