Are booming bauxite prices here to stay?

Australian bauxite prices have jumped to US$95 per DMT due to supply issues and strong Chinese demand
A handful of ASX stocks have benefitted from the price increase
But will prices maintain their momentum through 2025?

Experts believe bauxite, the raw material required for producing aluminium, is gearing up for another record year following the suspension of exports out of Guinea last year.

The 2024 price rally had been brewing all year due to several global disruptions, but the straw that broke the camel’s back came when Guinea blocked bauxite exports by Emirates Global Aluminium, one of the world’s leading aluminium producers accounting for 4% of global supply.

As the second-largest global bauxite producer, the importance of Guinea’s bauxite production cannot be overstated. The nation mined around 87.9Mt in 2023, positioning itself just behind Australia in production volume.

Along with the supply crunch, China’s aluminium smelters have become increasingly reliant on imported bauxite to feed their operations with much of the demand being met by Guinea.

As a result, bauxite prices surpassed the value of a tonne of iron ore for the first time last year.

Guinea bauxite prices have risen to US$120 per DMT, a 74% increase since January 2023 while Australian prices have jumped to US$95 per DMT, reflecting a 104% surge over the same period.

While bauxite and alumina producers on the ASX are few and far between, a handful of stocks have benefitted from last year’s surprise turn in the market.

High bauxite prices mean greater market dynamics

Higher commodity prices generally provide companies with greater potential to raise funds for drilling and exploration activities, leading to a healthy wave of market action including M&A deals and strategic partnerships/joint ventures.

Western Yilgarn (ASX:WYX) is an early-stage mineral exploration company looking to take advantage of improving market conditions by restarting activities at its Julimar West project in WA’s Darling Range.

The project area has a long history in prospective bauxite mineralisation dating back to 1968 and through to 2011 by various companies including Hancock Prospecting and Rio Tinto.

WYX is currently in the process of preparing a maiden resource estimate at its Julimar project based on historical work and is looking to identify high priority targets that could deliver a mine.

In an interview with Stockhead WYX executive chairman Pedro Kastellorizos said he expects the increase in bauxite prices to continue in 2025 with some Chinese alumina refineries curtailing production on the back of domestic bauxite shortages.

The price of Guinean bauxite is prompting Chinese smelters to look more closely at Australia to diversify their supply.

“We have already received interest from the overseas market in our project due to its close proximity to existing bauxite mining operations and the fact that we have announced we are preparing a resource,” he said.

“That is a pretty good indicator of the level of demand for new bauxite supply.”

ASX stocks with bauxite exposure

Brazil explorer Equinox Resources (ASX:EQN) has found high grades of bauxite at the Rio Negro prospect within its wider Campo Grande project, following a 14 RC hole drilling campaign last year.

The program delivered a peak bauxite grade of 42.1%, reinforcing Rio Negro’s potential as a multi-commodity discovery.

What’s even better is the fact that the prospect represents only 1% of the broader 1,800km2 landholding, with plenty of upside yet to be uncovered.

Over in Guinea, Arrow Minerals (ASX:AMD) is looking to fast-track development work at the Niagara bauxite project after a $7m capital raise to institutional and sophisticated investors at the end of January.

AMD managing director David Flanagan said the raising positions Arrow with a robust balance sheet to finalise its maiden mineral resource estimate, complete a scoping study and undertake further drilling.

Drilling undertaken at Niagara, located within trucking distance to the Trans-Guinean Railway, recently outlined mineralisation over 14km2 with many more targets yet to be tested.

An exploration target of 170 – 340Mt at a grade range of 40 – 46% aluminium oxide and 1 – 4% silica has been established, with results of 11 scout holes having identified the presence of high-grade bauxite at the Southwest/Vale prospect along strike of the Niagara permit.

But the only pure play ASX bauxite producer on the ASX is Metro Mining (ASX:MMI) who tabled record Q4 shipments of 2.1 million wet metric tonnes (WMT) – up 22% year on year – in December from its Bauxite Hills mine in Queensland.

“That was achieved during a period of rightness in the traded bauxite market and aluminium value chain as benchmark prices for bauxite and alumina rose strongly towards the end of the quarter,” the company said in its latest market update.

Metro’s average delivered prices were up 32% year-on year and approximately 16% over Q3 with quarterly contract prices expected to increase further in Q2 2025 underpinned by offtake contracts from a high-quality customer portfolio.

At Stockhead we tell it like it is. While Western Yilgarn and Equinox Resources are Stockhead advertisers, they did not sponsor this article.