China to face 10-15 million tonne bauxite gap from 2016 - Alumina Ltd.

China could face a 10-15 million tonne shortfall in bauxite supply as stockpiles run down from the second half of 2015, following an Indonesian ban this year on exports, said Andrew Wood, an executive with Melbourne-based Alumina Inc.

The shortfall could curb China's alumina production, pushing up prices of both bauxite and alumina - used to make aluminium - assuming no new alumina refineries are built and Indonesia's ban remains in place, said Wood, who is in charge of strategy and development.

"We could see a shortage as early as 2016 when China's stockpile is depleted and before new mines from places like Guinea come on board," Wood told Reuters on the sidelines of a Metal Bulletin conference in Singapore.

Bauxite prices into China will climb to $75 to $80 a tonne in the long term and could go higher before that, he said, up from an average this year of $60.50 according to Citi estimates.

Alumina Ltd owns a 40 percent stake in the world's biggest alumina maker, Alcoa World Alumina & Chemicals (AWAC). Alcoa holds the majority stake.

The drop in bauxite could cut China's alumina production by up to 6 million tonnes annualised, Wood said.

Indonesia last year accounted for 18 percent of world bauxite output, at 55.8 million tonnes, supplying 68 percent of China's import needs, according to Citi. Citi sees global bauxite supply falling 13 percent this year due to the ban.

China requires at least 47 million tonnes of bauxite through to 2017, to meet its growth in domestic primary aluminium production, Citi said. China is the world's top producer of aluminium.

Commonwealth Bank of Australia expects China's bauxite stockpiles to last for another six months before markets begin to tighten.

"We look for any strong price acceleration in implied bauxite prices as a potential signal of depleted bauxite inventories," CBA said in a report.

However, Citi said the impact of rising raw materials costs on China's aluminium prices is expected to be muted because power accounts for almost half - at 48 percent - of Chinese aluminium smelting costs.

Indonesia imposed a ban in exports of raw mineral ores in January in a bid to boost its domestic processing industry.

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