The price of bauxite, the raw material for aluminium, is set to
surge as the market undergoes a similar journey to that of iron
ore, according to bauxite junior miner Alufer, which plans to
list on London's Alternative Investment Market in mid-May.
"The fundamentals are exceptionally strong for bauxite. Our
listing in London - and we are the first pure bauxite company
-is only the start of many more to come," said Adonis
Pouroulis, the executive director and founder of Alufer, which
has bauxite assets in Guinea.
Pouroulis sees Guinea bauxite prices of about $35 per tonne,
while alumina from Guinea would cost about $400 per tonne.
Therefore, he argued, a big surge in bauxite prices is
"Today [bauxite] is a standalone commodity. We see pure iron
ore producers in the market, selling iron ore and maximising
the value from the commodity. Bauxite is the new iron ore,"
Alufer has 3 billion tonnes of bauxite resources in Guinea, and
plans to raise $40 million to fund the bankable feasibility
study of its Bel Air mine, based on an 80-million-tonne
resource, which it wants to ramp up to produce 10 million tpy of bauxite
Bauxite is comparable to iron ore, Pouroulis told Metal
Bulletin, explaining that a decade ago iron ore was mostly a
commodity extracted within integrated producers.
Integrated and non-integrated bauxite producers at Metal
Bulletin's Bauxite & Alumina Conference in March called for
a bauxite index price
, arguing it would
enable the market to trade based on its own fundamentals.
The time for integrated aluminium producers to be the sole
owners of bauxite is over, he argued.
"China has bought 30% of the new refining capacity for bauxite.
It doesn't have its own consistent supply of bauxite. This is
the era of the emergence of the third-party bauxite producer,"
China's demand will be the main driver for pure bauxite players
to emerge, but demand will also come from countries such as
Demand for bauxite will be about 225 million tonnes this year,
but will grow to 380 million tonnes by 2020, he forecast.
"We see an increase on average of bauxite consumption of 16-20
million tpy every year until 2020. That is only for the next
eight years. The world will need new large bauxite mines every
year," he said.
Alufer has two projects in Guinea: Bel Air, an 80-million-tonne
resource about 15km from the coast and set for start-up at the
end of next year or early 2014; and Labé, the bigger of
the two at 2.5 billion tonnes in reserves, but further inland.
Alufer's projected capital expenditure for its Bel Air project
is $330 million, Pouroulis said, of which the biggest part -
about $80 million - will be used to build the loading facility
at the port to ship its bauxite.
As soon as Bel Air starts production, it will become cash
generative and will be used to fund some of the plans Pouroulis
has for Alufer. Bel Air is set for an output of 10 million tpy
"We have an attractive product to sell around the world. We
don't have to do a lot in terms of infrastructure, like some
other juniors with bulks. We have a large resource with high
content aluminium. We have trihydrate, which is cheaper to
refine than monohydrate bauxite. We don't have a lot of silica.
We are set to become a solid, low cost producer of bauxite."
Alufer started its roadshow on April 30 to woo investors
to buy shares when it lists on London's Alternative
Investment Market (AIM) on May 17.