This article is a sponsored feature from Mining.com.au partner Metro Mining Limited. It is not financial advice. Talk to a registered financial expert before making investment decisions.
Metro Mining (ASX:MMI) is working to optimise production at its flagship Bauxite Hills Mine in Queensland as China looks closer to home to bolster its declining supply.
Having completed the ramp up to its targeted 7 million tonnes per annum in the second half of last year, Metro is anticipating a full year of expanded nameplate production.
CEO Simon Wensley tells Mining.com.au the company witnessed some good results in the final quarter of 2024, which demonstrated the run rates it was expecting to see.
“This will be the first year where we’ve really had that full expansion available to us all through the year,” he says. “So this year’s plan is around 6.5 to 7 million tonnes.”
Last year shipments reached 5.7 million wet metric tonnes, which represents a 24% increase over the previous year.
At the same time, 2025 contract prices are up over 2024 as demand continues to climb and unpredictable supply disrupts the market.
“So combining our higher volume with the higher average prices means we should see very strong cashflow from Metro this year,” Wensley notes.
The recently completed expansion puts Metro on a pathway to becoming the lowest global delivered cost supplier to China, particularly after the company negotiated lower contract freight of around US$3 ($4.69) a tonne for the next three years.
Shaw and Partners Head of Research Andrew Hines says in a March 2025 research report the combination of higher prices and lower costs will see margins expand.
“Our forecasts have the site EBITDA margin at $30 per wet metric tonne in CY25,” he says.
“At these margins, the company is hugely cashflow positive – we forecast Metro generating $165 million free cashflow in CY25, which is not yet priced.”
Hines says the same dynamic that caused iron ore prices to soar from less than US$50 a tonne in the early 2000s to over US$100 a tonne is now happening in the bauxite market.
Global supply squeeze opens doors
“Bauxite pricing has increased because of strong demand from China, coupled with declining Chinese domestic supply, Indonesian export bans, and supply disruptions in Guinea (notably GAC export bans, which are yet to be resolved),” he says.
A dispute between the Guinea Government and Emirates Global Aluminium has restricted exports from subsidiary Guinea Alumina Corporation’s (GAC) bauxite mine and has also reportedly resulted in supply to EGA being restricted from other Guinea mines.
Without bauxite there is no aluminium production. About two and a half to three tonnes of the red ore is required to make one tonne of alumina, and two tonnes of alumina is needed to make one tonne of aluminium.
Wensley was recently in China negotiating prices for the June quarter, with Metro’s open contract pricing expected to climb by over 25%.
Around 80% of Metro’s 2025 shipments are open, while 20% are on legacy fixed price contracts. In 2026, the percentage of contracts that are open will increase to 93%.
Wensley says that in the past 50 or 60 years China has been a big producer of bauxite, but the country’s resources have been dwindling and the quality has been declining.
“At the same time that their aluminium industry has been growing, their bauxite supply has been going the other way,” he tells this news service.
This means China needs to secure more supply from elsewhere, and Australia and West Africa are the two biggest suppliers.
Guinea is the world’s largest exporter, mainly to China, and Australia is the second largest producer and exporter, according to the Australian Aluminium Council.
Australia currently accounts for 25% of global bauxite exports, with the top importer being China – which takes 98% of the country’s supply.
In 2024, bauxite imports into China marked a third consecutive record, rising 14% year over year to 159 million tonnes.
Strategic edge in a shifting market
“We’re just a relatively small 7-million-tonne player in that market, but we have a good grade bauxite, we’re relatively near the markets and we have a good low-cost structure as well. So we can compete quite efficiently in that market,” Wensley says.
“Based on the people who are talking to us about existing refineries or new ones that they want to build, we could sell probably double or triple what we’re producing at the moment.
“So there’s certainly strategic demand for it and they’re looking for a juxtaposition between West Africa, which obviously is higher risk and further away, versus Australia, which is closer and has a geopolitical benefit over those West African countries.”
Metro has locked down 6.9 million wet metric tonnes of offtake contracts for this year, expanding its customer base to include the Aluminum Corporation of China (HKG:2600) and Emirates Global Aluminium.
The company also has supply contracts in place with China’s Shandong Xinfa Aluminum and Shandong Lubei Chemcal (SSE:600727).
Besides China, countries like Indonesia, India, the Middle East and Malaysia are also all looking to grow their respective aluminium industries.
Annual global aluminium demand is growing at about 3-4%, which equates to around 3 or 4 million tonnes of additional demand each year.
“I think India is probably the next cab off the rank. Maybe not next year, but we’re looking in the five-year timeframe,” Wensley says.
“Someone is going to have to take on the mantle of growth from China. We’re seeing aluminium smelters and refineries planned and now being built in India.
“So I think that could be the next wave of demand for traded bauxite there.”
The expansion opportunity
The focus now for Metro is on debottlenecking operations to increase production and shipments to 8 million tonnes, as well as reigniting exploration to identify new resources.
“We haven’t really done much exploration in the last few years as we’ve been a bit tight on cash, but this year we’ll be ramping that up to try and add more resources for the end of life,” Wensley notes.
The focus of debottlenecking activities will be on barge size and tug optimisation. Metro is progressing a Feasibility Study into the expansion of its barge loading facility.
Given aluminium’s importance to the clean energy transition, Metro would like to see bauxite recognised as a critical mineral.
Europe and the US already include aluminium and bauxite on their respective lists of critical minerals.
Aluminium is a key component in solar photovoltaic systems, wind, hydro, concentrating solar-thermal power, bioenergy, geothermal, nuclear, electricity networks, electric vehicles, battery storage, and hydrogen.
“What we would like to see from a bauxite perspective is for the government to rethink its strategy on critical minerals, to adjust the definitions of that, because of its role in underpinning aluminium, which is an incredibly important part of this energy transition,” Wensley says.
“We’d like to see a critical mineral status, not necessarily on the same basis that we’ve got critical minerals at the moment, but a critical mineral status that allows us to benefit from a bit more attention, a bit more of a coordination effort within the departments that we speak to – from approvals through to expansions, and also to be able to attract overseas capital.”
Metro has been collaborating with the Australian Aluminium Council, which in turn has been in talks with government representatives to emphasise the importance of the aluminium industry to Australia – which is one of few countries with a long-running vertically integrated industry.
Write to Angela East at Mining.com.au
Images: Mining.com.au & Metro Mining
