Citi stated in a recent research report that in recent years, China's aluminum industry has become increasingly dependent on imported bauxite.

Since 2020, China's bauxite imports have grown rapidly, with a growth rate far exceeding that of aluminum production (the final use of bauxite).

Against the backdrop of Chinese companies advancing projects at an unprecedented pace to supply the Chinese market, Guinea has become an important source of China's imported bauxite.

According to data from the United States Geological Survey, Guinea possesses nearly one-quarter of the world's known bauxite resources.

Therefore, as a major supplier to the world's largest bauxite market, Guinea has always had the potential to become a significant supplying nation.

However, due to years of political instability and slow progress in project execution, Guinea only occasionally exported bauxite to China before 2016.

But this situation has changed.

China's bauxite imports from Guinea have grown for eight consecutive years, and on an annualized basis, imports reached 187 million tonnes in the first eight months of 2026.

In 2025, China's total bauxite imports grew 26% year-on-year.

Among them, bauxite imported from Guinea grew 35% year-on-year, raising Guinea's share of China's bauxite imports to 74%, up from 69% in 2024.

In the first eight months of 2026, China's bauxite imports grew 10% year-on-year.

Among them, bauxite imported from Guinea grew 16% year-on-year, accounting for 80% of China's total bauxite imports during the same period.

Citi pointed out that most of the growth in Guinea's bauxite production and exports comes from the SMG/WAP project led by China Hongqiao (01378), the world's largest aluminum producer.

The SMG/WAP project was launched in 2015 and added more than approximately 50 million tonnes of export capacity around 2018.

With the commissioning of this project, the true third-party bauxite market has shrunk.

Citi added that the "upstream integration" effectively achieved by Chinese smelters has reduced demand for traded bauxite, thereby structurally depressing bauxite prices, which is beneficial to profit margins.

Citi assigned a target price of HK$48.0 to China Hongqiao, corresponding to a 2026 expected price-to-earnings ratio of 13.0 times, in line with the average level of its Chinese peers.