It might be ugly brown rock, but don’t be fooled by bauxite’s appearance.

Bauxite is vital in the production of aluminium — and Australia is the world’s biggest producer.

One ASX-listed bauxite play, Metallica Minerals, is on the cusp of bringing into production its flagship project on Queensland’s Cape York Peninsula.

Metallica’s (ASX:MLM) Urquhart project recently receiving environmental approval from the federal government.

The company is now waiting on final sign-off from the Queensland government and Environmental Authority while progressing approval for a haul road linking the project to port infrastructure at Hey Point.

“We are just waiting on final approvals now and from there we will look go into production at Urquhart,” Metallica chief Simon Slesarewich told Stockhead.

“We will also be able to lock in our off-take [distribution] deals once we know the timing.”

Hear from Metallica Minerals and other ASX-listed resource stocks at the Mining 2017 Resources Convention at the Brisbane Hilton on August 29 and 30.

Bauxite would be shipped to Shandong province in China which dominates world consumption.

“The vast majority of the seaborne bauxite is going to China,” he said. “There is some going to North America and other places but in terms of seaboard trade, the vast majority is going to China.”

Bauxite, a rock formed from a laterite soil severely leached of silica and other soluble materials, is the primary ore used in the production of aluminium.

Mr Slesarewich said Metallica decided to target bauxite production because of aluminium’s growing importance globally.

“When you think about aluminium it is something that is being used every day and is becoming more prevalent in everyday life,” he said.

“There is a shift away from steel to aluminium. From a macro perspective, you are seeing domestic grades of Chinese bauxite deteriorating significantly. They are building smelters primarily focused on imported bauxite.”

The Urquhart bauxite project lies some 5km southwest of Weipa on Queensland’s Cape York Peninsula.

Western Cape York is world–renowned for its extensive deposits of high quality, export-grade pisolitic bauxite.

The project forms part of the Cape York Bauxite and HMS Project, a 50:50 joint venture with private Chinese investor Ozore Resources, which also includes the Urquhart Point HMS project and the Cape York regional exploration project.

Since its formation in 2014, the JV has spent some $10 million to progress development of the Urquhart bauxite project as well as the design and fabrication of the Urquhart Point HMS processing plant, which is now in storage.

Once in production, the company is targeting 5 million to 7 million tonnes per year of bauxite over the coming three to five years.

Bauxite is vital in the production of aluminium. Picture: Metallica Minerals

The project has a mineral resource of 9.5 million tonnes with 6.9 million tonnes in “measured” and “indicated” categories.

Mineral resources are categorised in order of increasing geological confidence as inferred, indicated or measured.

An independent study by consultancy IMC Mining found development of the project had the potential to deliver strong financial returns for about $US1.1 million in costs.

Expected costs were low because no processing was required before the bauxite was shipped overseas.

“It’s a direct shipping bauxite so we don’t need to build an expensive and complicated processing plant,” he said.

Costs were further contained by a model that shifted risk and capital to contractors. In May, the company appointed Brisbane-based LCR Group to undertake all mining and haulage operations for the project.

Mr Slesarewich said there was further opportunity to build on bauxite resources from within the joint venture project.

“Inside the JV there is a large tenement package going up to the northern tip of Australia and that is prospective for bauxite as well so we will look at that as an organic growth opportunity,” he said.

The company would also look at merger and acquisition opportunities.

Shares in Metallica closed yesterday at 6.8c.

Metallica Minerals along with other ASX-listed resource stocks will present at Vertical Events’ premier flagship event, the Mining 2017 Resources Convention, at the Brisbane Hilton on August 29 and 30.