Venezuelan state-owned Bauxilum has suspended bauxite and alumina production, the latest casualty of unstable power supply, mismanagement and a lack of imported materials.
Plans announced in April 2019 by President Nicolas Maduro to achieve monthly production levels of 18,000 t of alumina and revive the company's 6mn t/yr open-pit bauxite mine before the end of 2020 have been abandoned for the foreseeable future, company and union officials tell Argus.
Bauxilum's shutdown this month "shuts the lid on the aluminum industry's coffin," a senior company union official said. "The entire Venezuelan aluminum industry from the Los Pijiguaos bauxite mine to the smelters is now shut down, possibly forever."
Industry and national production minister Tareck El Aissami, a member of Maduro's inner circle, says US sanctions forced Bauxilum's shutdown by scaring off international clients and blocking essential imports of caustic soda, spare parts and mining equipment.
A Bauxilum union official sees US sanctions as "only one small factor." The company's operations have been idled by "mismanagement, poor quality alumina, lack of electricity and the collapse of operational infrastructure that has not been maintained properly since 2000."
Bauxilum was able to produce only 40,000t of alumina overall from its official re-launch in mid-April 2019 until operations ended on 3 October, averaging about 6,666t per month, according to a 10 October CVG report on the state-owned aluminum industry seen by Argus.
Bauxilum is part of Venezuela's national heavy industries complex, CVG, based in minerals-rich Bolivar state. Like Bauxilum, most of the heavy industries including iron ore and steel production are closed or barely operating.
The alumina produced since April could not be exported because it failed to meet international quality specifications and is currently piled up at dilapidated storage facilities at Bauxilum, the CVG report states.
The Maduro government could not dispose of the poor-quality alumina through its local Alcasa and Venalum smelters, which have a combined 1,301 reduction cells. Both smelters have been out of service since successive blackouts in March destroyed the 71 reduction cells that were still operational in early March.
"The national blackouts in March killed what was left of the smelters," a Venalum official acknowledged.
Bauxilum's mine was producing about 120,000 t/yr of bauxite or 10,000 t per month at the end of September immediately before the company shut down, representing roughly 2pc of its nameplate capacity, the CVG report says. Efforts to raise bauxite output since April stalled because most of the mine's equipment is out of service, and US sanctions against the Maduro government have discouraged potential international bauxite buyers and foreign equipment vendors, the report adds.
"Even Chinese and Russian aluminum companies declined to get involved in Venezuelan aluminum after inspecting conditions on the ground," a Bauxilum union official said.
The CVG report estimates the cost of rebuilding Alcasa and Venalum at $650mn-$1bn, depending on the types of primary aluminum smelting technologies available in the market today. Alcasa's core reduction technology is about 50 years old, and Venalum's reduction technology is about 40 years old, the report notes.