Chalco’s Dependence on Guinea for Bauxite: Risks and Opportunities for the Chinese Aluminum Giant

Guinea has emerged as a crucial supplier of bauxite to China, providing 70% of the country’s bauxite imports last year. Aluminum Corp. of China Ltd. (Chalco) expressed concern about potential risks to its bauxite shipments from Guinea due to its heavy dependence on the country for raw materials.

To mitigate these risks, Chalco plans to ensure continuity of supply from its sole mine in Guinea while exploring opportunities to develop additional mines in the north of the country. The company also aims to collaborate on bauxite projects in other regions and improve domestic supply.

Despite its net income growing 60% last year, Chalco remains cautious due to uncertain global economic conditions and geopolitical risks affecting commodity markets. Bloomberg Intelligence analyst Michelle Leung warned that China could eventually rely on Guinea for 90% of its bauxite imports. She suggested that Guinea could follow Indonesia’s lead by requiring foreign companies to set up refineries locally.

However, challenges such as insufficient demand and weak expectations are still present in the domestic market, which could affect Chalco’s business in the long run. In addition, political instability and frequent strikes in Guinea could disrupt supply fluctuations at any time.