Introduction to Bauxite

Bauxite is currently the only raw material used in the commercial production of alumina which in turn is converted to aluminium metal. There are many other sources of alumina but these require different processing routes and technologies and at this point in time are not cost competitive. Although the world’s resources are vast, there is a shortage of high quality gibbsitic-bauxite which forms the bulk of Australian Bauxite’s resources.

As a general rule of thumb, it takes around 4 to 5 tonnes of dried bauxite to produce 2 tonnes of alumina, which in turn, provides 1 tonne of aluminium. The conversion of alumina to aluminium is highly energy intensive so the cost of electricity has a significant impact on the price of aluminium. Over the past three decades the Aluminium/Alumina price ratio has been relatively constant averaging 7.2. In contrast the Alumina/Bauxite price ratio rose from 7.3 in the 1980s to 11.6 last decade.

The strong growth in world production of aluminium is driving up demand for bauxite and the Alumina/Bauxite price ratio is falling back to levels of the 1980s.