Bauxite Industry

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Editor: William A. Darity, Jr.
Date: 2008
International Encyclopedia of the Social Sciences
Publisher: Gale
Document Type: Industry overview
Pages: 1
Content Level: (Level 5)
Lexile Measure: 1390L

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Bauxite Industry

Bauxite is the only commercially viable ore used as a source material for primary aluminum production. After iron, aluminum is the world’s second most used metal, having a wide variety of applications in transportation and packaging. Most of the world’s bauxite reserves and production are found in a wide belt around the equator, with Australia, Brazil, Guinea, China, Jamaica, and India being the world’s leading producers. While short-term demand for bauxite depends upon the demand for aluminum and is therefore cyclical, supplying countries have sufficient reserves to meet long-term projected demand for the foreseeable future.

The separation of primary aluminum from the other elements found in bauxite involves a distinct two-stage production process. First, 4 to 5 tons of bauxite is chemically refined into 2 tons of the white powder alumina (aluminum oxide), then these 2 tons of alumina are smelted into 1 ton of aluminum ingot. Both processes are highly capital intensive, and smelting is also highly electricity intensive. Of the bauxite mined worldwide, about 95 percent is converted to alumina; the remaining 5 percent is used in other applications such as abrasives and cement additives.

The world aluminum industry, from mining to fabrication, is both highly concentrated and vertically integrated. Multinational aluminum companies typically mine bauxite, which then feeds their alumina refinery operations, which then often feeds their own smelters. As a result, open markets do not generally exist for bauxite. Nearly all bauxite consumed in the United States is imported, mostly from Guinea and Jamaica.

Most of the world’s bauxite reserves are found in developing countries, but these countries account for a much smaller percentage of world alumina production and very little of the world’s aluminum production. Although bauxite and alumina production can typically play significant roles in terms of foreign exchange and gross domestic product in these economies, these capital-intensive production processes do not typically have significant macroemployment effects.

Nearly all of the world’s bauxite is produced through opencast mining. This can have significant environmental effects, including detrimental effects on flora and fauna, water runoff resulting in groundwater contamination and soil erosion, and generation of dust affecting surrounding areas. The Third Bauxite Mine Rehabilitation Survey, published by the International Aluminum Institute in 2004, details these impacts and the progress that the industry has made at protection and reclamation.

Jamaica provides an example of the importance to the industry of a relatively small country and the key role that the industry plays in a supplying country’s economy. Bauxite and alumina account for more than half of Jamaica’s exports, and they are the country’s second leading source of foreign exchange after tourism. The country’s relationship with the industry has been historically confrontational. In the 1970s Jamaica was instrumental in forming an attempted bauxite cartel, the now defunct International Bauxite Association, while simultaneously but unilaterally implementing a domestic bauxite production levy. At the time, Jamaica was the world’s leading producer of bauxite. After periods of industry stagnation and even contraction, the government changed approaches, and now directly participates in consortia with several of the world’s leading aluminum companies in the country’s bauxite and alumina operations. It has also replaced the bauxite levy with taxation on profits.

Two major issues face the industry: environmental impacts, and the desire by supplying countries to accrue a larger share of the benefits (income and employment) resulting from the downstream processing of their bauxite. The experiences of Jamaica and other countries have taught supplying countries and multinationals that direct equity participation in bauxite and alumina consortia by private or public supplying country partners is the most effective way to protect various stakeholders’ interests.


International Aluminum Institute. 2004. Third Bauxite Mine Rehabilitation Survey. .

Plunkert, Patricia. 2004. Bauxite and Alumina. U.S. Geological Survey. .

James P. McCoy

Source Citation

Source Citation   

Gale Document Number: GALE|CX3045300165