The Pick News

Metro Mining Secures Major Offtake Contracts Amid Record Production at Bauxite Hills

Written by Staff Writer | Nov 7, 2024 10:45:39 PM
Metro Mining Limited (ASX: MMI) has successfully finalised several key offtake agreements that extend its reach in the bauxite market through 2025 and 2026. This announcement comes on the heels of record-breaking production levels at the company’s Bauxite Hills Mine, highlighting Metro’s strengthened position in the global aluminium supply chain. Together, these developments underscore Metro’s capacity to meet rising demand for bauxite as the energy transition drives aluminium use in electric vehicles, electronics, and sustainable infrastructure.


Offtake Agreements: Building on Long-Standing Partnerships and New Ventures

Metro has secured multi-year agreements totalling 6.9 million wet metric tonnes (WMT) for 2025 and 6.1 million WMT for 2026. This includes a contract extension with Xinfa Aluminium Group, a major private integrated aluminium company in China and a longstanding Metro client. In addition, Metro has forged new partnerships with China Aluminium International Trading Group (Chalco Trading), the trading arm of Chalco—the world’s largest alumina and aluminium producer—and Shandong Lubei Enterprise Group, a diversified chemical manufacturer from Shandong Province.

Although detailed pricing and volume terms remain confidential, Metro disclosed that the bulk of these contracts (80% in 2025 and 93% in 2026) are based on short-term pricing mechanisms, with a blend of FOB and CIF contracts. For added flexibility, some agreements also feature options for additional spot cargoes. To mitigate freight rate fluctuations, Metro has secured contracts covering over 85% of its delivered volumes with first-class freight operators, stabilising costs across its supply chain.

Simon Wensley, Metro’s Managing Director and CEO, highlighted the strategic value of these agreements, stating, “This high-quality portfolio of customers is a testament to Metro bauxite’s competitiveness, technical service, and large-scale logistics capabilities, establishing robust and low-risk market positioning.”

Operational Success: Record Production at Bauxite Hills

The finalisation of these contracts coincides with record-setting production figures at the Bauxite Hills Mine, Metro’s flagship operation on Queensland’s Weipa bauxite plateau. In October 2024, Metro achieved its highest-ever monthly shipment volume, with 793,420 WMT dispatched, representing a 2% increase over September and an 18% rise from the previous October. This milestone brings Metro’s year-to-date shipments to 4.45 million WMT, reflecting the success of its recent optimisation initiatives.

Alongside this record, Metro set a new daily transhipment benchmark, moving 33,364 WMT in a single day. The company’s entire operational chain—from the mine to the Offshore Floating Terminal, Ikamba—is now running at nameplate capacity, with room for further optimisation. October’s production feats were achieved despite a 1.5-day delay from vessel scheduling issues and another 1.5 days lost to planned maintenance, underscoring the robustness of Metro’s operations.

Strengthening Metro’s Market Position Amid Growing Demand

Metro’s 100% owned Bauxite Hills Mine holds a unique position as one of the largest independent bauxite producers on the Weipa plateau, producing high-grade, high-alumina bauxite ideal for the aluminium industry. As bauxite is the primary ore used to produce aluminium, Metro’s role as a reliable supplier is particularly crucial during the energy transition, as aluminium demand surges across sectors from electric vehicles to renewable energy infrastructure.

By securing these multi-year agreements with major aluminium players like Xinfa and Chalco, Metro ensures stable revenue streams and builds on long-term customer loyalty. The addition of Shandong Lubei as a new client further diversifies Metro’s customer base and underscores the global demand for its bauxite, particularly in fast-growing sectors like transport and technology.

Positioned for Growth in a Key Market

With freight cover secured, stable offtake agreements in place, and production capabilities hitting new records, Metro is well-positioned to meet its ambitious targets. The high volume of short-term pricing contracts also provides Metro with exposure to favourable market dynamics, allowing it to benefit from potential upside in bauxite pricing driven by supply chain constraints and rising aluminium demand.

As Metro heads into 2025, it aims to build on this momentum, leveraging its strong production base and its deepening relationships with key players in the aluminium industry. The company’s emphasis on operational excellence, strategic partnerships, and risk management reflects a commitment to sustainable, long-term growth. For Metro, these offtake contracts are not just sales agreements—they are a testament to the company’s solid reputation in the global bauxite market and its capacity to thrive as demand for aluminium continues to rise.