Aluminium prices might be at currently levels similar to those that prevailed during the global financial crisis, but in the medium- to long-term it is one of the fastest gorwing metals with demand expected to grow at four percent per year, the chief executive of Rio Tinto’s aluminium product group said.
“At the moment, we are facing high inventory levels and a slight supply imbalance. But as that new growth comes through, inventories will come down to more historical levels, thereby increasing the need for more supply. We see the pricing outlook improving later in this decade and into the next,” said in an interview published on the Rio Tinto website.
He said aluminium was being used more and more globally, and in new applications, because of the special qualities.
“Aluminium is used in many applications from packaging to cars, building and construction, medical equipment and a multitude of other applications. Transport applications have been growing significantly, and will account for more than half of the demand growth in the next 15 years. That’s mainly due to the greater use of aluminium in the automotive sector, as manufacturers look to reduce vehicles’ weight to become more fuel-efficient and reduce emissions, in response to more stringent environmental regulations,” Barrios said.
Architects are also increasingly using the metal as building products made out of aluminium are long-lasting, and they generally contain 50 to 85 per cent recycled metal. The metal was also finding greater use in the consumer industry too, with more computers, phones and tablets incorporating the metal, he said.
Barrios said bauxite was continuing to grow rapidly, and future growth was expected to be even higher than the four per cent per annum forecast for aluminium, mainly due to demand from China.
“China has been expanding its aluminium smelting and alumina refinery capacity tremendously for the past ten to 15 years. We’re expecting that it will continue to aim for self-sufficiency in both products and thus increase production to meet its internal demand growth,” he said.
According to Barrios, China’s own bauxite resources were limited and the quality was deteriorating, and so it was increasingly looking to import from sources that are sustainable and reliable in terms of quantity and quality.
“China’s bauxite imports grew from just 2.2 million tonnes in 2005 to 50 million tonnes last year. Rio Tinto has become the largest single player in that market, providing about a third of the country’s imports,” Barrios said.
He said China’s bauxite demand growth is forecast to be significant over the next 15 years, and it is something Rio Tinto was very keen to capture.
He said the Amrun project in Australia approved by the board last November will produce 22.8 million tonnes of bauxite per annum as of 2019.
“Part of that replaces our depleting East Weipa mine, but it will also give us an extra ten million tonnes per year to continue increasing our presence in the bauxite seaborne market,” Barrios said.