China’s refractory consolidation: a year on

By Siobhan Lismore-Scott
Published: Wednesday, 29 October 2014

Chinese refractory industry consolidation continues and expands; MTI denies rumours about Minteq’s plant closure; RHI halts acquisition of a magnesite plant in Turkey; QMAG cuts personnel at its magnesite mine in Australia;

Renshou County, Sichuan Province, is the largest refractory base in southwest China. A year ago, there were 67 refractory companies operating in the province alongside three chemical companies and five ceramic companies, which held a cumulative value of Chinese renminbi (Rmb) 4.9bn ($800m*) in 2013 and a tax revenue of Rmb 170m ($27.7m).

Today, there are 14 consolidated companies.

The shutdowns have taken place over the last year as part of a governmental plan to eliminate the backward industry practices as well as tackling the many complaints from local residents regarding the serious dust, smoke, water and noise pollution created by the refractory businesses. The process has seen 22 chimneys demolished in the last year. In total, 51 chimneys have been knocked down.

The rest are expected to be destroyed after the respective companies finish their plant upgrades, Yong Tan, secretary of the local county Party Committee, told local reporters.

Local government officials have also shut down 22 refractory companies in total with less than 20,000 tpa capacity. Every single down drought kiln, of which there are 37, has been shut down and all tunnel kilns have stopped production.

There has also been a move towards making energy cleaner. All coal-fired plants are to convert to gas technology.

New companies and new opportunities

Zhixin Cai, of Danlu Refractory, and Xueliang Deng, of Xiangyu Special Steel Refractory, together invested Rmb 5m ($816,320) to build a 3,000 square-metre factory with a gas tunnel kiln production line of 98 meters, producing a total of 32,000 tpa of high end refractory products.

In the past, the two companies combined had an output of 17,000 tpa of solid bricks, which were manufactured using down drought kilns.

The new products can be sold at between Rmb 5000-7000/tonne ($816-$1,143/tonne), which is a premium to other companies which sell products around Rmb 1,000/tonne ($163/tonne).

Solving the various pollution problems, upgrading new equipment and investing in recycling has proven to be a factor in driving up revenues as this year refractory companies are forecasting a Rmb 6bn ($979,878) turnover and Rmb 280m ($45.7m) in tax revenues.


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Sichuan Province shows gains

Sichuan Province showed that it had made some capital gains off the back of a growing refractory industry for the period between January to August 2014.

Total turnover was at Rmb 4.7bn ($7.67m), up 23.7% y-o-y. Tax revenue, of Rmb 525m ($85.7m), was up 17.16%. Profit across the Sichuan refractory industry, of Rmb 319m ($52m), was up 24% on the previous year.

Elsewhere, in Zibo City, Shandong Province, also one of the largest refractory bases in China, announced on 17 October that it would stop all coal-fired refractory production, in response to growing dissent about the Province’s air pollution.

This dramatic move is expected to be approved by the end of November. Refractory companies which do not comply will not be allowed to ever produce again, reporters covering the announcement explained.

China’s Dalian Morgan Refractory Co starts production at Liaoning plant

China’s Dalian Morgan Refractory Co. has started production of refractory castable materials at its new plant in Pulandian, Liaoning Province, China.

The company, a joint venture (JV) between UK-based Morgan Advanced Materials and Bengang Group Dalian Refractory Factory, said that the plant is 100 metres squared and has required a Rmb 100m ($16.3m) investment.

Dalian Morgan Refractory has been working towards completing the first phase of the plant this year, which includes the refractory castables facility as well as a research and development centre.

Construction of the second phase of the plant will begin in 2015, the company said.

Inspections in Liaoning

Random refractory product inspections took place across Liaoning Province in October, which were carried out by provincial government officials. The inspections chose 17 producers across the province and of these, only one batch did not pass.

Alumina bricks, clay bricks and magnesia bricks were inspected by the officials.

There are 89 batches of products in 53 companies in five counties, which could have been selected.

Liaoning province hosts the Chinese companies known to be among the largest refractory producers in the country, including Haicheng Houying, Huayu, Yingkou Qinghua, Jinlong and Liaoning Zhongxing.

Magnesia quota bid discussed in meeting

The China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC) held a meeting in October with industry and government officials in Shenyang to discuss the magnesia market in 2015.

The meeting was to decide the H1 2015 quota bid.

Government officials, including China’s Ministry of Commerce (MOFCOM), the Department of Commerce of Liaoning Province and Liaoning Provincial Industrial Special Resources Protection Office, analysed 2014 exports and the market trends for magnesite, brucite and magnesia products.

MTI denies Minteq Suzhou plant closure rumours

Minerals Technologies Inc. (MTI), the parent company of refractories manufacturer Minteq International, has strongly denied rumours that it plans to close the company’s manufacturing facility in Suzhou, eastern China.

"[MTI] does not have any plans to close the facility. Any reports to the contrary are incorrect," Rick Honey, vice president for investor relations at MTI, told IM.

The response followed the publication of reports in IM that Minteq International (Suzhou) Co. Ltd would be wound down in the face of challenging market conditions in China and MTI’s strategy to move away from refractories manufacturing towards maintenance and technology services.

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RHI halts acquisition of magnesite plant and mining rights in Turkey

Austria-based refractory manufacturer RHI AG announced in October that it will not pursue the acquisition of rights to mine magnesite in Erzurum, Turkey.

The company explained that it halted its purchase of the rights, as contractual conditions required by Magnesit Anonim Sirketi, RHI’s Turkish subsidiary, were not met.

The contract signed between Magnesit Anonim and Turkish Cihan Group included the purchase of a magnesite power plant, and provided different contractual conditions to complete the transaction.

RHI told IM that it looked into the potential acquisition of the magnesite asset in Turkey as part of its strategy to increase its level of self-sufficiency for raw material supply.

According to Cihan Group, magnesite reserves in Erzurum and Erzincan amount to 10-15m tonnes, and the production plant built by Trabzon Mining can produce sintered magnesia in a rotary kiln at 1,800-2,000ûC, by firing natural magnesite.

Cihan Group estimated production capacity at the plant to amount to 100,000 tpa.

QMAG cuts personnel to save costs at Australian magnesite mine

Australian magnesia producer, Queensland Magnesia (QMAG) has cut 16 workers at its magnesia business unit in Rockhampton, Queensland, Australia.

The company said that the move will allow it to remain globally competitive in its magnesia business.

Belgium-based Sibelco, QMAG’s parent company, explained that it has focused on reducing operating costs and improving volumes and sales in the company’s magnesia business unit since its acquisition in 2012, in order to guarantee long-term sustainability.

"We’ve also had to change staffing numbers giving consideration to the needs of the operation and ensure its long term viability," Campbell Jones, Sibelco’s CEO, said in a statement.

"The Sibelco QMAG business is now well positioned to compete on the international market and continue as a long term employer in the Rockhampton region," Jones added.

Others have questioned the redundancies, however. According to the Australian Workers’ Union, Sibelco hired new workers at about the same time it made the long term employees redundant.

Nepal Orind Magnesite future looks shaky as Minister delays plans

Local media sources in Nepal are suggesting that the government’s plan to hand over management of Nepal Orind Magnesite to a major shareholder could be cancelled.

Khetan Group is one of three equity partners of the state-controlled firm and, according to the Kantipur, it was close to reopening Nepal Orind’s magnesite plant. However, Nepalese Industry Minister Mahesh Basnet is rumoured to be delaying the plan to open.

"I have intervened in the decision to hand over the factory’s management to the Khetan Group after finding out that the deal would result in a loss to the government," Minister Basnet told reporters during a visit to the factory site.

The Nepal government owns 75%, Khetan Group 12.5% and Orissa Industries 12.5% of the company.

Orind Magnesite stopped production of magnesite in 2001, due to technical problems and lack of competitiveness with Chinese producers in the Indian market.

The factory was opened in 1979 and only produced talc powder, despite having a deadburned magnesia (DBM) production capacity of 50,000 tpa.

*Conversions made October 2014