March 14, 2016 / 6:43 AM / 3 years ago

China Hongqiao starts alumina output in Indonesia, up bauxite from Guinea

* First phase of alumina plant in Indonesia on trial runs

* Bauxite from Guinea expected at 15 mln tonnes this year

* Not keen to buy bauxite from Malaysia, India, Indonesia

By Polly Yam

HONG KONG, March 14 (Reuters) - China Hongqiao Group Limited , the top primary aluminium producer in the country, is running a trial production at its one million tonnes-a-year alumina plant in Indonesia and will complete building another 1 million tonnes by the end of 2017, its Chief Executive Officer said on Monday.

The capacity is the first- and second-phase of a 4 million-tonne-a-year plant. Zhang Bo said the company had no timetable to build the remaining two million tonnes and the construction would be determined by market situations.

Alumina is a material for production of primary aluminium, used in everything from soda cans and window frames to airplanes and cars.

The production in Indonesia uses local bauxite, ores to be refined into alumina. Hongqiao produces alumina in China using bauxite imports mostly.

Zhang said the company’s bauxite imports from Malaysia, India and Indonesia would fall sharply as supplies from its bauxite mining project in Guinea in Africa rose. The Guinea project started shipments to Hongqiao in September 2015.

“In the future, our demand (of bauxite) from Indonesia, Malaysia and India will be very little,” Zhang said at a news conference in Hong Kong on Monday.

The company expects shipments of 15 million tonnes of bauxite from the Guinea project this year and 30 million tonnes in 2017, Zhang said.

The 2016 amount is equivalent to about a quarter of China’s imports last year. Malaysia was the top bauxite supplier to China last year, followed by Australia and India.

Higher supplies of alumina from the Indonesian plant and of bauxite from Guinea would support Hongqiao’s aluminium production in China, he said.

Hongqiao produced 4.28 million tonnes of aluminium last year, up 36.8 percent from the previous year, according to its annual results.

Aluminium capacity rose 28.8 percent from a year earlier to 5.186 million tonnes in 2015, which Zhang said may rise further to 6 million tonnes by the end of this year, depending on market situations.

Zhang expects China’s aluminium market to stabilize this year after prices fell to multi-year lows in 2015 which cut Hongqiao’s profits.

In a bid to support aluminium prices, Hongqiao’s parent, Weiqiao Aluminium & Electricity and other five large aluminium producers formed a joint venture for stockpiling the metal, Zhang said.

The five companies include Aluminium Corp of China (Chinalco), State Power Investment Corporation, Yunnan Aluminium, Jiugang group and Jinjiang group.

Zhang said Chinalco holds a 30 percent stake in the joint venture, Weiqiao and State Power each own 20 percent and the rest each hold 10 percent.

He declined to provide details of the commercial stockpiling plan. (Reporting by Polly Yam; Editing by Michael Perry)

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