ATHENS--A decision on Canadian producer Alcan Inc.'s (AL) proposed joint-venture alumina refinery in the Republic of Guinea will be made in the next 18-24 months, Jacynthe Cote, President and chief executive Alcan Inc. bauxite and alumina, said Tuesday.
"It's a question of when, not if," she told Metal Bulletin's 13th bauxite and alumina conference in Athens Tuesday.
The proposed refinery is a joint-venture project with U.S. producer Alcoa Inc. (AA) and is currently at the basic engineering stage, she said.
China will account for around 60% of the increased demand and supply of alumina by 2011, Cote said, and is expected top bring 30 medium- to large-scale alumina refineries on stream by then.
Around two thirds of this new alumina capacity will be based on domestic bauxite supplies, with the remainder imported, Cote said.
But given the lower quality of China's bauxite reserves, Cote said this will result in higher production costs because the ore will need more caustic soda and energy to process it. This means there's currently no strong business case to export bauxite from China, she said.
Alcan has the capacity to produce over 16 million tons a year of bauxite and is a net seller of the ore, Cote said. Once expansions at two of its alumina refineries, Gove in Australia and Alumar in Brazil, are complete, Alcan will have a production capacity of 7.3 million tons of alumina a year.
These expansions will be key to bringing 50% of Alcan's production into the lowest part of the cost curve and 75% in the lowest half, Cote said. They'll also balance supplies to Alcan's smelters, she added.
"Given the nature of the project and the support we can get from the government of Guinea, the refinery looks very attractive," Cote told delegates. Noting that Guinea contains a third of the world's bauxite reserves, Cote said that the key issue on making a decision going forward will be stability in the west African country.
In January and February, Guinea was gripped by a general strike aimed at toppling Lansana Conte, the country's long-ruling president. Conte seized power in a 1984 coup and refused to step down in spite of rumors of ill-health. He remains in power, but has appointed a prime minister that the country's unions approve of.
Bauxite operations were halted as a result and created a hike in alumina prices and upwards pressure on global aluminum prices. Four tons of bauxite make two tons of alumina, which in turn is smelted to produce one ton of aluminum.
Cote noted Alcan is monitoring closely the transition in Guinea's political situation. But she also pointed out that Alcan has been operating in Guinea for over 30 years and that the country has seen just one interruption to its operations during that time, fewer than in Australia and Canada.
Alcan already has a stake in Halco (Mining) Inc., which holds 51% in Guinea's CBG bauxite operations.
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