Move over iron ore. ASX mining shares may well be putting increased resources into digging up a historically cheaper metal.
Namely bauxite, which is used to produce aluminium. Aluminium is in strong demand for its critical role in the global electrification push.
According to CM Group, "The global traded bauxite market has entered a period of significant transformation, driven by the emergence of 'merchant' refineries importing bauxite into China."
The industry analysis company added:
More recently, we've observed the early signs of structural grade depletion of China's domestic bauxite reserves which, combined with strong alumina growth, create a significant opportunity for bauxite miners the world over.
Citing data from CM Group, The Australian Financial Review reported that the bauxite price reached a new record of US$112 per tonne last week, up 59% year to date. That certainly won't go unnoticed by ASX mining shares, with iron ore trading for around US$105 per tonne.
Atop the strong demand from China, global bauxite prices have been buoyed by supply disruptions out of Guinea, which followed Indonesia's export ban last year. The blockage of a Brazilian bauxite shipping lane by an errant cargo vessel in November has only added to the supply crunch.
Which ASX mining shares have exposure to bauxite?
Among the ASX mining shares exploring for and digging up bauxite, we find:
- Metro Mining Ltd (ASX: MMI), whose flagship project is the Bauxite Hills Mine in Queensland.
- South32 Ltd (ASX: S32), which is headquartered in Perth and has operations in ten countries mining bauxite, silver and copper, among other metals.
- Rio Tinto Ltd (ASX: RIO), which has bauxite mines in the Northern Territory and Queensland.
- Canyon Resources Ltd (ASX: CAY), which owns the Minim Martap Bauxite project in Cameroon.
So, how have these ASX mining shares been performing?
Well, since the opening bell on 2 January:
- Metro Mining shares are up 185%
- South32 shares are up 1%
- Rio Tinto shares are down 12%
- Canyon Resources shares are up 143%
Having a look at the performance, you can see that the smaller miners focused more solely on bauxite have been having a much stronger run in 2024 than the more diversified mining stocks.
What are the market experts saying?
Commenting on the soaring bauxite price helping boost ASX mining shares with significant exposure, Vivek Dhar, a commodity analyst at Commonwealth Bank of Australia (ASX: CBA) said (quoted by The AFR), "It's impossible to predict when the bauxite rally might peak. This market was already a tinderbox before the Brazilian shipment got stuck."
Alan Clark, managing director of CM Group, added:
If you rewind five years and told people bauxite prices would overtake iron ore in price, they'd have laughed you out of the room. This highlights the contrasting trajectories of two critical global industries: aluminium and steel. Right now, one is soaring while the other is facing headwinds.
Now, Australian bauxite is lower in grade compared to the metal mined in Guinea. It's also cheaper. According to CM Group, Aussie bauxite is trading at all-time highs of US$88 per tonne, up 75% from its 2024 lows.
Doug Ritchie, chair of ASX mining share Metro Mining, said that the lower-priced Australian bauxite is gaining traction in China.
According to Ritchie:
We've expanded our customer base from one to three in China. Selling bauxite is a long-term process. It requires aligning refinery capabilities with the material's properties, which takes sustained dialogue and trust-building.
