Bauxite Mining Market

The global bauxite mining market is expected to register a 4.34% CAGR during the forecast period, 2019–2025. The growth of the global bauxite mining market is driven by the increasing demand for aluminum in the automotive industry, the growing construction industry in Asia-Pacific, and the reissue of bauxite mining license in Malaysia. The increasing investments in bauxite mining across the globe are expected to create lucrative opportunities for the players operating in the global market during the forecast period. However, the environmental and health hazards associated with bauxite mining may restrain the market growth during the forecast period.

Bauxite is a key raw material required for the production of primary aluminum. To produce one ton of alumina, approximately two to three tons of bauxite is required, as one ton of bauxite contains 30–54% alumina. Therefore, growth in the demand for aluminum across different end-use industries is likely to drive the growth of the global bauxite mining market.

The automotive industry is one of the major end users of aluminum. Currently, the trend observed in the global automotive industry is the manufacturing of lightweight automobiles due to the increasing regulations pertaining to carbon emissions. According to experts, a 10% reduction in the overall weight of automobiles results in a 6–8% reduction in fuel consumption. Less fuel consumption increases the fuel efficiency of the vehicle and thus helps to reduce carbon emissions. To reduce the overall weight of the automobile, heavy metal parts are increasingly being replaced by lightweight metal and plastic components by automotive manufacturers.

North America and Europe have introduced strict CO2 emission regulations, and non-compliance with the corporate average fuel efficiency (CAFE) regulations by the manufacturers can lead to penalties by the respective governments. The US Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) have developed a national program for Green House Gas Emission and Fuel Economy Standards to influence automobile manufacturers to reduce the weight of the vehicles and reduce CO2 emissions. The CO2 emission target for new passenger cars is defined as 95g CO2/km for 2020 as compared to 118.5 g CO2/km emission target in 2017. These regulations have also been implemented in Japan and China, and similar regulations are expected to be implemented in the Middle East and South East Asia. In addition, the Zero Emission Vehicle (ZEV) program in California and the New Energy Vehicle (NEV) program in China, which are planned to be implemented after 2020, are expected to boost demand for lightweight metals, including aluminum.

Aluminum is widely used in the automotive industry as a substitute for steel as it is cost-effective, reliable, and lightweight, which helps reduce the overall weight of vehicles and, in turn, increase the fuel efficiency. The key automotive original equipment manufacturers (OEMs), such as Audi, Ford, BMW, Mercedes, and Land Rover, are increasingly using aluminum in vehicle production to meet the environmental standards for fuel efficiency and carbon emissions. Aluminum alloys exhibit low specific gravity and high strength and therefore are used to manufacture automotive parts, such as bumper systems, door beams, exterior components, and frame members. The primary role of a bumper system is to absorb the impact force by deforming itself. For this purpose, high-strength materials such as the 7000-series (Al-Zn-Mg system) alloys and cross-sectional shapes have been developed to absorb more energy in the lightweight structure. Door beams are also one of the key safety members for protection from the lateral collision of automobiles and are installed in almost all automobile doors. The increasing safety standards globally is projected to boost the demand for aluminum products. Thus, the increasing demand for aluminum in the automotive industry is expected to drive the growth of the global bauxite mining market during the forecast period.

The development of electric vehicles is a significant breakthrough in the automotive industry. The regulatory laws put forth by international conventions and conferences such as the Kyoto Protocol, the Montreal Protocol, and the Paris Agreement, coupled with the growing environmental concerns of the consumers and manufacturers part is favoring the production and increasing penetration for electric vehicles globally. This regulatory trend is expected to continue in the future and is likely to fuel e-mobility, which is expected to account for 30% of global automotive production in the coming years. This, in turn, is expected to boost the demand for aluminum, as most of the manufacturers of battery enclosures used in the battery electric vehicles (BEVs) are using aluminum alloys. Many of the e-battery manufacturers, such as Audi, BMW, and Daimler, use aluminum in their battery enclosures. Although Nissan, a leading automaker, uses a steel battery enclosure for its Leaf EV, it will be shifting to an aluminum battery enclosure for its next BEV in 2020. This is likely to fuel the growth of the global bauxite mining market in the coming years as more and more electric vehicle manufacturers are incorporating aluminum extruded products during vehicle assembly.

As per the data gathered by the world trade organization and Wantstats analysis, the penetration of electric vehicles is expected to increase significantly in the coming years. The sales of battery electric vehicles are expected to increase from 2% in 2015 to 12% in 2025. Meanwhile, the sales of plug-in hybrid electric vehicles are likely to increase to 3% in 2025, and the sales of full and mild hybrid vehicles are expected to increase by 20% by 2025 from 1% in 2015. Hence, the impact of increasing demand for aluminum in the automotive industry on the global bauxite mining market is expected to remain high over the forecast period.

Malaysia was once the biggest bauxite supplier to China, with shipments reaching nearly 3.5 million tons a month by the end of 2015. The east coast port city of Kuantan in Pahang has vast bauxite ore deposits. However, in 2015-16, a ban was implemented on bauxite mining in the country in response to complaints by residents regarding pollution due to irresponsible bauxite ore mining operations and water contamination concerns. Although the ban was initially intended to last for only a few months, the miners’ failure to clear stockpiles at the port of Kuantan led to the Malaysian government’s decision to extend the ban several times.

On 4 November 2019, the Malaysian government announced that it would issue bauxite mining licenses to companies in the first quarter of 2020. The government lifted the ban with a condition for bauxite miners to conduct an environmental impact study on the mining sites to receive licenses and restart mining operations. Currently, strict standard operating procedures (SOP), which include capping monthly bauxite exports at 600,000 tons and creating a buffer zone between mining sites and residential areas, have been introduced. In addition to these precautionary steps, the government also announced that it would commence a six-month monitoring process once the licenses are issued in the first quarter of 2020. Such developments and the precautionary steps introduced to prevent harm to the environment and human health are likely to increase bauxite mining operations in the country. Thus, the reissue of bauxite mining licenses in Malaysia is expected to create an opportunity for the players operating in the global bauxite mining market during the forecast period.

Bauxite mining has a direct impact on the environment as it contributes to the pollution of air, water sources, and soil. The primary concern of bauxite mining is the release of airborne particulate matter into the surrounding. Natural bauxite ore contains iron oxide, aluminum hydroxide, titanium oxide, and reactive silica, which can negatively affect human health and the environment. The deposit of these particles on vegetation, make it unfit for human and livestock consumption. Excessive exposure of aluminum hydroxide may cause redness and peeling of the skin, itching in the eyes, and coughing. Similarly, iron oxide in bauxite can potentially cause iron overload, leading to hepatic, cardio-myopathy, gastrointestinal, and joint and skin diseases and illnesses. Additionally, exposure to bauxite dust can cause neurological problems such as chronic brain syndrome, forgetfulness, or Alzheimer's and Parkinson's disease in adults. Thus, the environmental and health hazards associated with bauxite mining are expected to restrain the growth of the global bauxite mining market during the forecast period

The above mentioned hazards have led to the regulatory pressure by several regulatory bodies on bauxite mining, which in turn creates a negative atmosphere for the bauxite miners. For instance, the Republic of Guinea’s Office of Environmental Studies and Evaluation (BGEEE) conducts inspection of bauxite mining sites periodically and introduces limits on the production of bauxites whenever necessary or give approvals only upon the positive sustainability reports. Hence, the impact of the environmental and health hazards associated with bauxite mining on the global bauxite mining market is expected to remain high throughout the forecast period.