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Australian-based research house Morningstar said Indonesia accounted for about 10% of global bauxite supply and a far larger share of Chinese supply.
Rio Tinto, the owner of the Bluff aluminium smelter, renegotiated its contract with Meridian Energy to receive cheaper electricity in an effort to keep the smelter operating. The aluminium smelter takes all of the power generated from the Manapouri hydro generating station, sometimes buying more from the national grid.
The smelter is still expected to start winding down operations in 2016-17 but higher prices may give some breathing room to the Southland economy. Morningstar analyst Mark Taylor said Rio's bauxite volumes were a record 43 million tonnes in 2013, highlighting an ability to pick up Indonesian slack.
''We project aluminium will grow to one-fifth of Rio's expanded operating earnings by 2015, up from recent near negligible contributions.''
Chief executive Sam Welsh was ''vigorously'' stripping out operating and capital costs to improve profitability, Mr Taylor said.
That came at the cost of business diversification. Iron ore contributed 82% of group first-half 2013 earnings, a figure expected to increase to 86% in the second half.
At $A65.55 ($NZ69.43), Rio Tinto shares remained undervalued at a 13% discount to fair value, he said.
''Rio's business remains in recovery mode after losing its way under the former chief executive officer and the market is yet to completely forgive missteps.
''We think the share price also mistakenly bets on a continuation of unsustainable low aluminium and alumina prices.''
The ongoing dismantling of aluminium-linked contracts in favour of spot, and declining Chinese bauxite self-sufficiency, should realign prices in the aluminium complex to longer-term sustainable levels.
Morningstar was forecasting prices of $US1.15 ($NZ1.38) a pound for aluminium versus US80c per pound spot and $US450 per tonne for alumina versus $US335 spot.