Tight bauxite supply and great potential

Asian Metal: Hello, Mr. Gao! Thanks for accepting this interview. Please briefly introduce LAIA.

Mr. Gao: Established from 11 Jan 2017, LAIA was recognized by various aluminum enterprises in Lvliang. LAIA focus on building a platform for enterprises and government, which provides the connection service, posts aluminum market information and journals, hosts interchange conferences, etc.

Asian Metal: As one of the major aluminum manufacturing areas in China, how's the advantage and disadvantage of Lvliang?

Mr. Gao: Lvliang owns abundant bauxite and coal resources, which is the most important point. However, for now Lvliang mainly conducts the bauxite mining and alumina refining, and the downstream aluminum smelting and processing has not developed well. That is the major disadvantage of Lvliang's aluminum industry.

Asian Metal: How's the current condition of bauxite market in Lvliang?

Mr. Gao: The bauxite reserves are around 649 million tons in Lvliang, counting for 45.7% of Shanxi and about 1/6 of China. Now there are 67 bauxite enterprises in nice different Countries in Lvliang, of which 1/3 are state owned companies. Over the past few years, the environmental control policy became more and more strict, coupled with the nonstandard mining process, the bauxite supply remained short. Besides, the alumina capacity grew fast but no extra bauxite mining approval been issued, leading the problem be more serious. Most alumina plants started using imported bauxite for production from early this year.

Asian Metal: Due to the tight domestic bauxite supply, some alumina plants already finished the technical upgrading and used imported bauxite. How do you think the status?

Mr. Gao: Actually I don't think it is reasonable for alumina plants using imported bauxite in Lvliang. In my opinion, alumina enterprises should rely on the local bauxite resources to ensure competitiveness. As well, we forwarded the issue many times to local government and wish they could release more bauxite mining right. Besides, the resource tax in Lvliang (9%) is much higher than other regions like Henan (5%) or Inner Mongolia (7%). We hope government could provide some privilege on that.

Asian Metal: In Lvliang, there are now 10 alumina plants with a total production capacity of 15 million tons per year, counting for 17% of China. However, due to the strict environmental policy and high raw material prices, some of them are facing losses. What can LAIA do for that?

Mr. Gao: Presently most profits of aluminum industry are centralized in bauxite mining. We advise that alumina plants should combine with each other, and harmonize the relationship between government and enterprises, leading a win-win situation for both bauxite and alumina companies. In addition, alumina enterprises should strengthen the management and cost control, and develop other products like chemical-grade alumina to improve profitability.

Asian Metal: Now Lvliang only owns one aluminum smelter. Is there any possible to expand the aluminum capacity in the future?

Mr. Gao: The current preferential electricity cost in Lvliang is around RMB0.3/kWh (USD/kWh), which is lower than most other regions in China. LAIA and the local government are also making efforts together to rump up the aluminum capacity in Lvliang to 2 million tons per year in the coming 2-3 years.

Asian Metal: How's the current condition of aluminum downstream processing industries in Lvliang, and how LAIA can do to push the development of aluminum industry?

Mr. Gao: Lvliang owns six major aluminum industrial zones. Unfortunately, for now there are no large aluminum processing enterprises. Our local government attaches a great importance to the development of aluminum industries, and conducted many research on that. Now we devote inviting investment and promoting the development of aluminum industry in Lvliang. We would keep making effort on that, giving the best service to government and aluminum enterprises.

Asian Metal: Thanks for your shares and wish you have a great future!

Mr. Gao: Thank you and hope Asian Metal be better and better!