Beware if you get presented with an analysis from a bauxite deposit and all it shows you is total alumina. Total alumina is important but, a bit like iron ore, it is not the whole story.
We seems to be doing more and more work assessing bauxite deposits.This reflects a change in the market away from commodities such as iron ore and carbon steel-related materials to their substitutes. This is not really surprising. The high prices for iron ore over recent years encouraged new supply, but also increased substitution. You guessed it. The effect is to compound downward price pressure once demand turned. We now see iron ore at levels not seen for a number of years, with futures for 62% CFR China indicating sustained depressed prices for some time to come.
Welcome to the world of bauxite, the raw material for aluminium. Substitution for steel (cars) and copper (conductors) has seen sustained demand and pricing for alumina. There is a shift in the exploration industry to acquiring new deposits with resources appearing in places not previously widely accepted as being economic. ABx Resources deposits in Tasmania might be a good example.
To an extent, alumina ores can be thought of in a similar way to iron ores. The DSO (Direct Shipping Ore) benchmark for iron is about 62% Fe. Higher grades can attract a premium price and lower grades a penalty. The same is true for alumina, although the benchmark grades tends to be lower for alumina at around 48%.
Like iron ore, it is the impurities that are often more important to consider than the head grade. I’ll talk about these impurities separately in another post. For this post, I’ll simply focus on this head grade figure. This is the larger number that is shown at the top of many assays. It is often the only number in older assays, and it can be misleading.
Not all alumina is available for making aluminium. Not all alumina that is available for making aluminium is of a type that you want to use in a factory to make aluminium. Confused?…..
The table below shows total alumina analyses for two samples. These are real examples. The total alumina in both samples is quite high. That’s good, right – NO! Only KTV01 is acceptable.
Firstly, analysis of the second sample (KTV02) shows a large proportion of the total alumina is contained in minerals where that alumina is not available to become aluminium product. The available alumina is low compared to the total alumina. This can happen, for example, where alumina in the rock is locked up in minerals that make it too expensive to extract – ie it is not available to the refinery and/ore smelter.
Secondly, a sample may contain unacceptably high levels of reactive silica. This is silica that reacts and consumes chemicals used in the Bayer process to extract aluminium. The consumption of these chemicals increases the cost of processing each ton of alumina.
As such, beware of older or incomplete assays which only show total alumina. A high total alumina is not always indicative of a good ore. A general rule is that you want the ratio of available alumina to reactive silica to be >10. You cant ignore total alumina, but if your ratios are right then an ore with total alumina as low as the mid-20%’s can be more profitable than one yielding a total alumina result in excess of 49%.
Of course, this is not the whole story. There are other factors to consider, but I’ll talk about these separately.
Bauxite analyses showing ratio of available alumina against reactive silica.