October 2, 2023

Guinea Coup puts half of global bauxite supply at risk, impacting aluminum markets

The military-orchestrated coup in Guinea led by Colonel Mamady Doumbouya resulted in the suspension of the Constitution and the arrest of incumbent President Alpha Condé, in power for more than 10 years. This event is raising concerns in bauxite and aluminum markets as Guinea is the main global supplier of seaborne bauxite. Bauxite is used to make alumina and eventually aluminum. So far in 2021, the country has had a 56% market share in total seaborne bauxite exports. Guinea has exported 47.6 Mt of bauxite this year thus far, a 1.2% y/y fall, but still on track to reach 70 Mt, against its record of 71 Mt shipped in 2020.

Global seaborne bauxite exports by origin country (Mt)

The new Guinea security risk premium has pushed aluminum prices to their highest levels in a decade following confirmation of the coup. Prices in London jumped close to 2% to as high as $2,781 a tonne.

China and Europe to a lesser extent could face significant shortage of bauxite

China is by far Guinea’s largest bauxite customer, representing 64% of its exports in 2021 so far, or 3.8 Mt per month on average. Since 2017, Guinea has overtaken Australia as China’s largest bauxite supplier. In 2021 so far, Chinese imports from Guinea reached 31.3 Mt, a 45% share of total Chinese bauxite imports, against 23.2 Mt for Australia or 33%. While recent political clashes between Beijing and Canberra have not slowed the pace of bauxite trade between the two countries, it is very unlikely Australian bauxite could fill any gap Guinea would leave given China already represents 98% of Australian bauxite exports.

Chinese seaborne bauxite imports by origin country (Mt)

Although total volumes to China are up, Guinea was able to reduce its reliance on China in recent years: China’s share in its exports of bauxite decreased from 71% in 2018 to 66% in 2019, 65% in 2020 and 64% in 2021 until now.

Guinea’s bauxite trade with Europe has been on a strong rising trend, jumping from 13.1 Mt in 2017 to 15.1 Mt in 2020. Shipments to Spain, Ireland, Ukraine and Germany in particular have risen. The UAE’s Emirates Global Aluminium is another important client with exports to the company averaging around 350 kt per month.

Guinea bauxite exports by main destination markets (Mt)
What companies could be impacted?

Shares of aluminum producers such as Aluminum Corporation of China, Rusal and Norsk Hydro have already jumped between 4% and 15% on the back of higher aluminum prices.   US aluminum producer Alcoa owns another 45% in Halco Mining. The other 49% of CBG is owned by the Guinean state.

The unravelling of Guinea’s state could also negatively impact Rusal in the longer term. The third largest aluminum producer in the world owns three bauxite mines and one alumina refinery in the country.

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