Can Venezuela’s aluminium industry be revived?

The geopolitical conversation around Venezuela may be heavily focused on oil, but beneath the Orinoco Belt and Guayana Shield lie an enviable array of other resources, including vast swathes of the bauxite from which aluminium is extracted. The country once ran a sizeable aluminium mining and production operation, could it again? 

Our new report Beyond oil: what would it take to revive Venezuela’s aluminium industry? employs Wood Mackenzie’s industry expertise and on-the-ground experience to provide an answer. Fill out the form at the top of the page to read the full insight, or read on for a quick summary of the pros and cons.  

The positives: vast resources and an existing bauxite-alumina-aluminium value chain 

Venezuela boasts over 300 million tonnes (Mt) of proven bauxite reserves and up to a massive 5,000 Mt of inferred resources - more than enough to guarantee long-term supply (for context, Guinea and Australia, the world’s biggest bauxite producers, have 7,400 Mt and 1,986 Mt of inferred resources respectively). Venezuelan bauxite is of high quality, with characteristics that make it suitable for efficient low-temperature refining, minimising energy and caustic soda consumption and thereby reducing costs. What’s more, mining it requires no blasting, and shallow overburden means relatively low amounts of waste are created. 

A clear advantage over other frontier jurisdictions is that Venezuela once ran a sizeable aluminium value chain. As well as the Los Pijiguaos mine, this includes an alumina refinery and two aluminium smelters with a combined historical capacity of 610    ,000 tonnes per year. All these facilities leverage what should be abundant hydroelectric power from the Guri and Macagua dams. Finally, downstream at Guayana City, Sural was once a significant producer and global exporter of electrical-conductor-grade aluminium wire rod. 

The negatives: ageing, damaged infrastructure and unreliable power supply 

Unfortunately, while the industrial footprint remains, Venezuela’s aluminium industry is now largely idle, a victim of power shortages, underinvestment and sanctions.  

Los Pijiguaos is a world-class mine, but significant investment is needed in new mining equipment, as well as conveyor, rail and port systems. Similarly, while Bauxilum’s Interalumina refinery enjoys access to high-quality domestic ore, it suffers from ageing equipment, poor maintenance and an unreliable power supply. To restore production, digestion circuits, residue management and process control systems will all need to be modernised. 

Venezuela’s two smelters are in an even worse state. Two of the Alcasa facility’s four lines were dismantled years ago, while the remaining two lie idle and largely cannibalised, victims of a lack of funds and international supplies to keep them operational. At, Venalum, once the biggest smelter in Latin America, production has also largely collapsed. Over time, problems deriving from frequent power outages and ageing technology have been exacerbated by labour unrest, financial issues and supply bottlenecks in raw materials, bringing the plant to a virtual standstill.  

A covetable resource? 

It’s worth noting that in the past, various foreign firms were involved in Venezuela’s aluminium industry, including Western majors such as Alcoa and Glencore. Despite the poor current state of key infrastructure, aluminium’s critical role in sectors including defence could make Venezuela’s bauxite-alumina-aluminium value chain attractive, particularly to the US. The key question is, what would it cost to revive the country’s aluminium sector and bring it into the 21st century?  

Fill out the form and download the full report to find out.