Editor: Adam Zhang
With Chinese magnesia supply dwindling, or ceasing altogether in some markets, Adam Zhang , the oversea minister of Northeast Asia Industrial Minerals Exchange, discusses the supply situation outside of China.
Magnesia prices were low at the start of 2017 but have since risen considerably. Fused magnesia (FM) prices in particular increased by 326% from the end of January to October.
There has also been international progress, specifically for Magnezit in Russia, the Industrial Mining Company (IMC), a subsidiary of Ma’aden, in Saudi Arabia and AusMag (Korab Resources) operating in Australia.
Additionally, a recent merger between RHI of Austria and Magnesita of Brazil has formed RHI Magnesita, which is now trading on the London Stock Exchange (See pp31-32).
RHI AG (RHI) and Magnesita Refratarios SA (Magnesita) announced their merger on October 17; RHI Magnesita commenced trading on the London Stock Exchange on October 27.
RHI’s refractory production in 2016 was 1.5 million tonnes while that of Magnesita was 1.3 million tonnes. The combined company achieved pro-forma revenues of €2.5 billion ($2.96 billion) in 2016.
In 2016, China accounted for 26% of global magnesite resources, 63% of global magnesia production and 65% of refractories. The majority of production in China is from Liaoning province, the world’s main magnesia-producing region. In 2017, environmental inspectors from central and local government forced many magnesia plants, including caustic calcined magnesite (CCM), dead burned magnesite (DBM) and FM facilities, to halt production to reduce pollution.
The government also imposed restrictions on the use of dynamite for mining in many areas, leading to a magnesia supply shortage. In 2017, the export taxes for DBM and FM (10%), CCM (5%) and the quota fee (around RMB 260-350 ($30.20-52.76) per tonne) were cancelled. Consolidation is forthcoming in Liaoning, with state-owned Haicheng Magnesite Refractory General Factory taking control of all magnesite mines in Haicheng, accounting for a third of the total resources in China. Anshan is also planning to consolidate all local magnesia companies into one state-owned conglomerate.
Supply constraints have led to an unprecedented rise in magnesia prices due to material shortages.
CCM, DBM and FM fob China prices from January 19 to October 31 are shown in Table 1, including percentage increases covering the first 10 months (48% for CCM, 220% for DBM and 326% for FM).
The halting of operations at several small companies, magnesia producers being able to pay cash on delivery, magnesia kilns halting operations for environmental protection (341 kilns in Daashiqiao and 529 kilns in Haicheng) and a rise in coal prices propelled the domestic Chinese magnesia price higher.
Although China has previously exported little ore, it shipped 118,453 tonnes of magnesite to Indonesia (76,907 tonnes - 65%), Japan (33,308 tonnes - 28%), the Philippines (7,200 tonnes - 6%) as well as Malaysia, South Korea and India (1,038 tonnes - 1%) over the first nine months of 2017. Magnesia export volumes in the first three quarters of the year are shown in Table 2 alongside year-on-year percentage increases.
China is now importing significant tonnages of magnesia, mainly from North Korea
(Table 3). Magnesia imports totalled 153,054 tonnes in 2016; imports in the first nine months of 2017 were 137,043 tonnes.
Magnesia imports from North Korea into China in 2016 were 114,876 tonnes of CCM (97% of total imports) at an average price of $170 per tonne, 27,810 tonnes of DBM (89%) at an average price of $162 per tonne and 2,360 tonnes of FM (95%) at an average price of $390 per tonne.
In the first nine months of this year, China imported from North Korea 104,808 tonnes of CCM (99% of total), 22,502 tonnes of DBM (82%) and 2,202 tonnes of FM (55%). Prices averaged $138 per tonne, $130 per tonne and $325 per tonne respectively.
Another main importer of FM was Russia with 1,545 tonnes (38%) at an average price of $636 per tonne.
With difficulties in supplying magnesia set to continue, growing shortages and, therefore, higher prices are expected into 2018. Stronger FM prices are prompting RHI to consider a restart of its Porsgrunn plant in Norway by the end of December 2017 after operations there were suspended in August 2016.