Alufer Mining DRA
Drone photograph of the export facility being established.
Independent bauxite exploration and development company Alufer Mining is poised to become a significant bauxite exporter to China.

Alufer Mining will attain this when it achieves first commercial production from its Bel Air bauxite project in Guinea within the next 18 to 24 months.

Having secured project funding within just seven months of completing the definitive feasibility study, the company is well underway with the early stages of development, CEO Bernie Pryor tells Chantelle Kotze.

Alufer Mining aims to achieve first commercial production from its Bel Air bauxite mine in the third quarter of 2018.

The medium to long-term demand for bauxite, which is the main commercial mineral from which aluminium oxide is extracted and aluminium is produced, is strong as a result of China’s growth which has continued to drive aluminium demand growth in key sectors including construction, transportation, power, packaging and consumer products.

It is this aluminium demand that is driving bauxite growth.

[quote]Compounded by declining quality of domestic bauxite in China and diminishing global reserves of high quality ore, there is a significant opportunity for high quality Guinean ore, (as opposed to expensive yet lower quality Indian and Malaysian ore) and more specifically, Alufer Mining’s Bel Air ore, to enter the market as a premium supply of quality bauxite.

Located in the centre of the coastal belt in Guinea about 15 km from the coast, with a dedicated transport corridor and its own planned export and port facility, the Bel Air project has a 146 Mt resource grading at 46% total aluminium oxide – 40.6% of which is available aluminium oxide and 1.7% reactive silica.

The Bel Air project, which was granted a mining convention on 1 February 2016, was subsequently ratified by Parliament in June 2016 with the Presidential Decree received in July 2016, was also declared a project of national interest in December 2014.

It is strongly backed by the Guinean government and prominent African and mining investors and is positioned to become a significant player within the global bauxite market.

“Owing to our location to the coast and the quality of our bauxite we will have a significantly low capital expenditure and are in the lowest cost quartile of bauxite producers.

“This stands us in good stead in the global market as we will be under the least amount of pressure compared to other high cost operators should pricing of bauxite change,” notes Pryor, adding that the quality of the bauxite, with little to no impurity, puts Alufer Mining in the ‘premium grade bauxite’ producer category.

Comprising a total of six contiguous ore bodies, the project will commence production at a rate of 5.5 Mtpa, potentially ramping up to a 10 Mtpa over a 15 year LOM. The increase in Guinean bauxite production of this scale would increase the country’s total output, currently at around 18 Mt, by more than a quarter.

Alufer Mining has already concluded a six year off-take agreement to market the bauxite product and secure revenue during the ramp-up.

From pit to port

The mine will produce direct shipping ore (unwashed and unprocessed) via an open pit mining method using surface miners.

The material will then be transported via 40 m³ side tipping trucks to the ROM tip, about 11 km away, where the ore will then be withdrawn from the ROM bin using two apron feeders (2 000 tph design rate) and conveyed to the ore stockpile.

The ore will then be reclaimed from stockpile by two apron feeders and conveyed along a 1 km jetty to a barge loader (one slewing, telescopic barge loader with a capacity of 2 000 tph) where the ore will be stockpiled and handled via conveyor over a rubble causeway.

The trans-shipment will be handled via self-propelled barges and transhipment

vessels to ocean going vessels  at the trans-shipment zone, which is about 32 km offshore, and involves the loading of bauxite onto barges at a barge berth at the end of a causeway and then onto Cape-size vessels for shipment.

In realising this mammoth project, Alufer Mining began civil construction of the project infrastructure in February 2017 with the aim of commissioning the project in August 2018.

In terms of additional onshore infrastructure, Alufer Mining will establish a self-contained mine camp area and operations centre at the coast near the mine site – this will comprise an easy to erect, modular, pre-fabricated package system.

The operation will be powered using diesel generators, which will also be established near site, while an export facility area will be established to stockpile ore for transportation.

Alufer Mining will also establish its own quarry to supply core and armour material for the establishment of the rubble mound causeway.

Fully funded

An international consortium including pan-African multilateral development finance institution Africa Finance Corporation (AFC); specialist mining investor Orion Mine Finance (with over US$2.5 billion of assets under management); and mining focused private equity firm Resource Capital Funds (with over US$2.5 billion under management); as well as existing shareholders - provided Alufer Mining with the capital necessary to development the Bel Air.

What makes the US$205 million deal so significant is that it is one of the largest foreign investments in Guinea since the 2014 Ebola crisis – as well as being spearheaded by the AFC, which has spent the last 10 years (since its inception) investing in projects on the continent that stimulate in-country economic growth and development, most specifically in African economies that have suffered conflict and crisis.

Upside potential

Also part of the company’s portfolio – Labé – which is actually Alufer Mining’s original bauxite asset, having been granted its exploration licences in September 2010 is a very large, high grade and high quality bauxite project.

Located inland in the Guinea highlands, approximately 350 km north-east of Conakry, Labé has a total JORC-compliant resource of 2.5 Bt grading at 43% aluminium oxide.

Within this area, Alufer Mining has identified a well-defined high-grade area of 583 Mt grading at 50% aluminium oxide, with low silica content at 3.2% silica.

The challenge in developing Labé, as is the case with most bulk commodity projects, is its distance to the coast, as well as the investment in high capital infrastructure, which combined, makes it all the more challenging to produce a return on investment.

Despite this current challenge, Labé provides a significant growth opportunity for the company.

Bauxite demand

Bauxite is the principle ore used in aluminium manufacture and, at present, the global demand for aluminium exceeds supply.

According to information from the AFC, there is currently a greater than 6% per annum, five-year growth forecast for aluminium consumption. This is primarily driven by Chinese demand, which has resulted in increased Chinese aluminium production (which has increased by 400% in the past 15 years) and has led to a rapidly expanding smelting industry with smelting capacity in the order of 50 Mt.

In light of the declining quality of domestic bauxite in China as well as diminishing supplies of high-grade ore globally, the AFC believes that given Guinea’s vast bauxite reserves, and given the shifts in supply and demand dynamics, the country is poised to ship high grade bauxite ore to markets such as China to support the growing future demand for aluminium.

Alufer’s bauxite bounty

Alufer Mining currently holds a ratified mining convention in the Bel Air project in western Guinea, as well as licenses linked to the Labé project in central Guinea. The company has declared a cumulative 3 Bt JORC-compliant bauxite mineral resource at the projects - over 146 Mt of JORC compliant direct shipping ore resource at Bel Air and over 2.5 Bt of JORC-compliant resources already defined at Labé.

Remote accommodation solution

Parkhome Modular Units (PMU), a division of Southey Holdings, was contracted by DRA as the chosen pre-fabricated modular accommodation supplier for their client Alufer Mining’s greenfield project in Bel Air, Guinea.  PMU has achieved fantastic growth over the past few years in a difficult market and with the backing of Southey Holdings, one of Africa’s largest and most respected privately owned companies are well positioned to execute similar projects throughout Africa at very competitive prices whilst maintaining high quality standards.  To date the project is on track with occupation anticipated towards the end of the third quarter of 2017.

Feature image: Drone photograph of the export facility being established

Feature image credit: Alufer Mining

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