As domestic bauxite reserves are gradually exhausted, the share of imported ore will increase further in the future. By 2025, it may reach 75%, and import sources will be further concentrated in Guinea. In 2025, imported ore from Guinea may account for 54% of China's total bauxite demand.

The Guinean government owns part of the shares in domestic mining projects. The Guinean government has the will and ability to interfere with bauxite prices to obtain more economic benefits, and the level of bauxite profits is expected to increase.

Guotai Junan Research predicts that in 2024, domestic safety production and ecological protection policies will continue to restrict the commencement of bauxite mines. Domestic bauxite resources will become increasingly tight, and a significant portion of bauxite demand will shift to imported mines. The unit consumption of using imported ore to produce alumina is around 2.6, which is significantly higher than 2.3 for domestic mines, driving the growth rate of bauxite demand to reach 9.5%.

Guinea's and Australia's exports to China grew by 13.8% and 16.1%, respectively. The domestic bauxite supply and demand gap is expected to widen to -15.51 million tons in 2024, and bauxite prices will rise or fall easily.

Domestic bauxite resources are becoming increasingly tight, import dependency is increasing, pricing power is shifting away, bauxite prices have been bullish for a long time, and profits in the bauxite industry are expected to increase. Under the trend of tight supply of bauxite and high prices, the advantages of smelting companies in resource-side layout may expand, which is expected to control costs and increase profits.

Guotai Junan Securities research suggests focusing on aluminum smelting companies in the Chinese aluminum industry with high bauxite self-sufficiency rates.

Companies related to the aluminum industry concept:

Hongqiao, China (01378): Participates in Guinea's “Win Alliance” project. Every year, more than 40 million tons of bauxite are transported back to the country through the Boke Port to Yantai Port route, helping Guinea quickly become the world's largest exporter of bauxite.

China Aluminum (02600): Construction of the Bofa mine in Guinea began in 2018. By 2022, the Bofa mine produced 13.55 million tons of bauxite per year, increasing the bauxite self-sufficiency rate of China Aluminum to 68%. Smelting companies with high bauxite self-sufficiency rates can mitigate the impact of rising bauxite prices and increase profits.