Chinese demand for bauxite from the Dominican Republic is recovering
----Interview with Mr. Ben Guesmia
CEO
CEMENDUS
- CEMENDUS is a firm in commodities investments and in international commerce. The company holds owner’s rights in 6 mines worldwide and is partner and main investor in 7 other mines mainly in South America and in Africa.
The company was created in 1965 and was re-incorporated in 2008 when Mr. Ben Guesmia took on the position of CEO, re-establishing the company’s investments and strengthening the company’s partnerships with a new strategy based on a deep assessment of the global commodities’ market.
- Asian Metal: Based on China Customs, the bauxite imports from the Dominican Republic were around 1.6 million tonnes in 2014, which dropped to around 1.1 million tonnes in 2015 and 280,000t in 2016. From last year, China stopped the import. What do you think are the reasons? Do you think China will restart the import?
- Ben Guesmia: I would like first to express to you our recognition for your media “Asian Metal”, for the valuable information it is providing to our worldwide community. The bauxite contract of year 2014 was different from that of 2015. As the need for high volume decreased, we kept exporting only to our regular clients on spot basis.
- PR of China is restarting imports of bauxite from the Dominican Republic these days and we have already had a contract of 2.1 million metric tons in place starting end of October. We can export up to 4.5 million metric ton per year and we can certainly accommodate the needs of our Chinese clients by increasing our production.
- Asian Metal: Compared with bauxite from other countries, how do you think of the advantages of bauxite from the Dominican Republic? How about the bauxite quality?
- Ben Guesmia: I would like with your permission to speak about the socio-political situation first in the Dominican Rep. We had and we still have a very stable political situation and the GDP had reached a record high in 2017. We have absolutely no strikes or social interruptions in the mine sector and unions are closely collaborating with producers to keep the balance between work and social conditions. If you compare this to other countries exporting bauxite, our advantages will be immediately obvious. As for our bauxite quality, it was already tested and used in millions of metric tons by refineries in the PR of China. Our bauxite has an alumina content of 46% and a low content of reactive silica.
- Asian Metal: From early this year, Chinese demand for monohydrate bauxite increased in inland regions including Henan and Shanxi. What is your opinion on the situation? And what is your outlook for Chinese demand?
- Ben Guesmia: I think Asian Metal provided various analysis and statistics that demonstrated that the bauxite market will be toward a high demand in the next months and the supply is already limited. This situation will make the alumina price worldwide to reach a maximum high. This is the right time for companies looking to import bauxite for their refineries to move forward in securing the supply.
- There are new refineries using monohydrate under construction in China. We have requests also from refineries looking to blend our bauxite with others, as our specification demonstrates a better quality of bauxite.
- Asian Metal: When did you start bauxite exploration in the Dominican Republic? How about the current operation and the production last year? What are the total reserves of your bauxite and the annual production capacity?
- Ben Guesmia: Historically, Alcoa was the first bauxite producer in the Dominican Republic and they exported more than 30 million metric tons. We are now operating the same mine and a second site nearby. The bauxite reverse in mining site under development is more than 100 million metric tons. There is also a second bauxite deposit zone in the Dominican Republic, that is not currently under operation but is promising to triple the volume of bauxite we have right now. We are cooperating with Sierra Bauxite Dominicana, the only company in the Dominican Republic with an export license from the government.
- Asian Metal: Did you export to China before? And where do you export now?
- Ben Guesmia: Yes, we did export bauxite on a high volume basis to the PR of China, in close relationship with our strategic partners. End of October will be the beginning of our new era with buyers from the PR of China, because we have solved all the issues related to our operations and transshipment.
- The mine is not that far from the port and we already had a stockpile of over 200,000 MT ready to load.
- Asian Metal: In terms of the high freight cost, will you use capsize vessels? How about the port environment?
- Ben Guesmia: We do offer a formula to our buyer, if they contract with us on an FOB basis we will be working with them in reaching the best offer on the shipping. We do not make any profit when we help set up the shipping as to keep the price steady for us and for our clients. Most of the companies offering C&F today, (and) will sell at a higher price because they can’t have any visibility on the shipping cost fluctuation in the next 3-6 months. We keep this as a competitive advantage to offer the best price possible in the market!
- Asian Metal: For the high freight cost, both bauxite prices from Brazil and Jamaica increased. How do you think of the Dominican Republic bauxite price?
- Ben Guesmia: We will not increase our bauxite price based on the shipping industry market trend as this will be a mistake to link our industry to the shipping industry, in regard of pricing. Our pricing is more based on volume as this will impact our entire supply chain. We also do consider the contract duration as we will be more competitive with long term contracts.
- We also do not increase the price on new clients to the contrary of the other producers selling bauxite who do not give importance to new clients. All our clients are important to us and we will do our best to contribute to their success!
- If I may contribute with my opinion in regards of the bauxite market, I will say that the price can easily be the double of the current price as we have seen this year a higher demand coming from clients with different profiles, refineries, traders and companies looking to control their own cost on alumina by having one contract on the bauxite and another contract with a refinery.
- I would like to thank you for giving me the opportunity to express our goals in this interview and also thank you for Asian Metal's contribution to our worldwide community.
