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China's aluminum bauxite resource facing exhaustion on overusing

Published: Oct 28,2008 11:01:59

 

China's aluminum bauxite reserves are available for ten years due to excessively mining, China Business News reported Tuesday.


    According to Ding Haiyan, vice president of China's biggest aluminum producer Aluminum Corp of China (ACH.NYSE; 2600.HK, 601600. SH), China has less than two percent of the world's aluminum bauxite reserves, but uses 10 percent of the total. In this case, the overall resource will be used out in ten years.


    China's aluminum output has maintained an annual growth of 28 percent since 2001, 10 percentage points higher than that of other countries.


    Moreover, some 2.5 million tons of aluminum processing capacity will be released in the following 2-3 years, which is estimated to consume 12.5 million tons of aluminum bauxite.


    Ding noted that the Chinese government is encouraging powerful Chinese companies looking for aluminum bauxite resource overseas so as to ease domestic supply tension. But domestic aluminum companies are suffering from capital shortage due to sharp aluminum price decline on the international market. The price was quoted at 16,985 yuan per ton on September 22.


    The aluminum price is likely to dig below 14,000 yuan per ton soon on domestic demand stagnancy, overproduction and inventory increase, said Ma Junfeng, deputy general-manager of Orient Securities Futures, citing the conclusion of the company's analyst Cheng Hui as saying.


    Therefore, a large number of aluminum producers will go bankruptcy.

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