INTERVIEW: Magontec to start magnesium alloys production at Qinghai facility in Q3

Australia-listed Magontec Ltd aims to start producing magnesium alloys at its Qinghai casthouse in the third quarter of this year, executive chairman Nicholas Andrews told Metal Bulletin during an interview on the sidelines of the 74th annual world magnesium conference in Singapore this week.

“We will take a pour of liquid magnesium from the Golmud plant in [China’s] Qinghai Province to produce alloys so no remelting is required,” Andrews said, adding that the plant has a magnesium alloys production capacity of 60,000 tonnes.

Magontec will receive 56% of the production from QingHai SaltLake Industry Co’s 100,000 tpy magnesium smelter which will convert, after alloying, into about 60,000 tpy of magnesium alloy at full production.

Magontec has exclusive rights to manufacture magnesium alloys at this location.

The company has a ten year lease for the alloy casthouse located at Qinghai Salt Lake Magnesium Co Ltd’s (QSLM’s) smelter complex with the option to extend the contract for a further ten years.

QSLM owns a 30% stake in Magontec.

Magnotec’s casthouse at the Qinghai smelter complex in China

The magnesium industry has seen massive disruption in the last 10-20 years, Andrews said.

“China started using cheap labour and coal power using the Pidgeon process for magnesium metal and nearly all the big international companies died and billions of dollars were written off.”

“The Qinghai facility is 85% supplied by renewable energy which reduces the environmental footprint to 6 tonnes of CO2 for each tonne of magnesium produced,” Andrews said of the green magnesium complex.

He compared it with other producers in China’s magnesium industry that use the high labour and energy intensive Pidgeon process which is “highly polluting at up to 25 tonnes of CO2 for every one tonne of magnesium metal produced”.

“We will be producing magnesium alloys in Qinghai but these will be environment friendly products.”

In addition to the 60,000 tonnes of magnesium alloy capacity in Qinghai, Magontec has 25,000 tonnes of capacity across its plants in Romania and Germany, as well as a further 30,000 tonnes of capacity at its plant in the Chinese province of Shaanxi.

Erection of the Qinghai casthouse

“The Qinghai plant will transform our business, we will be the largest magnesium alloys producer in the world. We are already number two or three in terms of exports [of magnesium alloys] from China, and the leading global magnesium alloy producer when the European operations are included,” Andrews said.

The bright spots for demand in magnesium alloys will come from China’s automotive sector and the move away from gasoline-powered and diesel-powered vehicles towards electric vehicles world-wide.

“China has 25 million new cars every year and those cars manufactured by Chinese automakers use very little magnesium, so if the Chinese used the same amount of magnesium as European auto manufacturers do then there is big scope for this light metal,” the executive said.

A car made in Europe on average uses around five kg of magnesium while cars made in China have less than one kg, according to Andrews.

“New electric vehicles have the potential to use 45kgs of magnesium each by 2030 according to some projections,” he said.

“An electric car will have the same problems with weight as a gasoline-powered vehicle,” Andrews pointed out, stating that “a Telsa weighs 2.5 tonnes of which one tonne is battery and engine with the rest being parts of the frame, so the lighter you can make everything, the more fuel efficient the car would be.”

He projects that within the next 10-15 years 50% of the world’s automobiles will be hybrid or electric vehicles.

Australian miner Straits Resources acquired Hydro Magnesium and changed its name to Magontec GmbH in 2007. In 2011, Advanced Magnesium Ltd bought the company from Straits Resources and changed its name to Magontec Ltd.

Global magnesium metal production totals some 878,000 tonnes per year with China producing approximately 743,000 tonnes. Magontec thinks around 40% or 300,000 tonnes of this figure is exported, Andrews said.

According to Andrews, approximately 281,000 tonnes of magnesium alloys is produced world-wide and if one assumes a 40% scrap rate then the total magnesium alloys produced globally including recycling is close to 400,000 tonnes.

China exported 116,000 tonnes of primary alloys in 2016, up 8% year-on-year. This is close to 45% of the total magnesium alloys produced in China, which Magontec estimates is around 260,000 tonnes.