Oct 29, 2020

Metro holds positive bauxite outlook for 2021

Metro holds positive bauxite outlook for 2021

Metro Mining is anticipating improved trading conditions in 2021 after a weaker bauxite market in recent months saw its Bauxite Hills mine move into its planned wet season shutdown earlier than usual.

In its latest quarterly report, Metro said operational results during 2020
demonstrated the Bauxite Hills mine could easily operate at a 4Mtpa rate with existing plant and equipment.

Bauxite mining for the quarter was 1.062 million wet metric tonnes (WMT) with 1.23 million WMT shipped; both representing continued strong performance from the June quarter.

The last vessel completed loading September 14 as the Cape York mine moved into its planned 2020 wet season shutdown earlier than anticipated due to difficult market conditions impacting demand for and pricing
of bauxite exports into China.

Metro said negotiations with several refineries continue to advance and confidence in the sector was showing signs of improvement.

Positive signs cited include that:
▪ Aluminum and alumina prices have recovered from COVID-driven lows, although alumina is still being impacted by the availability of western world alumina that is generally available at a lower cost than domestic Chinese alumina.
▪ Confidence looks to be returning with more alumina capacity coming back online in China and other input costs such as reagents and energy are remaining lower allowing most to make modest profits at the prevailing prices.
▪ Ocean freight from Guinea and Indonesia has increased, which has seen an increase in the delivered bauxite price into China.

As a result, it was anticipated that 2021 would see improved trading conditions, Metro said.

The company said it was still committed to its Stage 2 expansion for the long-term development of Bauxite Hills.

Timing for the formal commitment to Stage 2 remained influenced by general uncertainty over the outlook for global growth due to the impact of COVID-19, the company said.

“Whilst there have been recent improvements in macro conditions leading to a recovery in general confidence in the sector, customers remain reluctant to enter into long-term offtake agreements,” the company stated.

“Metro will continue to monitor market conditions prior to taking the decision to formally proceed with the expansion.”

Debt financing remains in place through a loan facility from the Northern Australia Infrastructure Facility (NAIF). The sunset date for financial close was extended during the quarter to March 1 next year.

Metro said completion of the Stage 2 expansion was not expected to occur until 2022 at the earliest.