Bauxite on the move

Mining will commence in July at the Urquhart bauxite project in far north Queensland. The Queensland company, LCR Group, is the main contractor.

Although very small, the development of Urquhart reflects growing confidence about the outlook for bauxite, the feedstock for aluminium.

Aluminium prices have increased by over one-third since late 2015.

According to mining consultancy firm, CRU, "China's growing need for raw materials to feed its alumina refineries is expected to drive a 15-year boom for the top bauxite exporters like Australia and Guinea". (Alumina is the intermediate processing step between bauxite and aluminium.)

Alcoa, a major global producer, expresses similar optimism, projecting in December last year that "the market for third-party bauxite demand will double between 2015 and 2024, with China as the biggest importer of bauxite".

In response, the large bauxite producers in Australia - Rio Tinto, South 32 and Alcoa of Australia - are expanding.

Bauxite mining at Alcoa's Huntly mine in Western Australia. Source: Alumina Limited (Alcoa's partner in Australia).

For example, Rio Tinto will start production at its $2-billion Amrun project in far north Queensland in mid-2019. Construction is underway.

Last month, in Western Australia, South32 referred to the state government a proposal to extend its bauxite mine and increase production at it alumina refinery, both south of Perth. (South32 took over the bauxite and alumina operations of BHP Billiton in 2015.)

This year, Alcoa of Australia is selling bauxite for the first time to third parties overseas (previously, all bauxite was sold to its own alumina refineries in Western Australia). It expects such sales to increase, with production to increase accordingly.

Australia is the world's largest bauxite producer.