Ashapura bauxite sales to surge

Ashapura Minechem expects to sell 29 per cent more bauxite this year to its clients including Alcoa Inc and Alcan Inc after a strike in Guinea cut supply of the mineral used to make alumina.

Ashapura may export as much as 4 million tonne of metal-grade bauxite in the year ending March 31 to customers in the US, China and Europe, said Hemul Shah, chief executive of the bauxite business at the Mumbai-based company.

"We are seeing an opportunity to sell more bauxite to refineries in the U.S. Gulf, Germany and China,'' Shah said in an interview today. "We were hoping to export about 3.1 million tonne. With the strike in Guinea, we may end up shipping 4 million tonne."

Aluminum gained the most in more than three months in London yesterday after protests in Guinea, the West African country that has one third of the world's bauxite, the key raw material for making the lightweight metal.

Guinean President Lansana Conté declared martial law in the country and deployed security forces and tanks after the main trade unions resumed a general strike, Agence France-Presse reported, citing residents.

Melbourne-based BHP Billiton, the world's largest mining company, began evacuating its 20 staff from Guinea. OAO Russian Aluminium and Alcoa, the world's largest aluminum producer, said their operations were affected. Global Alumina Corporation, the developer of a $2.8 billion alumina refinery in Guinea, said work was "temporarily halted."

Labor unions in Guinea staged an 18-day strike last month to protest against corruption and food-price increases and demand the resignation of Conté. The strike resumed at the weekend after Conté appointed a close ally as his new prime minister, AFP reported.

"The strike has led to a severe shortage of bauxite,'' Shah said. "Refiners are out to buy any quantity that's available in the open market.''

The price of bauxite has risen "to some extent,'' Shah said without elaborating. Ashapura was selling bauxite to Chinese refiners at $50 a metric ton on a cost and freight basis and at $65 a ton to U.S. buyers, he said. The differential is because of higher freight costs to the U.S.

"Bauxite prices will remain firm as long as there is a tightness in supply,'' Shah said.

Aluminum for delivery in three months on the London Metal Exchange gained $113, or 4.2 per cent, to $2,820 a ton yesterday. Prices of alumina, which is smelted to make the metal, may also rise on reduced bauxite supply, C R Pradhan, chairman at National Aluminium Co, India's biggest alumina producer, said.

"I would think alumina prices will go up until May since it will take at least another month for production to stabilise in Guinea,'' he said by phone from Bhubaneswar. "It may rise as high as $500 a ton. After that there may be a fall in prices, but we don't expect a free fall.''