이 목록에서
금속

Guinea coup may hit global bauxite supply; aluminum price reacts

금속 | 비철 | 철강

Platts Market Data Metals

Guinea coup may hit global bauxite supply; aluminum price reacts

하이라이트

Guinea world's largest producer, exporter of bauxite

Accounts for 55% of China's bauxite imports in 2021

Aluminum prices see volatility on news

The detention of Guinea's President Alpha Conde by special forces soldiers in a weekend coup may lead to disruption in bauxite exports and, in turn, the global aluminum supply chain, market analysts said.

아직 가입하지 않으셨나요?

일일 이메일 알림과 구독자 노트를 받고 이용 경험을 내게 맞게 설정하세요.

지금 가입하세요

Guinea, which has the world's largest bauxite reserves and is the world's largest producer, exported 66.2 million mt in 2020 with China as the main destination.

"Prices in London rose as much as 1.8% to $2,775/mt this morning [to the highest level since May 2011], while futures in China rose 3.4% to $3,405.64/mt, higher than previous highs in July 2008," UK brokerage SP Angel said Sept. 6.

The London Metal Exchange three-month spot aluminum price was trading at $2,779/mt as of 1458 GMT, registering further gains during the day's trade.

"Guinea's coup is expected to add further supply pressures to the aluminum market, although new Chinese supply in the pipeline is anticipated to soften prices," SP Angel said, adding that the army had also declared the shutting of land and air borders, "triggering concerns over supply route disruptions."

Guinea's alumina and bauxite exports were worth around $1.5 billion/year, analysts at UK brokerage SP Angel. Bauxite is the raw mineral that is converted to alumina and then aluminum.

Berenberg analysts said in a note: "The aluminum sector has seen the most volatility off the back of the news, with Guinea shipping about 25% of global bauxite (recall 1 mt of aluminum requires c2 mt of alumina, and alumina in turn requires c2.5 mt of bauxite). In turn, this has pushed up aluminum prices by about 1.1%, but will also be beneficial to alumina and bauxite prices."

Simandou iron ore project

For Guinea's booming mining sector, the coup could not come at a worse time, Verisk Maplecroft Africa analyst Eric Humphery-Smith told S&P Global Platts.

"Miners now have little other option than to sit tight and await further clarity from the transitional authorities, but contract renegotiation or even expropriation cannot be discounted," Humphery-Smith said.

"The upshot will be major supply disruption for the global bauxite market, as operations will likely remain shuttered for the coming days and potentially weeks. This coup will only add to the uncertainty around the Simandou iron ore project, which despite recent progress on preparatory works has yet to have a feasibility study completed," the analyst said.

That was echoed by Commonwealth Bank of Australia analyst Vivek Dhar, with the greenfield Simandou iron ore project potentially delayed if political instability in Guinea propagates in coming years.

"Before the coup, the project was at least five years away and was likely to initially produce 60 million-80 million mt (around 4% of the seaborne market)," Dhar said. "The project could potentially produce 150 million mt/year (around 10% of the seaborne market), but this was likely a decade away at best and will require more capital."

The Platts TSI raw material assessment Sept. 3 had the IODEX Iron ore fines 62% Fe price at $145.05/dmt, up 3.8% on the day.

Project development

Since China-backed Societe Miniere de Boke (SMB) began development in 2015, Guinea's bauxite exports have increased, with other Chinese companies having also moved in, Dhar said.

Non-Chinese companies have also stepped in, with the UAE's Emirates Global Aluminium and Russia's Rusal, Dhar said.

SMB told Platts Sept. 6 that at this stage it prefers not to comment on the situation in Guinea. It declined to confirm whether its bauxite production or shipments could be affected by the events.

In July, Guinean bauxite producer SMB-Winning Consortium inaugurated a 125 km railway line as part of its $3 billion Boffa-Boke project.

With the project, SMB-Winning intends to increase its bauxite export capacity by 10 million mt by 2022 and by 30 million mt by 2024. The consortium is already Africa's and Guinea's primary bauxite producer, with 35 million mt exported in 2020.

SMB-Winning groups together Guinean bauxite miner SMB and Chinese backers, including major aluminum producer Shandong Weiqiao. Guinea is a also a partner and shareholder of up to 10%.

"China's growing appetite for imported bauxite reflects China's declining bauxite grades," Dhar said. "In the 12 months to July 2021, China's bauxite imports from Guinea surged by 34% year on year. That has helped Guinea account for just over half of China's bauxite imports [so far in 2021]."

Major Russian aluminum group Rusal, which has been operating in Guinea since 2001, said in a Sept. 6 statement: "In connection with the events taking place in the Republic of Guinea, Rusal's number one priority is the health and safety of its employees and the continuity of its production processes. In case of further escalation, the Company is considering options for the evacuation of Russian personnel in the Republic. The company is monitoring the situation and is working closely with the Russian Embassy in Guinea."

Rusal, a major foreign investor in Guinea, operates the major Friguia alumina refinery complex there and is enlarging its bauxite reserves in the West African nation.