The Australian Aluminium Council is advocating for the inclusion of bauxite, alumina and aluminium on the Critical Minerals List.
Aluminium is a vital component of green energy technologies, such as solar panels, electric vehicles and batteries, making it one of the most widely used commodities in the energy transition. The metal’s significance has led to its inclusion on the Federal Government’s Strategic Materials List, which contains minerals that are important for the global transition to net zero, but are not currently vulnerable enough to meet the criteria for the Critical Minerals List.
While High Purity Alumina is included in Australia’s Critical Minerals List, bauxite, alumina and aluminium are not. The Australian Aluminium Council (AAC) believes they should be, and is urging the Federal Government to make these inclusions. AAC CEO, Marghanita Johnson, said that Australia’s aluminium industry needs better protection.
“We’ve seen the warning signs coming in the alumina industry today, and that’s the reason that our industry has been vocal in urging the government to recognise the threat to our bauxite and our alumina sectors,” Ms Johnson said.
“In the last 18 months, what we’ve seen is of the six alumina refineries we had, three have been impaired and one has curtailed. We think that’s a strong sign that things are vulnerable.”
Ms Johnson said the AAC is trying to raise the flag before there are further curtailments or other issues in the sector.
“We would rather work constructively with the government now than waiting until it’s too late.”
The AAC is also urging the government to recognise the interdependencies of bauxite and alumina with aluminium. Ms Johnson said classifying only aluminium as a strategic material has led to confusion.
“Bauxite is an internationally traded commodity, alumina is an internationally traded commodity and aluminium is internationally traded. They are not one commodity,” she said.
“We’ve already seen cases of other government policies being misapplied because they didn’t understand that aluminium, being a strategic material, also meant that technically, bauxite and alumina are included. It’s confusing. Let’s keep this as simple as possible: include all three in the Critical Minerals List.”
Meeting global demand
Ms Johnson said demand for aluminium is forecast to almost double by 2050 and therefore global demand for aluminium plus bauxite and alumina is forecast to remain very strong.
“Based on all the resources we have in the ground and the renewable and other energy resources, Australia should be really well-positioned to take advantage of those opportunities,” she said.
“However, what we’ve seen over the last decade is the closure of two aluminium smelters, the closure of one alumina refinery and the curtailment of another.”
Ms Johnson said while the bauxite sector hasn’t seen many closures or curtailments, it has seen growth opportunities taken up by Guinea, not by Australia.
“Our alumina refineries are moving up the global cost curve, and any refining capacity which is displaced from Australia is likely to migrate to countries like Indonesia, where the policies are really framed to attract, retain and grow mining and mineral processing.”
While aluminium is not deemed a critical mineral in Australia, it is listed on critical minerals lists in the US, Canada and Europe. Ms Johnson said this reflects the concern about limited global supply chain diversity.
“Adding aluminium to Australia’s Critical Minerals List will send a really strong signal to our trading partners, across all different parts of the value chain,” she said.
Sector vulnerabilities
The AAC recently released a report The vulnerabilities and opportunities in Australia’s upstream aluminium sectors, highlighting the growing risks to Australia’s domestic upstream supply chain due to increased geopolitical risk combined with rising costs and prolonged regulatory approvals.
Ms Johnson said the report was aimed at understanding Australia’s position compared to international peers regarding critical minerals.
“Historically, I think we thought about bauxite as being a single mineral in the ground,” she said.
“But in fact, bauxite is the name given to multiple different types of ores, and each alumina refinery is designed to take a really specific type of bauxite. It’s not a mix and match-type system.”
Ms Johnson said it has become harder to access Australia’s bauxite resources because of complications in the country’s regulatory processes and the time it’s taking, as well as high energy costs, high labour costs and high capital costs.
“We’re seeing Indonesian refineries, looking to expand alumina refining capacity by around six million tonnes over the next five years, and at the same time, we’re facing mounting costs.
“One of the greatest cost increases over the next five years will come from delays in environmental approval processes, which limit the access to bauxite and limit the quality of the bauxite that we’re able to put through our refineries, which is pushing them further up the cost curve.
“What we’ve seen is Indonesia can approve and build an integrated bauxite mine and alumina refinery faster than we can just approve a mine expansion in Australia. They’re building faster than we can complete regulatory processes.”
Preparing for future challenges
Ms Johnson said while there is no silver bullet to addressing the vulnerabilities in the aluminium supply chain, its inclusion on the Critical Minerals List would help mitigate future risks.
“It would mean we’re included in streamlined regulatory approvals, environmental approvals, enhanced funding for decarbonisation initiatives and support of the development of advanced manufacturing,” she said.
“Additionally, it will support our ability to attract investment in a competitive international market.”
Ms Johnson said Australia is one of the few countries in the world with a complete mine-to-market supply chain.
“Aluminium is also one of the few things you can buy in Australia, which has been mined, refined, smelted, extruded, distributed. You can buy something off the shelf which has come all the way through the value chain in Australia.
“That presents exciting opportunities for both Australia and our global trading partners, to help them as we all navigate the next the energy transition.
“It’s really important that we can continue to have free and fair trade in Australia, so that our downstream markets, can compete within local and global markets.”
Ms Johnson said having that domestic value chain is incredibly important.
“It’s only when you think you might not have it that you realise you don’t know what you’ve got till it’s gone.”
In efforts to demonstrate the importance of Australia’s aluminium supply chain, the AAC has put significant effort into looking at the economic contribution of its vertically integrated supply chain.
“An example of what that study found was that under a hypothetical scenario, the economic impact of the closure of a bauxite mine that employed, say, 600 people would lead to the loss of 10,000 indirect jobs and a $2.7 billion action to GDP. That’s because the bauxite flows into alumina.”
Looking ahead
The Federal Government has committed to supporting Australian green metals, including alumina and aluminium, as part of a priority under its Future Made in Australia framework.
“That’s part of a suite of measures which should help make Australia a clean energy superpower,” Ms Johnson said.
“It should capitalise on Australia’s comparative advantage, boost our investment, boost capability and create jobs.”
Ms Johnson said the AAC is hopeful the Federal Government will also award bauxite, alumina and aluminium critical mineral status.
“We’ve continued to evolve as an industry for more than 70 years, and with a supportive policy framework we can take that bauxite and energy and develop facilities in regional Australia so that can keep providing good jobs for Australians for another 70 years to come.”
