Indonesia's bauxite export ban to have limited impact on China supply

Major ore exporter Indonesia's plan to stop bauxite outflows are unlikely to have a major impact on the supply of raw material into China, as any gaps in imports can be easily filled by shipments from other countries, industry sources said Nov. 25.

Indonesian president Joko Widodo said Nov. 24 the country is planning to halt bauxite exports in 2022 and copper ore shipments in 2023.

The move is part of the country's ongoing plans to bolster investments in its downstream sectors and would aid exports of higher value semi-finished or finished products, rather than raw materials, according to an ING Bank note Nov. 25.

Indonesia has already banned exports of nickel ore.

China is the world's largest importer of bauxite ore and its dependency on Indonesian bauxite has been declining over the past few years following a similar ban in 2014, sources said.

Indonesia banned exports of mineral ores, including bauxite, from Jan. 13, 2014, but China's customs data shows that it started buying bauxite ore from Indonesia from July 2017.

China also produces significant amounts of the raw material within the country that is used to make aluminum products.

It could replace Indonesian bauxite with supply from Guinea, as traders already import bauxite from the region following the previous ban, sources in North China said.

An east China-based source said that Indonesia's bauxite accounted for a small portion of their overall bauxite volumes.

Indonesia's market share shrinks

Bauxite ore imports from Guinea -- China's largest supplier -- increased 8% year on year to 48.04 million mt in the first 10 months of 2021. Guinean supply accounted for 52.8% of China's total imports during the ten months, China's customs data showed.

Indonesia was the third largest bauxite supplier to China after Guinea and Australia. China's imports from Indonesia decreased 16% on the year to 13.76 million mt over January-October, accounting for 15.1% of the country's total imports, according to the customs data.

In October, however, Indonesian exports to China rose sharply from the previous month to 2.19 million mt.

A China-based trader said the surge in Indonesian imports could be partially attributed to a spike in freight costs for the Guinea-China route leading to a switch to Indonesian supply.

The freight has started falling for the Guinea-China route since mid-October and was coming back to the levels seen in July-August, the trader said.

Chinese alumina projects in Indonesia to support supply

Indonesia's bauxite export ban is also not expected to impact China's alumina supply, as alumina refineries in Indonesia developed by Chinese smelters can help fill the gap, sources said.

Aluminum producer China Hongqiao Group Co. Ltd. started the first phase of its Indonesian project in the first half of 2016, and it is running at its full capacity since 2017.

Shandong Nanshan Aluminum Co. Ltd. began the first phase of its Indonesian alumina plant, with a capacity of 1 million mt/year, in May. The company plans to bring the second phase with similar capacity into production in the first half of 2022.