BHP Billiton vice president of strategy and business- aluminium, Konrad von Szczepanski, outlined the challenges facing the industry in a presentation titled The Longer-term View: Challenges and opportunities beyond 2015.
He said in the last 10 years aluminium production had doubled from 24Mt in 2000 to 42Mt in 2010, with China contributing 41% of it. Similarly alumina refining has also risen from 48Mt to 84Mt (2000-2010), with China making up 37% of it. He asked: Will a similar pattern continue in the next 10 years?
China will need to manage its energy reserves if it is to maintain its economic growth. Power tariff varies between $50/MWh and $90/MWh in China, more than the global average.
Middle East smelting is expected to grow, the region accounts for 40% of first quartile capacity today, 60% of which was built last decade. Alumina demand will grow from 6Mt in 2010 to 14Mt/y in 2020 and 22Mt/y by 2030. The quality of Chinese bauxite will decline so the country will require more imports, putting pressure on capital and operating costs. Atlantic refineries will incur higher operating costs due to oil prices, labour costs and the dependency on imported bauxite.
New alumina capacity will be required. Latin America and Australia will be in a long position by 2020 but rest of the world will be in a short position.
BHP’s response has been the growth of its brownfield expansions such as its Alumar and Worsley sites and the growth in its three bauxite sites in Western Australia, Brazil and Guinea.
The Worsley expansion will see an extra 1.1Mt/y added to the 3.5Mt/y site while its nearby Marradong mine construction is now 70% complete.
Its bauxite approach has seen it focus on the west African country of Guinea where it is involved in two projects. It has a 30% share in the Guinea Alumina JV alongside Dubal and the Mubadala Development Group, while it completely owns the Boffa/Santou/Houda bauxite site.
One possible area to build a nearby smelter is the Bas Congo region of the Democratic Republic of Congo in Africa. The Congo river is the world’s largest under-used source of hydro power.
The Inga 3 hydro power scheme is only 150km from a proposed smelter location right at the mouth of the Congo river. Alumina and bauxite would be supplied from its Guinea sites. The smelter would be able to serve the European and American markets. The tendering process has already been launched to select a developer.