‘Bauxite industry needs strategic reforms ‘

Ghana’s bauxite industry must urgently focus on value addition and strategic market practices to unlock its full economic potential, according to David Ofosu-Dorte, Founder and Senior Partner of AB and David Africa. Speaking at the closing session of the Future of Energy Conference in Accra, organized by the Africa Centre for Energy Policy (ACEP), Ofosu-Dorte highlighted the significant economic benefits that Ghana could realize by refining and smelting its bauxite locally rather than exporting it in its raw form.

He emphasized the vast difference in the value of raw bauxite compared to its processed forms. Over the past 15 years, the average price of raw bauxite has fluctuated between $30 to $40 per ton. However, when refined into alumina, the value rises to approximately $2,000 per ton, and further processing into aluminum can see prices soar to around $6,000 per ton. Despite Ghana’s abundant bauxite reserves, the country has yet to fully develop its downstream industry, including smelting and further aluminum production.

Ghana currently extracts around 50,000 metric tons of raw bauxite annually, which is mixed with Jamaican bauxite for alumina production before being sent back to the Volta Aluminum Company (VALCO) for smelting. However, this process is constrained by the lack of refinery capacity, requiring only 30 megawatts of power compared to the 400 megawatts needed for full-scale smelting at VALCO.

To address the challenges posed by price fluctuations in the global bauxite market, Ofosu-Dorte proposed three key strategies. First, he suggested price hedging as a method to stabilize prices, noting that bauxite prices have historically fluctuated between 10% to 20% annually over the past decade. By hedging, Ghana can protect itself from the volatility of global metal markets.

Second, he recommended establishing well-organized supplier contract arrangements. By adopting a competitive bidding process for bauxite supply contracts, Ghana can avoid being overly dependent on a single buyer or market, such as China, the US, or Europe. This strategy would enable the country to secure better deals and ensure more favorable terms in its bauxite trade.

Ofosu-Dorte’s remarks underscore the importance of moving beyond raw bauxite exports and focusing on refining and smelting to maximize the economic benefits of Ghana’s bauxite industry. By adopting value addition and strategic market practices, Ghana can better harness its natural resources and mitigate the risks associated with global price fluctuations.