May 22, 2024 6:30 pm
Top Aluminum Producer in the World Faces Supply Risk of Raw Materials from Guinea

Aluminum Corp. of China Ltd. (Chalco) is facing concerns over the stability of bauxite supplies from Guinea, which accounts for 70% of its imports last year. The company’s heavy reliance on this single source puts it at risk, as any disruptions in supply can have a significant impact on its operations.

To mitigate these risks, Chalco has announced plans to ensure supply continuity from its existing 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 recent years. Most of its bauxite is shipped to China, where it is processed into alumina and aluminum metal. With China’s own production declining and Indonesia reducing exports, Guinea has become an increasingly crucial supplier for the country.

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.

In conclusion, Chalco faces significant risks related to its reliance on a single source of bauxite from Guinea, which accounts for a majority of its imports last year. To mitigate these risks, the company plans to explore opportunities for additional mines in the country while also diversifying its supply sources through collaboration with other countries and developing domestic refineries if necessary. Despite this cautionary outlook, Chalco remains committed to ensuring supply continuity and maintaining profitability amidst uncertain market conditions.

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