A well-established quality control system is essential to Turkish bauxite export
----Interview with Mr. Mehmet Bozdemir Marketing Director Grafit Madencilik San. VE Tic. A.S.
Founded on October 7th, 1992, Grafit Madencilik San. VE Tic. A.S. is a wholly-owned subsidiary of ZMMC in Shanghai, owning a registered capital of RMB50 million.
Asian Metal: Thanks for the time joining this interview. Would you please give a brief introduction of Grafit Mining and the bauxite operation?
Mehmet Bozdemir: Our company was established in 2012. We do have actively operated emery and bauxite mines in western Turkey. We market our raw bauxite to different industries in the domestic market as well as Europe, America and Canada, etc.
Right now, we have two active bauxite mines in western Turkey and few other licenses for future operation and feasibility study. Quality control is very important for bauxite mining and that's why we rely on international inspection, and we do have our own lab to secure quality of our product.
For Chinese market, we are trying to increase our production and reduce the cost of shipping. Soon, we are able to ship 120,000t of vessels.
Our bauxite production capacity keeps at 600,000tpy, targeting China, around five vessels a year. We are planning to expand the annual capacity to 1 million tons next year. The guarantee quality is Al2O3 53-54% SiO2 6-7%.
Right now, the identified reserves are around 2.5 million metric tons, but we do have other pending licenses waiting for continuous supply, like 1 million metric tons every year, for ten years.
Asian Metal: From 2019, Chinese local monohydrate bauxite supply became tight and buyers increased the import volume from Turkey, but some buyers complained about unstable bauxite quality. How do you think of the quality of Turkish bauxite? Do you have any suggestions?
Mehmet Bozdemir: I believe that the reason why the Chinese buyers face unstable bauxite quality problem, namely unstable Al-Si proportion, is that there is no well-established quality control system in Turkey at the moment, leading to products with various qualities. If Turkish bauxite producers want to establish stable export cooperation with global clients to explore international market, a well-established quality control system is essential.
That's why we are very serious with the quality control (Al/Si) in order to deliver right product to our clients, and that's why are able to work with many reliable companies in Europe and America. We are planning to do the same for Chinese market. Until we have the right product and quality, we did not want to enter the Chinese market. Right now, it is time for us.
Definitely, we do have to come together with other international producers. I believe that we have to bring a kind of internal quality control system, which is the most important thing.
Asian Metal: For the freight rebound, Chinese bauxite import prices from Guinea and Indonesia moved up from early this month. Will Turkish bauxite prices go up? What is your opinion?
Mehmet Bozdemir: I believe it is not going to increase too much. Guinea has an important role in the world bauxite supply, especially to China, but I believe that China has to diversify their bauxite sources. That's why Turkey is going to play a very important role and with less political risk. Turkey will also follow up international prices.
To have a continuous good price, China has to focus on long-term agreements rather than spot purchases, which will keep prices at a certain level.
Asian Metal: China firstly imported around 170,000t of bauxite from Turkey by a cape-size vessel in May. How do you think of the bauxite shipping problem by cape-size vessels from Turkey?
Mehmet Bozdemir: There are several ports which can handle cape-size vessels in South Turkey, but when you come to West Turkey, there are not so many. Our company has to use cape-size vessels to deliver bauxite. If we catch the right buyer, we believe that, every two or three months, we are able to handle 120,000t of bauxite by cape-size vessels, reducing the cost of shipping.
For our bauxite, the small port handling 50,000t-vessel is around 50km away to our mining area, and the big port handling 120,000t-vessel is around 220km away.
Asian Metal: What is the current shipping cost from Turkey to China by different vessels?
Mehmet Bozdemir: OK. I give you some examples, about USD18/t for 120,000t-vessel, USD22/t for 70,000t-vessel, USD27 for 50,000t-vessel, USD32/t for 35,000t-vessel.
Asian Metal: Does Turkish government encourage bauxite mining and export? Are there any taxes?
Mehmet Bozdemir: Yes, the government basically encourages most of mining sections, including bauxite export, as the internal demand is not too much. The tax is less than 1%.
Asian Metal: The COVID-19 pandemic affected bauxite delivery in many countries from early this year. How about the bauxite mining operation and delivery in Turkey?
Mehmet Bozdemir: The mining operation was stuck by the pandemic in the beginning only. Currently, normal production rate has been reached. We are producing at the rate before the pandemic, around 50,000tpm. There is no problem for the delivery now.
Asian Metal: Because of the slow economy under the current special situation, will the global demand for bauxite become weak this year? What is your opinion?
Mehmet Bozdemir: I believe so, but the market will again come to a certain level in 2021.
Asian Metal: Thanks for the time again. Good wishes for your business!
