Looming alumina: what’s in store in 2024?

When investing in commodities and those who mine them, there are the popular metals (think lithium, gold, and copper, for example), the lesser-known metals (gallium, germanium, and kaolin), and the rising stars (rare earths and platinum group elements). 

And then there’s alumina. 

It’s a commodity that you’ve likely heard little about, but those who know the ins and outs of the product are continually touting its importance. 

It seems, however, that 2023 has become something of a launching platform for lesser-known commodities. As the world begins to better understand new technologies, renewable energy, and decarbonisation, investors are cluing up to just how many elements are required for the future. 

Among these is alumina, which, while somewhat stagnant in 2023, is forecast to explode in the decades to come. 

Alumina? I barely know ‘er

Alumina, also known as aluminium oxide, is a synthetic white or sometimes colourless crystal that does not occur naturally in the ground. Rather, it typically comes as a by-product of bauxite production.

It’s one of the hardest engineered ceramics on the planet, with strong resistance to abrasion and wear, a high melting point, and ‘excellent’ thermal conductivity, according to engineering ceramics specialist Syalons. 

This means alumina has widespread applications in mining and exploration, as well as military armour plating, vehicle refinement, and high-temperature industrial production environments like kilns and furnaces. 

More than this, alumina is used to smelt aluminium, and according to Geoscience Australia, more than 90% of the world’s bauxite production is used for the primary purpose of refining alumina. 

Alumina is starting to pick up further traction as an investment opportunity thanks to the applications of its 99.99%-purity form — known simply as high-purity alumina (HPA) or 4N — in lithium-ion batteries. 

In this context, HPA is used in products like electric vehicles to coat parts of the battery that separate the cathode and the anode. 

Further to this, HPA is used in the manufacture of LED lighting and semiconductor substrates.

This high-purity form of alumina is predominantly refined from kaolin clays.

Alumina is listed on the Australian government’s Critical Minerals List, and Geoscience Australia estimates there are currently some 16.7 million tonnes of economic demonstrated alumina resources in the country. 

A sideways market or a launching pad?

Despite alumina’s importance to so many sectors and its crucial role in aluminium production, alumina futures have moved largely sideways over 2023. 

Alumina spot prices have sat between US$330 and US$360 per tonne for the majority of the year but dipped to around US$320 per tonne in December, according to macroeconomic analyst FocusEconomics. 

However, the consensus among analysts seems to be that demand for alumina — and, in particular, for HPA — is set to soar over the rest of the 2020s. 

Grand View Research, for example, says the global HPA market was valued at around US$3.18 billion in 2022 but is expected to increase at a compound annual growth rate (CAGR) of 22.2% from 2023 to 2030, driven largely by the growing demand for electric vehicles and battery metals. 

And this bodes well for Australian explorers and developers given that Australia produces a massive chunk of the world’s total alumina supply

In fact, Geoscience Australia says three refineries in Western Australia alone account for 45% of Australia’s total alumina and 11% of global production, making the state the largest source of alumina on the planet. 

It’s no wonder, then, that even alumina-adjacent products have been eyed by the Australian government as crucial for the future of technology and carbon emissions reduction. 

For example, fluorine is a core component of steelmaking and, alongside alumina, is crucial to the aluminium smelting process. 

Fluorine was in December added to the government’s Critical Minerals List, meaning potential producers have been thrust into the vision of investors and government funding agencies alike. 

ABx Group (ASX:ABX) Managing Director Mark Cooksey says the addition of fluorine to the Critical Minerals List shows that the Australian government has recognised the potential future demand for this element.

“There are supply chain issues,” Cooksey tells Mining.com.au

“Currently, Australia doesn’t produce any [fluorine].”

“Currently, Australia doesn’t produce any [fluorine]”

ABx is developing a reactor designed to recover fluorine from aluminium smelting waste, use this fluorine to create hydrogen fluoride, and later process the hydrogen fluoride into aluminium fluoride to support aluminium smelting operations. 

It might sound technical, but the takeaway is this: Australian aluminium smelters are currently entirely reliant on imported aluminium fluoride for processing operations. For Australian investors, this then means that a steady supply of local fluorine could make way for locally-produced aluminium fluoride for cheaper aluminium smelting and see demand for alumina ramp up even further. 

ABx Group is working to produce fluorine on Australian soil through its ALCORE subsidiary, with a continuous pilot plant in potential development for 2024. 

Where to from here?

While commodity prices can often be difficult to predict in the long term, there are often indicators that interest in an element could soon begin to rise. 

These include forecast supply issues, growing demand thanks to technological developments, and simplified processes that could reduce production costs. 

For alumina, it seems that the little-known material ticks each of these boxes.

This, of course, is no indication that the analysts’ forecasts will prove true — unexpected geopolitical factors and macroeconomic movements will always play their role in influencing prices. 

Nevertheless, in the commodity guessing game, it can pay to be informed. 

Write to Joshua Smith at Mining.com.au

Images: ABx Group
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Written By Joshua Smith
Joshua Smith has years of experience in the media sector, having worked as a markets reporter, features writer, and editor since completing a Communications and Journalism degree and a Creative Writing degree. Josh is an avid board game fan and a self-professed coffee snob.