Special Report-EU Looks to Rejuvenate Domestic Magnesium Production
- May 23, 2022
- Posted by: Quatro Strategies
- Category: Mining
The European Commission aims to restart domestic production of magnesium, which is a key metal in steel and aluminum manufacturing, with at least three companies have been working to develop projects.
A European Commission working document places a new emphasis on magnesium and a target of cutting dependence on major producer China. The document says an investment of up to 2 billion euros ($2.12 billion) will be needed to restart smelting activity in Europe by 2025.
With Europe consuming a fifth of the global magnesium supply, the issue has gained importance especially following Russia’s invasion of Ukraine.
Russia was the world’s fourth biggest magnesium producer last year, with an estimated 21,000 tonnes of output.
Europe is not a major buyer of Russian magnesium and the metal is not sanctioned, but Russia’s isolation means Europe can’t use it as a replacement if Chinese supplies are cut.
EU’s executive arm is concerned that a potential curb from China, which supplies 90% of the EU’s magnesium, could cause production cuts in automotive, aviation and other industries that use the mineral.
After supplies from China dropped last year, magnesium prices in the bloc have soared and forced the EU to accelerate efforts to secure domestic production.
As a result, EU policymakers have made magnesium production top priority along with rare earth magnets used in electric vehicles and wind turbines.
China, which dominates both, supplies 93% of the bloc’s magnesium needs.
The Commission aims the domestic industry to produce 15% of the EU’s magnesium needs by 2030.
The magnesium market is relatively small, with about 1 million tonnes of annual production, compared to 67 million tonnes of aluminum, but it plays a critical role in a wide range of products, from aluminum cans to airplane wings.
Magnesium prices skyrocketed late last year after the Chinese government’s efforts to curb power consumption reduced the output of a range of metals, including magnesium.
European industry groups warned the bloc last October that if magnesium shortage remains, plant shutdowns would become a possibility, putting millions of jobs in danger.
The EU has been looking at ways to revive production since then, although Chinese shipments to Europe resumed.
The last two European magnesium production facilities, in Norway and France, closed in 2001 mainly because of competition from cheap imports from China.
There are now three potential European projects that could produce magnesium in the coming years, two in Romania and one in Bosnia.
Verde Magnesium, backed by private equity firm Amerocap, is seeking to revive a brownfield mine in Western Romania and is seeking permission from the government. Verde hopes to start production by 2025.
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