China tensions weigh on Metro’s forecasts, delay expansion

Diplomatic tensions with China and the state of the market for alumina and aluminium were headwinds impacting Metro Mining’s bauxite project on Cape York.

May 27, 2020, updated May 27, 2020
Barges load a ship from Metro's Cape York bauxite mine (Image: Metro Mining)

Barges load a ship from Metro's Cape York bauxite mine (Image: Metro Mining)

The company has stalled its plans for the completion of its expansion of the mine and scaled back its production forecasts.

But chairman Stephen Everett said it was not all doom and gloom for the Brisbane-based company, which shipped its first bauxite in April.

“I am not going to pretend it will be all smooth sailing from here. (The) board is well aware of many of the headwinds we face.

“We also remain ever vigilant to address, where possible, unknown challenges as they emerge.

“Obviously there have been inter-nation political sensitivities that have surfaced recently, and it is not for Metro to offer comment on them. However, having said that, we are heartened by recent reports that China’s manufacturing sector appears to be recovering. That is what is important to us.

“We continue to ship product under our existing contract with Xinfa. The planned June quarter production is sold and the shipping schedule is finalised.

“We continue to negotiate with several potential new and existing customers and Metro has a strong balance sheet –cash on hand and other receivables as at the end of the last quarter was $11.7 million.

“Work has been completed on engineering and design work related to the stage two expansion to an annual operating production rate of six million wet metric tonnes. The formal commitment to stage two is being influenced by the uncertainty for global growth and the current associated weakness in aluminium and alumina prices.

“The board is looking for more clarity post the COVID-19 crisis before committing to the stage two expansion.

“At this time, all I can indicate is that completion of stage two is not expected to occur prior to the second half of 2021.

“Production next year is, therefore, likely to be between four million to five million WMT rather than the previously communicated six million WMT.”

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