The Next Profit Margin in The Alumina Industry-Red Mud
In the absence of new countries that can replace the decrease in aluminum demand caused by China's slowdown, we expect the alumina sector to enjoy a period of high profitability.
Only the complete utilization of red mud (also known as "the worldwide problem"), which is the expected next profit, can be expected in the case where the alumina manufacturing process has not been changed for decades.
The first thing you need to know about red mud
Alumina produces approximately 1.5 tons of red clay, which has a particle size of 0.088-0.25mm, a specific weight of 2.7-2.9 and a bulk density ranging between 0.8-1.0. It also has a melting temperature between 1200-1250°C. Below is a table that shows the composition of red clay:
The Bayer method is used to produce the majority of alumina in China. The Bayer Method is characterized with high levels of iron, aluminium and alkali.
Second, the typical alumina case in the utilization of red clay
1. Chinalco Shandong Branch. The data available shows that in 2016, the red mud utilization rate was 25 percent. China's enterprises that produce alumina have a high utilization rate, with accumulated consumption exceeding 12 million gallons of red clay. Henan Aluminium Industry Transformation and Growth Action Plan (2018-2010) clearly states that by 2020 the comprehensive usage rate of red clay will reach 10%. No harm will come if there is no comparison. China's comprehensive utilization rate is too low. The main uses of mountain aluminum red clay are the development of new coal-burning de-sulfurizer technologies, high-grade concrete, highway subgrades and bricks.
2. Weiqiao Group, 2018: 20,000 tons of mud red were used to cover the 5.3 km roadbed in the Binzhou section Jiqing Expressway. Estimates state that each kilometer of expressway consumes 200,000 tons, while provincial highways consume 60,000 tonnes, and municipal road can consume as much as 20,000 tons. Future market opportunities are wide for countries in China that have a lot of highway mileage.
Third, the typical social case in the use of red clay
Shandong Satellite TV broadcasted a story on December 31st, 2018 about Zibo Tianzhirun Ecological Technology Co. Ltd. using large amounts of red dirt to produce permeable blocks (consumption 70,000 tons per year). The red-mud permeable bricks project was chosen as one of Shandong Province's top ten innovations for the circular economy in 2018 with a red-mud blending rate exceeding 90%. The boss of the firm invested more than $30 million. After Zui, only 2 houses had been studed.
This is not only reminiscent that enterprises in Inner Mongolia have spent hundreds of billions of dollars trying to crack the code on the production alumina from fly ash and yet there hasn't been a breakthrough.
Fourth, comprehensive red mud usage recommendations
Currently, red mud is more commonly used in the production and roadbeds of bricks as well as for cement. Each has its advantages and disadvantages. There is a nearby plant that produces cement, but the consumption of roadbeds is high. The future demand for permeable blocks is low in economically developed areas. Therefore, it's possible to promote the production of these bricks nationwide. The only disadvantage is the fact that it is more cost-effective to sell bricks within a radius of 800 kilometers.
China's red mud alumina is generally used at a very low rate. Our utilization rate may not be as low as that of other countries, but we cannot compare ourselves to foreign countries. China's alumina has entered a new era, one of self-transcendence. We are now able to make full use of red mud. The company's alumina position will be reshaped by the profit margin.
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