Australian bauxite miners are pinning their hopes on a turnaround in the struggling industry, with a new market likely to open up in China.
Indonesia has long satisfied China’s growing hunger for bauxite to feed its aluminium smelters, which has prevented Australian companies from entering the market.
Now that might change, with Indonesia expected to endorse tough, new restrictions on exports from January. Peter Kopetz from Stockbroking agency State One Capital says he has been closely watching the bauxite price increase in recent months.
“Some of the projects which maybe were marginal beforehand are becoming more economic as the price goes up and we’ve seen a gradual price increase over the last 12, 24 months and we see that continuing,” he said.
“There’s a push for Australia to become a more prominent player in the bauxite industry; we’ve got the quality, we’re close to China and of course we can supply long-term the raw materials to whatever china needs.”
Bauxite mining is not new to Western Australia, with the commodity being processed into aluminium for 50 years.
But the bauxite price has never been high enough to support export of the bulk commodity.
Mr Kopetz believes Indonesia’s moves away from the market will continue to push up the price of the mineral.
“There is a definite niche in the market and Australia is poised to fill that void with the projects that are in the pipeline at the moment,” he said.
Why has Indonesia changed its tune?
The Indonesian Government has decided to slash its bauxite exports and hike taxes in a bid to set up its own processing industry.
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