Iran Considers African Bauxite Deposits for Alumina Industry

Overview
Based in Iran, our client had invested in a bauxite deposit in Africa. The client had proposed developing an alumina refinery and aluminium deposit in Iran. The report constituted a review of the company’s previous feasibility study and set out to  determine whether there may be alternative sources of bauxite available to our client and whether there was a way to ensure that their aluminium smelter could operate profitably.

Methodology
The report was conducted as a desk-top study whereby Core Consultants considered alternative suppliers in Brazil and Australia.  The project was met with a number of challenges including infrastructure, alternative sources of ore, determining the outlook for the bauxite and alumina markets as well as an appropriate reference price. We considered these bauxite deposits based on their alumina and silicon content and balanced this against the potential cost of logistics to transport the ore to Iran.

Our Recommendation
The economics of the project was definitely marginal.  In general, Iran has higher energy charges than other GCC players in the region such as Saudi Arabia. Furthermore, Iran is a relatively new player compared to its GCC counterparts. It is unlikely that Iran will have any comparative advantage for the production of alumina or aluminium. Our recommendation was  for them to first source off-take agreements before pursuing the development of this project and we assisted the company in understanding the reference price for bauxite in the market. It was further found that Brazilian ore was not viable, but there may be opportunity to bring in Australian ore.

Outcome
Studies for this project are still ongoing. The expectation is that this project will go ahead as it is regarded as a strategic project by the Iranian government for the country’s economic development.

Lara Smith

Lara is the CEO and founder of Core Consultants. She has been an analyst for over thirteen years and has focused on commodity markets for just over a decade. She began her career as a buy-side analyst at Foord Asset Management in Cape Town, before taking a Head of Research role at a mining corporate finance and investment firm.

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