Acquisitions in the caustic
calcined magnesia (CCM) market and a shifting of suppliers mean
that as well as spaces opening up, there may be some potential
supply blockages in the future.
Of note were the acquisitions by
RHI in 2011. The Austria-based company made significant moves
to become entirely self sufficient in its dead burned magnesia
(DBM) and fused magnesia (FM) production. Firstly it acquired
Premier Periclase Ltd (PPL), a seawater magnesia producer of
low silica, high density, low iron oxide, large periclase
crystal DBM with a 75,000 tpa capacity at Drogheda, Co. Louth,
Republic of Ireland.
PPL also has production capacity
for 80,000 tpa CCM and 90,000 tpa Mg(OH)2.
In the same year, RHI acquired SMA
Minerals Magnesia SA, renamed Normag AS, a producer of high
quality seawater CCM for speciality markets at Porsgrunn,
Norway.
Here RHI plans to use the CCM as
feedstock for a new €70m, 80,000 FM plant at Porsgrunn
with 10 EAF, the largest single FM plant outside China. The
plant started up in late 2012, but was temporarily closed in Q1
2013. This was due to a technical default. Now, however,
eight-furnaces are up and running, RHI confirmed with
IM.
The acquisition of SMA was
portrayed as RHI successfully vertically integrating and
expanding its FM supply - but, by doing so, two CCM producers
were taken off the market.
“There’s a question mark
over SMA - will it continue to supply as they were?”
Roland Murenik, manager business development & research,
magnesia division, ICL-IP, Israel, asks.
“It was told that RHI would
run the plant as fused magnesia so if that happens then they
will disappear [as a CCM outlet],” he added.
“Traditionally RHI is quite a
small CCM producer and CCM is a niche market for us - and
that’s where we see RHI in future as well,” Bernhard
Goliasch, RHI’s head of supply chain, told
IM.
QMAG
Multinational privately-owned
industrial minerals group SCR-Sibelco NV acquired Queensland
Magnesia Pty Ltd (QMAG) of Australia in April 2012.
QMAG mines, pre-concentrates, and
beneficiates magnesite at Kunwarara, and processes ore to CCM,
DBM and FM grades at its Parkhurst plant at Rockhampton, 70km
south of the mine.
The company produces only small
volumes of CCM, CEO Campbell Jones told
IM.
“We are a small producer and
only supply small volumes of CCM. As in the past our main
volume is refractory,” he added.
QMAG produces 115,000 tpa of DBM,
35,000 tpa of Electrofused Magnesia (EFM) and 175,000 tpa of
CCM, according to a presentation given by the company at the
Queensland Energy Forum in 2011. However, since then the
company has moved to purchase some additional CCM capacity.
In August 2011 QMAG signed an
agreement to purchase and restart an Australian cement plant to
facilitate an additional 100,000 tpa of CCM. This was expected
to be online in 2012-13.
Kumas enters the fore
Kumas, the Turkish DBM producer,
moved into the CCM space in May 2011 with the acquisition of
Bomex Holding’s 98% shareholding in Bommag Manyezit Sanayi
ve Ticaret Ltd Si.
The company has expanded CCM
capacity, at its now-named Tavsanlõ plant, to 50,000
tpa, Nafiz ...zdemir, marketing manager, told
IM.
“In our first year we spent to
improve the reputation of the plant and products that were
destroyed by the ex owner of the company,” ...zdemir
said.
“We invested in very fine
products in our plant. After we did that we achieved good sales
level for the use of animal feed and grinding,” he
added.
The company consumes 15,000 tonnes
of CCM for use in producing FM.
“We are consuming high quality
for ourselves and selling medium and low quality. Our aim is
producing more high purity CCM and selling to the market,”
...zdemir told IM.
Kumas said it will aim to increase
its CCM production in the next two years, to 90,000 tpa.
“We are planning to produce
more high purity materials,” ...zdemir told
IM, emphasising that the company will continue
to sell CCM into the animal feed and fertiliser
industries.
Grecian stays ahead of the game
Greece has been in the headlines
for all the wrong reasons over the last year. But for Grecian
Magnesite, despite the country’s poor economic
performance, the future looks positive.
The company has worked hard to
implement cost-cutting measures and has invested heavily in
research and development (R&D).
“Despite the very difficult
situation Greece has faced over the last years resulting in
increased taxes, increased financial costs, as well as
increased environmental costs, we have managed to reduce
somewhat our production cost,” Pantelis Vetoulas, sales
and marketing manager at Grecian Magnesite, told
IM.
The company has decreased its raw
material cost (kiln feed magnesite) with investments in new
beneficiation technologies, the use of bio-fuels in its kilns
and the utilisation of its old magnesite stock piles.
This has resulted in increased
production capacity, lower costs and a better quality of kiln
feed magnesite (hence better quality of CCM), Vetoulas
said.
Production of new high purity
(natural) CCM grades, from Grecian’s Turkish affiliated
company Akdeniz, is continuing. This holds a MgO content of up
to 98% with extremely low impurities
(Fe2O3 < 0.05%) heavy metals and trace
elements as well as advanced physical properties such as
specific surface area up to 100m2/g.
It also worked to double production
capacity of its mine and plant in Akdeniz, Turkey, to
>30.000 tpa CCM
The global CCM market
The CCM market is not the largest
end use for magnesite. Global production in 2011 was 3.05m
tonnes, of 10.7m tonnes (see pie chart of total magnesia
products).
The largest part of the market
(between 1.3-1.6m tpa) is for general chemical grades,
construction and agriculture. An estimated 500,000 tpa of the
market is intended for environmental and high purity magnesia
chemicals and 100,000-150,000 tpa is intended for specialities,
according to ICL Industrial Products.
As can be seen by the value pyramid
(graphic 1) it is this, the smallest market sector,
which commands the highest value. It is at this level that
prices will leap from the $200-400/tonne level (see table
3) to be over $1,000/tonne.
China
China is the largest CCM producer,
accounting for 49% of the CCM market (1.5m tonnes).
Of this, in 2011, 264,000 tonnes
was exported to outside markets and three countries - the
Netherlands, the US and Japan - accounted for 66% of
exports (see table 3).
China remains a factor for those
companies producing outside of the regions, sources told
IM. This is mainly true in lower end markets,
as the country does not tend to compete in the higher
specification CCM market.
“As far as our product is
concerned China is not an issue,” Murenik told
IM.
For others, however, China remains
an important issue.
“China is still a factor, due
to low demands in China and high free capacities,”
Goliasch told IM.
Doug Bopst, VP sales at Martin
Marietta Magnesia Specialties (MMMS), US, agreed, telling
IM that because of its position as a low-end
supplier, China remains extremely important in the CCM
market.
MMMS, with its brine sourced
synthetic CCM and Mg(OH)2 production at Manistee,
Michigan, produces light burned, hard burned and speciality
grades for medium to high end CCM markets, such as chemicals,
glass, ceramics, water treatment, rubber, and plastics.
In 2010, MMMS entered the nutrition
market with its Food Grade MgO (Marinco FCC).
Another reason why China is a
factor in the CCM market is because there are major
discrepancies between prices (see table 5), producers
told IM.
“There is a discrepancy
between agricultural CCM sourcing cost from China and the
market price,” Hagen Schultes, president of Baymag told
IM.
“The cost has risen
significantly since late 2012, but the market has not followed
yet,” he added.
Elsewhere, Grecian Magnesite agreed
that China remains ever important in the CCM market.”China
still remains a critical/decisive factor in the CCM supply
[and] pricing,” Pantelis Vetoulas, told
IM.
Prices
While most industry participants
maintain a silence on pricing of CCM most said they believed
levels to still be in line with those published in
IM (see table 4).
Depending where, or which market is
being targeted, opinions divide as to what the next quarter, or
even the next year, may bring. According to several different
market sources, Chinese prices have seen some upside, but these
have not yet been carried into contracts Ñ which means
there is the chance that prices could rise in the next
quarter.
Elsewhere, in the US, prices remain
stable, according to Doug Bopst, vice president of sales,
MMMS.
“Caustic calcined markets for
synthetic magnesia are mature in North America. Markets can be
described as flat to down,” he told
IM.
“I have not seen an increase
in CCM price in the last year, although one or two people have
said that they expect increases,” Gerry Spoors,
Development Manager of Omex Environmental Ltd, told
IM.
For Israel Chemicals Ltd (ICL),
which produces high quality CCM, prices “have marginally
increased,” according to Murenik.
“There’s an acceptance of
the fact that there is a lot of cost input into producing
quality magnesia. This has been recognised by customers.
There’s an increase that comes with quality magnesia in
terms of regulatory; consistent quality; consistent service
these are things that customers appreciate,” he added.
Bopst agreed that input costs had
increased, citing increased energy, raw materials, taxes,
logistics as well as regulatory costs.
Kumas, meanwhile, was more frank,
saying that the cost of energy has seen an increase of price of
around 8%.
“Prices of CCM have been
changing between $300-680/tonne FOB Gemlik,” ...zdemir
told IM.
A change in pricing is anticipated
in the future also, with most sources saying that they believe
that the increase in energy, personnel costs and regulatory
pressures will doubtless see increases in prices for 2013.
However contracts are expected to
remain in place, with spot pricing reserved for smaller
quantities, RHI told IM.
“For big quantities: contracts
are agreed far in advance, for small quantities: rather spot
pricing,” Goliasch told IM.
Vetoulas meanwhile said that
Grecian Magnesite had “seen a softening trend in CCM
prices (with some ups and downs) since the end of 2011 (...)
with CCM prices currently stabilising, at relatively low
levels.”
The main drivers, he added, were
Chinese prices, smuggling (including North Korea via China),
new CCM producers and capacity increases of existing producers
and the downturn in the global economy.
“Due to our substantial
product range and diversity of applications served, our CCM
prices can vary from €200/tonne up to
Û600/tonne,” Vetoulas added.
Growth in
demand
Each source questioned had
different ideas as to where demand growth will take place. For
RHI, there had been an upwards shift in demand for CCM used for
water and gas desulfuration (for chemical, pulp and paper,
leather tanning.)
For Kumas, demand is expected to
increase in the insulation board endmarket, according to
...zdemir.
For Omex, there has been a marked
growth in demand in trace element additives.
“Biogas is produced in
anaerobic digesters, by the action of microbes on waste
materials and the amount of gas produced can be substantially
enhanced by adding essential trace elements as food supplements
for the biomass,” Spoors told IM.
The market for trace elements is
increasing worldwide and Omex has expanded its sales team to
increase its efforts in this area.
“A rather new trend would be
the successful replacement (wherever technically feasible) of
synthetic CCM grades with high purity natural CCM grades in
non-commodity, specialty applications,” Vetoulas divulged
to IM.
“Volumes in these markets have
been rather stable with signs of moderate increase with prices
decreasing, in certain cases, due to the lower production
cost/selling price of natural CCM versus synthetic CCM,”
he added.
Regulation
Without doubt, the most regulated
end market for CCM is the pharmaceutical and food market - and
in recent years this has become even more stringent.
In the US regulations pertaining to
CCM in food or drugs is regulated by the Food and Drug
Administration (FDA).
There is more than one set of
regulations. Companies must adhere to the ICH Good
Manufacturing Practise (GMP) for active pharmaceutical
ingredients.
This sets out quality, safety,
efficacy and multidisciplinary guidelines.
Companies also must adhere to the
US FDA Code of Federal Regulations (CFR) Current GMP for
finished pharmaceuticals (Q7A/CFR 211).
This sets out the minimum GMP for
preparing drugs for both humans and animals.
In Europe, companies must also
adhere to the ICH regulatory framework, which includes GMP I
and II and Annex 18 Part 2. The industry is regulated by the
European Medicines Industry.
As well as this, companies will
have to adhere to regulatory frameworks within their own
country.
ICL, which produces CCM for the
high-end specialities sector, must adhere to all these
different frameworks, Murenik told IM.
“For our pharmaceutical and
food grades we require stringency in terms of the materials and
stringent requirements from regulatory bodies,” Murenik
explained.
The company is the largest producer
of CCM for the specialities sector.
“If you look across the
breadth of the world, we are the largest. We are by no means
the largest producer of CCM but I think in terms of
applications, we have the largest diversity,” Murenik
added.
Agrimarkets
The agricultural sector is a vital
end market for magnesia. CCM is typically combined with animal
feed and given to cattle and sheep, and blended with
fertilisers to increase nutrients in farming soil.
Grass tetany is primarily a
magnesium deficiency disease of cattle and sheep that causes
uncoordination, muscular tremors, and even death.
One of the most effective aids in
prevention of grass tetany is by feeding cattle a
high-magnesium mineral supplement made with CCM.
In the US, the use of CCM in feed
has decreased, David Johnson from Premier Magnesia told
IM.
“The [CCM] market has been
little changed with the exception of the feed market,” he
said.
“Droughts in the US over the
last two summers have significantly reduced the amount of dairy
and beef cattle. The herds have been culled due to the high
cost of sustaining the animals with minerals and supplements as
opposed to prairie grass,” he added.
“This led to reduced beef
prices in the near term, but will lead to higher beef costs due
to continued demand, but less available cattle. This cycle will
not correct itself for at least 3 -5 years assuming no other
significant droughts,” Johnson said.
New end
markets?
There are few new end markets
reported for CCM, although there has been strong growth in the
pharmaceutical and food sector. According to Murenik, this
sector has grown the fastest - but it has now stabilised and is
not diversifying.
“It’s important to
mention that in CCM there is a rather limited product/market
development since the R&D, promotional capabilities,
lobbying capabilities of the producers is small due to their
relatively small size,” Vetoulas said.
“Despite this, Grecian
Magnesite, with its R&D centre, currently working on new
projects,” he added.
Elsewhere, Spoors told IM that a new end
market is advancing for magnesia used in biological systems
where it is used for pH correction in anaerobic digestion for
effluent treatment. These systems rely on keeping the pH
carefully controlled around neutrality.
CCM Basics
Mike O’Driscoll
CCM is one of a series of magnesia grades (MgO) manufactured
from feedstock magnesia containing raw material treated to
increasing increments of calcination: 600-1,000¼C for
CCM, but >1,450¼C for dead burned magnesia (DBM), and
2,800-3,000¼C for fused magnesia (FM).
CCM feedstock raw material can be
either natural hard rock magnesia minerals, mainly magnesite,
but also brucite, dolomite, and serpentinite
(naturally produced CCM); or derived from seawater,
and magnesia enriched lake and well brines
(synthetically produced CCM).
Natural CCM is produced by
calcining crushed magnesite (or other magnesia mineral) in a
kiln (multiple hearth furnace (MHF), rotary, or shaft) at
600-1,000¼C to form a concentrated source of chemically
active magnesia.
Synthetic CCM is produced by
precipitating magnesium hydroxide from seawater or brines,
using an alkali mineral (lime, dolime), which is then
compacted, washed, and filtered prior to calcination usually in
a MHF or shaft kiln.
Other synthetic processes to form
high purity CCM include the Aman process (steam pyrohydrolysis
of brine) and the Pattinson process (purification by
carbonation of magnesium hydroxide slurries sourced from
dolomite, magnesite).
CCM grades range from 85-98% MgO.
Synthetic CCM is generally superior in quality, and more
expensive, than natural CCM, such as:
*>97% MgO
*<0.2%
Fe2O3, <0.3%
Al2O3, <0.5% SiO2, <1.0%
CaO
*smaller particle sizes
*greater bulk density
*whiter
*higher surface area,
>170m2/g
Taken from “Magnesia blasts
back, September 2010
LEHMANN & Voss & Co. found Dutch subsidiary
Germany’s Lehmann & Voss & Co., the well-known
expert of natural and synthetic magnesia products has
established an office in the Netherlands.
“The new subsidiary company
LEHVOSS Nederland B. V. is the 8th subsidiary of the
LEHVOSS-Group and has been founded especially to strengthen our
magnesia activities globally,” the company told
IM.
Magnesia exports
quotas
In 2012 Chinese magnesia exports were dominated by five
companies which were based in Liaoning: Liaoning Jiayi Metals
& Minerals Co. Ltd, Haicheng Houying Trade Group Co. Ltd,
Jiachen Group Co. Ltd, Haicheng Huayu Refractory Group Import
& Export Co. Ltd, and Haicheng Xiyang Group import and
Export Co. Ltd.
For H1 2013 the following companies
claimed the largest share of quotas for CCM and DBM:
And for ‘other magnesia’ the following 10 companies
had the largest share of the export quota:
