The lucrative business of bauxite trade

Malaysia shipped more than 20 million tonnes of bauxite to China from January to November last year, up nearly 700 percent from the year before.

A bauxite mining location pumping water illegally in this Oct 22, 2015 file photo near Felda Bukit Sagu in Pahang. - BERNAMApic | Astro Awani
Strong demand from China has driven Malaysia to emerge as the world's biggest provider of bauxite to China, filling a gap after Indonesia banned ore exports in early 2014 to promote domestic processing.

According to a Reuters report, Malaysia shipped more than 20 million tonnes of bauxite to China from January to November last year, up nearly 700 percent from the year before.

The amount was nearly half of China's total bauxite imports for the whole of last year.

In 2013, Malaysia reportedly shipped just 162,000 tonnes.

Since late 2014, bauxite mines have mushroomed in Malaysia, notably in Kuantan, where they shipped increasing amounts of the raw material to China, the world's biggest aluminium producer.

Industry experts described Malaysia's entry into the industry as a game-changer, opening a new source of bauxite to meet demand for aluminium, a metal widely used to manufacture various industrial goods, cars and kitchen utensils, among many others.

Asian Metal, a business entity that provides advice on pricing and trading activity to mining companies, visited a number of mines in Malaysia last September.

According to them, three of the companies revealed that they export a combined one million tonnes of bauxite every month, which makes an export volume of 12 million tonnes per year.

Meanwhile, Universiti Putra Malaysia's mineralogy expert, Dr Shamshuddin Jusop said the amount of bauxite ores in Kuantan alone covers the area of 18,000 ha (hectare).

"There is a lot of bauxite in Kuantan. They can be found mainly from the coast of Kuantan to Batu Goh," he told Astro AWANI.

Bauxite in Kuantan is formed by weathering of basic igneous rock called basalt.

On what makes bauxite mining such a lucrative trade, he said, "Bauxite in Kuantan contains not only precious metal Aluminium but also Ferum and Titanium which are widely used in industries."

Titanium is an even more precious metal than aluminium. For this particular reason, bauxite gets premium price at marketplace in the world nowadays.

According to The Star Online, the average price of bauxite last year was US$45 (RM197.91) per tonne.

As for the average historical price of bauxite, it was US$30 (RM131.94) per tonne.

Although business was lucrative, the frantic pace of mining has caused great concerns about the lack of regulations and environmental safeguards.

Environmentalist and residents blamed residue waste from the extraction process for polluting the waterways.

At present, there are 22 legal bauxite-mining operators in Pahang. But due to the alleged rampant illegal mining, the exact number of bauxite mines in the state are still undetermined.

Revenue from mining activities shot up from RM2.4 million in 2014 to RM 46.7 million last year.