Rusal looks to Fiji as source of bauxite supplies

OLEG DERIPASKA'S Rusal, the world's biggest aluminium producer, has given Rio Tinto food for thought on the future mix of bauxite supplies to their Queensland Alumina Ltd joint venture at Gladstone in Queensland.

By InvestSMART · 17 Jun 2011

By InvestSMART ·
17 Jun 2011

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Rusal has thrown up the potential for Fiji to become a new source of bauxite to cover its needs at the operation, of which it owns 20 per cent, with Rio Tinto holding the remaining 80 per cent.

In meetings this week with Fiji's Ministry of Lands and Mineral Resources, a Rusal delegation said the Russian group wanted to explore potential bauxite mining and export opportunities in the country.

Queensland Alumina is currently wholly supplied by bauxite that comes from Rio Tinto's Weipa/Ely operations in Queensland, with the only other regional choice for Rusal being Rio Tinto's Gove operation in the Northern Territory.

Generally, about four to six tonnes of bauxite is consumed in the making of the two tonnes of alumina it takes to make one tonne of aluminium.

Rio Tinto's control over Australia's north-eastern bauxite/alumina industry became complete in 2007 with its acquisition of Canada's Alcan.

The Fiji option under investigation by Rusal comes as the privately held Chinese aluminium group Xinfa and a local group, Aurum, start mining at an initially small-scale bauxite operation at Nawailevu on Vanua Levu, Fiji's second-biggest island.

Xinfa is an 18 per cent shareholder in the ASX-listed Cape Alumina, the group that is planning a development of its Bauxite Hills project on west Cape York, to the north of Rio Tinto's Weipa operation.

Cape Alumina had planned an earlier development of its Pisolite Hills bauxite project on Cape York but that fell victim to Queensland's new laws protecting "wild rivers".

Rusal has raised the prospect that it could work with the Xinfa/Aurum partners on developing a new bauxite industry in Fiji.

Fiji was last a bauxite producer from operations on Vanua Levu in the early 1970s.

Apart from possibly turning to Fiji for its bauxite needs at Queensland Alumina, Rusal has previously flagged its interest in bauxite mining opportunities in Indonesia and Vietnam, again as an alternative to supplies from the Rio Tinto "system".

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Frequently Asked Questions about this Article…

What is Rusal proposing in Fiji and why is this important for investors?

Rusal has met with Fiji’s Ministry of Lands and Mineral Resources to explore potential bauxite mining and export opportunities in Fiji. The company is investigating Fiji as a possible new source of bauxite to help supply Queensland Alumina Ltd (QAL), where Rusal owns 20% and Rio Tinto owns 80%. For investors, this is notable because it could change regional bauxite supply dynamics and potentially reduce reliance on Rio Tinto’s existing Australian sources.

How is Queensland Alumina Ltd (QAL) currently supplied with bauxite?

QAL is currently wholly supplied by bauxite from Rio Tinto’s Weipa/Ely operations in Queensland. The only other nearby regional source mentioned is Rio Tinto’s Gove operation in the Northern Territory.

Could Fiji realistically become a commercial bauxite supplier again?

Fiji was last a bauxite producer in the early 1970s, and Rusal is now exploring whether mining and export opportunities exist there. While the article confirms discussions and early interest, any return to commercial production would depend on further exploration, development plans, regulatory approvals and potential partnerships—factors investors should monitor.

Who are Xinfa and Aurum and what role could they play in Fiji bauxite development?

Xinfa, a privately held Chinese aluminium group, and a local group called Aurum have started small-scale bauxite mining at Nawailevu on Vanua Levu in Fiji. The article notes Rusal has raised the prospect of working with the Xinfa/Aurum partners on developing a new bauxite industry in Fiji, which could create partnership or consolidation opportunities in the region.

What is Cape Alumina and how is it connected to these developments?

Cape Alumina is an ASX-listed company planning the Bauxite Hills project on west Cape York, north of Rio Tinto’s Weipa operation. Xinfa is an 18% shareholder in Cape Alumina. The article also notes Cape Alumina’s earlier Pisolite Hills project was halted due to Queensland’s ‘wild rivers’ laws, demonstrating the regulatory risks in regional bauxite projects.

How much bauxite is required to make aluminium?

The article states that generally about 4 to 6 tonnes of bauxite are consumed to produce the two tonnes of alumina needed to make one tonne of aluminium. This bauxite-to-alumina-to-aluminium conversion is a useful rule of thumb for investors watching supply volumes.

Has Rusal looked at other countries besides Fiji for bauxite supplies?

Yes. The article says Rusal has previously flagged interest in bauxite mining opportunities in Indonesia and Vietnam as alternatives to supplies from the Rio Tinto ‘system’.

What should everyday investors watch next regarding Rusal’s Fiji bauxite exploration?

Investors should watch for official updates on exploration results, any formal partnerships (for example with Xinfa/Aurum), development proposals or export plans, and statements from QAL and Rio Tinto. They should also monitor regulatory decisions in Fiji and any timeline for re-establishing commercial bauxite production, since Fiji last produced bauxite in the early 1970s.