• Wed. May 29th, 2024

China’s Bauxite Giant: Aluminum Corp. of China Ltd.’s Dependence on Guinea and Strategies to Mitigate Risks

BySamantha Jones

Mar 28, 2024
Top Aluminum Producer in the World Faces Supply Risk of Raw Materials from Guinea

Aluminum Corp. of China Ltd. has expressed concerns about the potential risks to its bauxite supply chain, with Guinea being a significant source of the raw material for the company. With Guinea providing 70% of China’s bauxite imports in 2019, Chalco is vulnerable to any disruptions in supply from the country.

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 other regions, such as those in the north. Additionally, the company aims to collaborate on bauxite projects in other countries and enhance domestic supplies to reduce its dependence on Guinea.

Guinea has emerged as one of the largest bauxite exporters globally, 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 bauxite production declining and Indonesia reducing exports, Guinea is becoming an increasingly crucial supplier for China.

Bloomberg Intelligence analyst Michelle Leung warns that China may eventually rely on Guinea for 90% of its bauxite imports if current trends continue unabated. She suggests that Guinea could follow Indonesia’s lead by requiring foreign companies to establish refineries locally to increase control over the value chain and reduce their reliance on imported raw materials. 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.

In conclusion, Chalco faces significant risks due to its heavy dependence on Guinea for bauxite supplies. The company is taking steps to mitigate these risks by diversifying its sources of raw materials and enhancing domestic supplies while also collaborating on projects with other countries. However, challenges such as insufficient demand and weak expectations persist in the domestic market setting, which may further complicate Chalco’s efforts to reduce its reliance on foreign suppliers like Guinea.

By Samantha Jones

As a content writer at newsnnk.com, I weave words into captivating stories that inform and engage our readers. With a passion for storytelling and an eye for detail, I strive to deliver high-quality and engaging content that resonates with our audience. From breaking news to thought-provoking features, I am dedicated to providing informative and compelling articles that keep our readers informed and entertained. Join me on this journey as we explore the world through the power of words.

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