Alumina

Alumina & Aluminium — Vietnam: the quick story

Alumina (Aluminium Oxide) sits squarely in the middle of the aluminium value chain:

Bauxite Al(OH)₃, AlO(OH)  (mining) → Alumina  Al₂O₃ (refinery) → Aluminium ingot AL (smelter) → Casting / rolling / extrusion → Finished products → OEMs / construction / packaging / transport.

Like ferrous metals, the aluminium system has two supply routes: a scrap/recycle route and a virgin ore-based route. Vietnam is set up to play both, but the ore-to-alumina pathway is the immediate, high-conviction opportunity. Vietnam hosts some of the world’s largest bauxite reserves concentrated in the Central Highlands (estimates around 5.4–5.8 billion tonnes), which gives the country a structural resource advantage. 

That advantage has spawned a rapid build-out of alumina refining capacity. Historically Vietnamese alumina output has been in the ~1.2 million tonne range, and government/market forecasts and projects point to continued expansion (analysts project Vietnam approaching ~1.5–4.0 Mtpa of alumina over the next few years as new phases come online). Much of this product today is exported rather than fed into domestic smelting. 

Why exporters? Because primary aluminium smelting is extremely energy-intensive: electricity is the single largest cost for a smelter, and power economics often determine whether a smelter is viable at all. That is why countries with cheap, reliable grid power (hydro, subsidised coal, integrated gas) have historically hosted smelters — and why building smelters in Vietnam has been challenging until very recently. Market participants therefore find it commercially sensible today to export alumina while refinery capacity grows and power/smelter economics are resolved. 

Vietnam is now at an inflection point. Refinery capacity is expanding and policymakers and developers are talking seriously about downstream integration (there are projects and announcements toward Vietnam’s first commercial smelters with phased start-ups planned). If those projects secure stable, affordable power, Vietnam could capture much more value domestically rather than exporting feedstock. 

Commercial implications — where the money is

Short-to-medium term: alumina export origination. Refinery owners and trading houses will continue to supply global smelters. That creates origination, logistics, and structured-trade opportunities — exactly the kinds of flows Clavis has been arranging.

Medium-term: capture downstream value if smelters come online. Vertical integration (alumina → smelter → finished aluminium) multiplies margin capture but depends on power economics, permitting, and infrastructure.

Risk management & informational edge. Participating physically across the chain (origination + logistics + hedging) gives better price discovery, earlier access to off-market liquidity, and more ways to manage basis, freight, and quality risk. That is why energy and commodity trading firms are increasingly active in the aluminium/alumina space across SE Asia. 

The practical constraint (and opportunity)

Constraint: power availability & cost — until Vietnam secures reliable, competitive bulk power for smelting, most alumina will economically flow to export markets. 

Opportunity: build flexible positions in physical alumina, logistics, and offtake, and be ready to convert to smelting participation as policy and power economics evolve. Countries that moved early to secure offtake and power contracts captured outsized value historically.

Why this is exciting for Vietnam (and for Clavis’ clients)

Vietnam’s resource base + growing refinery footprint = a rare set of fundamentals for organic industrialisation. 

Early entrants who combine origination, physical logistics, and structured risk management can monetise mispricings, offer liquidity to refineries, and position for downstream capture if/when smelters scale.

Clavis has helped clients source origination liquidity and move alumina for export; we remain active in monitoring refineries, projects, and power developments

If you’re exploring entry or positioning in Vietnam’s alumina chain — talk to Clavis. We connect strategy with physical execution. 👇