Life after steel: Is there more for magnesia? The global steel industry may have taken a turn for the better, but refractory magnesia continues to face oversupply. Cameron Perks, IM Correspondent, looks at why the decline of magnesia s largest end market is failing to deter new entrants to the sector. 32 INDUSTRIAL MINERALS April 217
Global steel production began to recover last year and the first few months of 217 have also shown strong growth in worldwide crude steel volumes. While this looks like a positive indicator for refractory minerals like magnesia, sharp cuts to steelmaking capacity in China, low capacity utilisation rates and moves towards consolidation in the European steel sector means that net demand growth for refractories remains under pressure. Nevertheless, several companies around the world are looking to enter the magnesia market or expand within it, in the expectation that refractories demand will rebalance and that opportunities in areas such as agriculture will bolster consumption volumes and prices. The world s leading importer of magnesite and magnesia, the US, saw imports increase in 215 to 571, tonnes from 362, tonnes in 214, but volumes then fell back again to 348, tonnes in 216 (see Figure 1). The majority of US imports are magnesia, rather than magnesite, with the former making up around 86% of the volume it received in 215. According to the US Geological Survey (USGS), US imported and locally produced magnesia is predominantly caustic calcined magnesia (CCM) for use in the chemical industry, agricultural supplements and environmental applications. In 216, the leading sources of US magnesia/ magnesite imports, in descending order, were China, Brazil, Canada, Australia, Turkey and Russia. Last year, imports from China as a percentage of the overall quantity fell by four percentage points from 215, while shipments from Brazil, Australia, and other countries also fell slightly. By contrast, imports from Canada Tonnes Figure 1: US imports212-216 (tonnes) 6, 5, 4, 3, 2, 1, 212 213 214 215 216 rose 5% and those from Turkey increased by 2% (see Figure 2). The quality of the starting ore is an important determinant of the quality of the magnesia product and therefore only certain sources around are able to meet the standards of end users, which are often located in different parts of the world to the best magnesite mines. Mike Miller, an industry consultant based in Perth, Australia, has conducted various CCM-MgO product evaluations for benchmarking purposes. He told IM that magnesite mineralogy is important for CCM quality for two reasons. First, the presence of impurities in the magnesite largely determines the final magnesia grade. Secondly, fine-grained (cryptocrystalline) magnesite, under the correct calcination conditions, produces fine-grained magnesia, China Brazil Canada Australia Turkey Russian Federation Other which has a higher population of reactive sites along the extended grain boundaries. For this reason, coarse-grained magnesite generally produces less reactive magnesia, he said. Canadian magnesite projects Canada s growing share of the US magnesia market is encouraging for projects such as Karnalyte Resources Inc. s carnallite-sylvite mineral deposit, located near Wynyard in Canada s Saskatchewan province. The company hopes to produce magnesium chloride brine, as well as a synthetic magnesium carbonate (see box). According to its NI 43-11 report released in June 216, Karnalyte s synthetic magnesium carbonate product can be used in the paint and printing industries as well as in fireproofing, fire-extinguishing, flooring, polishing compounds and as fillers and smoke Magnesia and magnesite Magnesia is commonly produced by either calcination of naturally occurring magnesium-bearing minerals or by calcination of magnesium hydroxide that has been precipitated from liquid sources (see below). The latter form is known as synthetic magnesia. Formula: Magnesite + heat = magnesia + carbon dioxide Figure 2: US imports by origin in 216 (tonnes) 5% 4% 3% 7% MgCO 3 + heat = MgO + CO 2 Magnesia can also be produced from the calcination of brucite (magnesium hydroxide), but this source is limited by the availability of economic ore deposits. 11% 11% 59% Synthetic magnesia The calcination of magnesium hydroxide that has been precipitated from seawater, brine or similar sources produces synthetic magnesia. Synthetic magnesia is generally purer than other magnesia grades, but is more expensive to produce than magnesia made from magnesite. Due to this cost premium, synthetic magnesia is generally excluded from use in the hydrometallurgical industry. China Brazil Canada Australia Turkey Russian Federation Other April 217 INDUSTRIAL MINERALS 33
% Growth Figure 3: Value of US magnesia imports (212-216) 1 5-5 -1-15 -2-25 -3-35 212-13 213-14 214-15 215-16 suppressants in the paper, plastics and rubber industries. It notes that high purity magnesium carbonate is also used as an anti-caking agent in salt, as a bulking compound in powder formulations and as an antacid. In late 216, Karnalyte announced plans to build a pilot magnesia production plant to make samples that can be used to fully explore potential markets. The company aims to produce 18, tpa high-purity magnesia. Elsewhere in Canada, MGX Minerals Inc. is looking to build a magnesite mine at Driftwood Creek near Cranbrook in British Columbia. Last year, the company conducted a drilling programme to obtain a 1 tonne magnesite bulk sample for detailed metallurgical testwork and has since commenced a preliminary economic assessment (PEA) of the project. West High Yield Resources Ltd (WHY) is also developing a project in British Colombia, located between the US border and Vancouver, and is currently working on environmental studies and a mine plan, along with microplant scale production simulation tests being undertaken by US-based Drinkard Metalox. In Quebec, Mag One Products Inc. is due to begin constructing a magnesium compound plant this year to process serpentinite tailings using its own proprietary technology. The initial plant has a projected capacity of 18, tpa magnesia, but will also aim to produce magnesium metal. Rather than establishing a vertically integrated business model based on its own magnesite mines, Mag One is looking to become a technology and processing company, producing materials that target the magnesium-based structural-insulated sheathing industry. Australian magnesite projects Along with a number of magnesite development projects, Australia has various active magnesite mines, including the Kunwarara deposit near Rockhampton in eastern Queensland, which is the world s largest known source of ultrafine-grain cryptocrystalline to microcrystalline nodular magnesite. The mine produces approximately 3m tpa magnesite ore, according to USGS estimates, and belongs to Belgian speciality mineral company, Sibelco. Causmag International s Thuddungra project near Young in New South Wales (NSW) has a production capacity of approximately 18, tpa. The company had its licence suspended in August 216 over unpaid environmental fees, although this was lifted later that month by the NSW Department of Industry s Resources Regulator, after the company paid a Australian dollar ($A) $54, ($47,457*) environment rehabilitation security deposit. While Canadian magnesia companies have robust market opportunities in North America, particularly in neighbouring US, their peers in Australia are naturally looking to Asian markets. Australian magnesia producers already have strong export relationships with some Pacific nations, including New Zealand, where there is a growing market for agricultural lime (see Figure 4). But the prospect of growing populations in the Association of South East Asian Nations (ASEAN) region and their projected demand for magnesium-based chemicals tends to be cited as the justification behind the expansion of many existing Australian magnesite projects and the development of new ones. Thessally Resources Ltd, an Australian exploration company focused on the Huandot magnesia project 8km south of Darwin in the country s Northern Territory, sees future demand growth coming from the ASEAN. Formed in 215, ASEAN includes Indonesia, Malaysia, the Philippines, Singapore, and Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam and has a population of more than 6m and a nominal GDP of $2.31 trillion. Indonesia imported around 9, tonnes magnesite and magnesia in 215, up from around 7, tonnes in 211, an increase of around 3% (see Figures 5 and 6). Australia has various free trade agreements with ASEAN members, giving its magnesia exporters a potential advantage over suppliers from other Western nations. ASEAN is rapidly becoming a very important customer for magnesia products, Thesally Resources told IM. The company is optimistic about high growth rates in the region s agricultural sector, which may ultimately become a food supplier to large consumers like China. Thessally s Huandot project is based on a shallow, macrocrystalline magnesite deposit with a JORC resource (indicated and inferred) Figure 4: New Zealand magnesite and magnesia Imports 21-216 1, 8, 6, 4, 2, 21 211 212 213 214 215 216 China Australia Other 34 INDUSTRIAL MINERALS April 217
of around 9m tonnes at 44% magnesium oxide (MgO). Approximately 25, tonnes of ore has been lifted from the deposit on a trial mining basis and bulk samples have been sent to the Canadian arm of Norway-based aluminium producer, Norsk Hydro, for testing. Thessally has also performed various end user specification studies on CCM and is currently looking for equity partners with an interest in offtake agreements for Huandot material. Also in the Northern Territory, diversified mineral explorer Korab Resources Ltd is developing the Winchester magnesite deposit, for which it completed a pre-feasibility study (PFS) in March 215. Following the release of the Winchester PFS, Korab entered a $6m development funding arrangement with undisclosed Chinese steel interests. The company believes that the growing market for magnesium carbonate will continue to expand, due primarily to demand for MgO in refractory bricks, flame retardants, fire and moisture-resistant building materials, magnesium alloys, hydrometallurgy, water purification and soil treatment. In South Australia, Archer Exploration Ltd is working on the Leigh Creek magnesite project, which claims to be the world s largest cryptocrystalline (fine grained) magnesite deposit at 453m tonnes at a grade of 41.4% MgO. Tonnes Figure 5: Indonesian magnesite and magnesia Imports 211-15 (excluding China) 25, 2, 15, 1, 5, 211 212 213 214 215 Archer recently announced that its magnesite is being tested by the Australia-based Commonwealth Scientific and Industrial Research Organisation (CSIRO), with dead burned magnesia (DBM) and CCM products currently being assessed. Calix Ltd, an Australian magnesium Australia Rep. of Korea Malaysia India Singapore Other Australia currently exports more magnesium minerals than all other countries outside China combined. The country hosts around 33m tonnes of demonstrated economic magnesite resources, including 95m tonnes of reserves. materials company, built its first flash calciner at Bacchus Marsh in the state of Victoria in 211 and acquired mining tenements in South Australia in 212, giving it access to high grade magnesite. By 214 the company had built its first magnesium hydroxide liquid manufacturing facilities in Victoria and Queensland. April 217 INDUSTRIAL MINERALS 35
Magnesia Figure 6: Indonesian magnesite and magnesia Imports 211-215 (including China) 1, 8, Tonnes 6, 4, 2, 211 212 213 Australia China 214 215 Other The company is currently exporting to Europe and South East Asia and in early March it announced that its BOOSTER-Mag product had achieved registration as a fertiliser in the Philippines for almost all crops. The trademarked product is applied to crops as a foliar spray to promote plant growth and combat disease. The Philippines currently imports over 4, tpa magnesium minerals, of which China is the main supplier. Calix also sells its ACTI-Mag water treatment product in the Philippines and has reported growing sales across its product lines, including for air treatment and infrastructure. We are focusing on high value, new markets being developed in Australia and overseas as a result of our patented calcining technology, Calix told IM, adding that it hopes to expand into the US and China by its next financial year. The Bandalup magnesite project (BMAG) near Ravensthorpe in Western Australia recently began producing small amounts of magnesite. The company told IM that the first 6 tonnes have so far been extracted from the site for use as an alternative liming agent to limestone and as a source of magnesium in broadacre (large scale crop) farming. The company is looking to mine around 2, tonnes magnesite over 217-218 under its approved programme of works. Last year also saw Jindalee Resources Ltd obtain the Arthur River and Lyons River magnesite deposits in Tasmania, now rechristened as the Prospect Ridge magnesite project. Rest of the world magnesite projects Apart from China, which continues to dominate the global magnesia market, there are few countries outside Canada and Australia where significant new magnesite deposits are being developed. Russia s Magnezit Group is a major producer of magnesia for Russian and CIS nations and has a number of new deposits under licence, at various stages of development. Austrian refractories producer RHI AG owns magnesite mines in Austria, Italy, Turkey and China and recently agreed to merge with Brazilian producer Magnesita SA, consolidating the company s Brazilian mines with its own operations. The Turkish magnesia industry has had a difficult time in the last few years and early 216 saw the closure of 5-year old magnesia company, Superates, due to tough trading conditons. Others, like Akdeniz Mineral Kaynaklari, which is a joint venture with Greece s Grecian Magnesite, have managed to weather the tough market by concentrating on high purity, speciality CCM and other types of magnesia. In view of the uncertainty about the future of the magnesia industry, over the last few years, Greek magnesite miner Terna Mag S A has been deliberating over whether to proceed with the third phase of its magnesite project on Euboea island in southern Greece. Last year, its parent, GEK Terna Group said it had decided to invest around 1m ($16.7m) in its facilities at Mantoudi Evia to produce CCM, DBM and magnesium hydroxide. Around 25m of this had been spent as of 3 June 216. Having reported a small rise in revenues in the six months to the end of June 216, the company predicted strong demand growth for CCM, which unlike other types of magnesia has a diverse end user base, over the coming years. RHI however recorded a decline in 216 revenues in its preliminary earnings statement, Thessally Gabriella Kiss 36 Terna Group in Greece are deliberating over whether to proceed with the third phase of their Magnesite ore displaying a stromatolitic texture magnesite project. at Thessally s Huandot Deposit. INDUSTRIAL MINERALS April 217
which it attributed to continued falling demand for magnesia in refractories due to rising steel inventories. RHI has recently stated that it considers the company has met its target of strategic raw material vertical integration and its priority is now to balance its use of internal magnesia supply with external purchasing and selling options. Exploration companies such as Archer and Korab are now chasing cobalt, and it looks like until magnesite prices go over the $25/ tonne mark, and general demand picks up, these projects will remain sidelined for years to come. Thessally 217: Make or break for magnesia? According to the USGS, the leading end use of magnesia continues to be in refractories for the steel industry. According to the World Steel Association (worldsteel), world crude steel production increased by.8% last year from 215 to 1.63bn tonnes, although this was still 1.8% lower than the 1.66bn tonnes produced in 214. China, which accounts for half of global steel output, has pledged to slash its steelmaking capacity and claims to have cut 65m tonnes in 216 although these figures have been questioned in light of export and inventory data. The country has said it will axe a further 5m tonnes of steel capacity this year, and whatever the success of the policy, the nominal trend is A cross section of Thessally s Huandot magnesite deposit showing an outline of the proposed pit. likely to mean lower refractories consumption. Chinese demand for DBM and fused magnesia (FM) is expected to decrease with steel production and the lack of any coordinated reduction policies in the refractories sector has meant a surplus of supply. IM reported in March this year that Chinese magnesia export volumes surged in January while the value of the material plummeted, according to Chinese customs data. Even CCM has not been immune, with average price of CCM exported in January falling by 14.17% month-on-month to $162.33/tonne, the lowest value seen in the last four years of obtainable customs data. On the other hand, it has been suggested that environmental crackdowns in China s magnesia industry could curb supply by forcing closures of some of the most polluting plants, which may lend some support to prices. Most new magnesia suppliers, though, are thinking beyond refractories and looking at alternative markets like agriculture which have promising growth projections. Better technology and investment in R&D are also helping to create new applications for magnesia, which may benefit from a shift towards speciality chemicals as traditional bulk markets come under increasing pressure. *Conversions made March 217 QUALITY FOCUS WITH CUSTOMER TECHNICAL SUPPORT IFM Fused Minerals Hull Ltd is the world s leading producer of specialist grades of magnesia for use in electrical and other specialist applications. As part of Imerys SA, the Paris-based international minerals company, IFM Hull Ltd offers its customers a collaborative development service in some of the most sophisticated R&D facilities in the industry. Manufacturing operations now centred in Europe with a global network of sales agents and distributors, IFM Hull Ltd products are used worldwide in a range of applications from the most basic heating to the most sophisticated industrial applications. Electrical grade magnesias Silicone coated powders Refractories Automotive applications Ceramics Dental The next time you take a shower, boil your kettle or drive your car, there is a strong possibility that you will be using a product from IFM Hull Ltd. For more information contact: For Europe, Africa & Asia For North & South America Hull, UK Muscle Shoals, USA TEL: +44 1482 899141 TEL: +1 256 381 4217 FAX: +44 1482 89196 FAX: +1 256 381 4168 ifm-hu@imerys.com www.imerys-fusedminerals.com IFM Hull Ltd, Hull Road, Saltend, Hull HU12 8ED, UK April 217 INDUSTRIAL MINERALS 37