supply trends and prospects for fused alumina
TRANSCRIPT
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Supply trends and prospects for fused
alumina
Jessica Roberts
Roskill Information Services
Metal Bulletin/Industrial Minerals, 2nd Asian Bauxite & Alumina
30-31 October 2012, Marina Mandarin, Singapore
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The statements in this presentation represent the considered views of Roskill Information Services Ltd. It includes certain statements that may be deemed “forward-looking statements”. All statements in this presentation, other than statements of historical facts, that address future market developments, government actions and events, are forward-looking statements. Although Roskill Information Services Ltd. believes the outcomes expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include changes in general economic, market or business conditions.
While Roskill Information Services Ltd. has made every reasonable effort to ensure the veracity of the information presented it cannot expressly guarantee the accuracy and reliability of the estimates, forecasts and conclusions contained herein. Accordingly, the statements in the presentation should be used for general guidance only.
Disclaimer
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Outline of global alumina and bauxite supply
Focus on non-metallurgical grades & fused alumina
Global fused alumina producers
Balance of BFA vs. WFA
Spotlight on Chinese FA industry
Feedstock supply chain
Energy issues
Government policies
Prospects for future supply
Summary
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
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Global metallurgical alumina output was
92.11Mt in 2011, led by China
China (37%)
Oceania (21%) East & Central Europe (5%)
West Europe (6%)
Africa & Asia (8%)
South America (16%)
North America (6%)
Source: International Aluminium Institute (IAI)
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
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Output of non-met. alumina was 5.92Mt in 2011,
split between calcined and chemical grades
Non-met. alumina is broadly
split into two categories:
Calcined
(42%) Chemical
(58%)
Chemical grades:
Aluminium sulphate
Aluminium fluoride
Aluminium hydrate
Calcined grades:
White fused alumina (WFA)
Ceramics
Refractories
Tabular Source: Roskill Information Services, IAI
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
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Output of non-met. bauxite was 10.4Mt in 2011
Main non-met. (raw) grades:
Portland cement
Calcium aluminate cement
Slag adjusters (steel)
Main calcined grades:
Abrasives/BFA
Refractories
Proppants
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
Refractories
(26%)
Cement
(24%) Abrasives
(22%)
Chemicals (8%)
Proppants
(10%)
Slag adjusters
(9%)
Other
(1%)
Source: Roskill Information Services
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Fused alumina
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High hardness and melting
temperature – good abrasive/
refractory materials
Two main grades (BFA/WFA)
based on different feedstocks
BFA: calcined bauxite (80%) +
ground coke (5%) + iron borings
(15%) fused in EAF at
2,000°C
WFA: calcined, low soda Bayer
alumina fused in EAF at
2,000°C (can add chromite for
extra toughness)
What is fused alumina?
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
Courtesy: Treibacher Schleifmittel
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Brown fused
Average composition of
>94% Al2O3
Feedstock: abrasive-grade
calcined bauxite
Production: focused in
China (~85%)
Main markets: abrasives
and refractories
Market size: 1.5-1.7Mtpy
Fused alumina comprises two distinct products,
BFA and WFA, based on different feedstocks…
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
Courtesy: Orient Abrasives, India
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White fused
Higher purity grade (>99.5%
Al2O3)
Feedstock: low soda
calcined alumina
Wider regional spread in
output
Main markets: abrasives
and refractories
Market size: 550-580ktpy
Fused alumina comprises two distinct products,
BFA and WFA, based on different feedstocks
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
Courtesy: Treibacher Schleifmittel, Austria
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Top Chinese producers (over 100,000t capacity):
Bosai Minerals Group
Guizhou Dazhong Qisha
Zhengzhou Wei Er Special Materials
Guizhou Sanshan Abrasives
- Main production centres are Guizhou, Henan, and Shanxi
- 20 producers have over 40kt capacity, hundreds of smaller
ones exist
China is the world’s largest fused alumina
producer with 3.5-4Mtpy capacity
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
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Top producers outside China (over 100,000tpy capacity):
Elfusa, Brazil (Curimbaba)
Imerys
Treibacher Schleifmittel, Austria
C-E Minerals, USA
Saint-Gobain, France
Washington Mills Electro Minerals, N. America
Producers outside China are bigger enterprises
with greater geographical spread
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
Tend to have numerous production bases, including Chinese
(eg. Treibacher has subsidiaries in 9 countries)
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China dominates international trade, accounting
for nearly 70% of the total in 2011
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
Source: Global Trade Atlas, Roskill
Calcined
(42%) Chemical
(58%)
Exports Imports
41% 22%
68%
23%
24%
4%
4%
4%
4%
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China accounts for majority of exports…
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
0
20
40
60
80
100
120
0
100
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rts
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$/t
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Exports Price per tonne (China)
Chinese fused alumina exports and average unit price (2008-2012)
Source: Global Trade Atlas
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… but ROW prices are higher, reflecting higher
WFA/BFA ratio
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
0
5
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00
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ROW exports (ex-China) ROW price per tonne (ex-China)
ROW fused alumina exports and average unit price (2008-2012)
Source: Global Trade Atlas
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Situation in China
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Top 10 producers in China only account for 26%
of domestic fused alumina capacity…
Producer Location Capacity (tpy) & grade
Bosai Minerals Nanchuan, Chongqing 250,000 BFA
Guizhou Dazhong Qisha Qingzhen, Guizhou 100,000 BFA, WFA
Zhengzhou Wei Er Special Materials Dengfeng, Henan 100,000 BFA, WFA
Guizhou Sanshan Abrasives Guiyang, Guizhou 100,000 BFA
Henan Great Wall Special Refractory New
Materials
Mianchi, Henan 80,000 BFA, WFA
Shanmenxia Fused Corundum Sanmenxia, Henan 80,000 BFA, WFA
Shanxi Tiankun Special Materials Gaoping, Shanxi 80,000 BFA
Wuhan Dazhong Qisha Abrasives Wuhan, Hubei 70,000 BFA
Henan Ruishi Special Refractory Luoyan, Henan 60,000 BFA
Henan Yilong High & New Materials Yichuan, Henan 60,000 BFA, WFA
Total - 980,000
Source: Roskill Information Services
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Main (non market-driven) factors affecting utilisation:
1. Government policies
2. Increased overall production costs
3. Competition from aluminium smelters
… and overcapacity is rife, with utilisation rates
less than 50% in 2011
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
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Banned inefficient smelting technology (furnace
transformers must be >3,000KVA)
Consolidation encouraged: closure of low-quality, low-
tech operations (account for approx. 50% of fused
alumina capacity)
BFA export tax of 15% implemented end-2008 to
discourage exports
Exporters must be VAT registered and/or own a mine
1. Chinese government policies are affecting
BFA supply
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
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Prior selective mining/‘cherry-picking’ has lowered
overall quality of current bauxite output
Shortage of suitable grades has led to higher bauxite
prices
Only 3 Chinese producers now specifically mine non-
met. grades
2. Increased production costs owing to raw
material quality/supply…
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
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Lower grades of bauxite require more energy for fusing
(average feedstock grade now 70% Al2O3, 5-15% SiO2)
Unreliable electricity supplies (brownouts and power
restrictions), especially from hydroelectric sources
Electricity restrictions in 2011-12 severely impacting
furnace operating rates (40% in Henan, 50% in Shanxi,
30% in Guizhou)
2. … and high energy costs
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
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Non-met. bauxite grades diverted to smelter grade
alumina producers during high aluminium demand
When aluminium demand is lower, refineries use excess
EAF capacity to produce fused alumina
Refineries may have cheaper bauxite source and better
energy supplies
3. Competition from aluminium smelters
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
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In addition to domestic factors, supply could be affected
by:
Indonesian ban on bauxite exports – higher demand for
domestic resources
Effect of WTO ruling in January 2012 on future trade policy
(taxes, quotas, licences)
China’s economic situation
Fused alumina supply prospects: China
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
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The world economy and future aluminium production
Access to raw material feedstock (esp. bauxite for BFA)
Demand from major consuming markets:
Abrasives = general manufacturing, automotive
Refractories = iron & steel, cement, non-ferrous metals,
glass & ceramics
Fused alumina supply prospects: rest of world
Bauxite & Alumina Asia 2012 – Jessica Roberts, Roskill
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Thank you!
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