The dragon loosens its hold: magnesia supply developments outside of China

By IM Staff
Published: Friday, 08 December 2017

With Chinese magnesia supply dwindling, or ceasing altogether in some markets, consultant Ian Wilson, discusses the supply situation outside of China.

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The year to date for magnesia output has been dominated by China, with mine and plant closures announced alongside environmental inspections intended to reduce pollution (see p46). 

Magnesia prices were low at the start of 2017 but have since risen considerably. Fused magnesia (FM) prices in particular increased by 326% from the end of January to October.

There has also been international progress, specifically for Magnezit in Russia, the Industrial Mining Company (IMC), a subsidiary of Ma’aden, in Saudi Arabia and AusMag (Korab Resources) operating in Australia. 

Additionally, a recent merger between RHI of Austria and Magnesita of Brazil has formed RHI Magnesita, which is now trading on the London Stock Exchange (See pp31-32).

RHI AG (RHI) and Magnesita Refratarios SA (Magnesita) announced their merger on October 17; RHI Magnesita commenced trading on the London Stock Exchange on October 27. 

 RHI’s refractory production in 2016 was 1.5 million tonnes while that of Magnesita was 1.3 million tonnes. The combined company achieved pro-forma revenues of €2.5 billion ($2.96 billion) in 2016.  

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Figure 1: View of Kirgiteisk magnesite deposit,
Razdolinsk Magnezit 

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China

In 2016, China accounted for 26% of global magnesite resources, 63% of global magnesia production and 65% of refractories. The majority of production in China is from Liaoning province, the world’s main magnesia-producing region. In 2017, environmental inspectors from central and local government forced many magnesia plants, including caustic calcined magnesite (CCM), dead burned magnesite (DBM) and FM facilities, to halt production to reduce pollution.

The government also imposed restrictions on the use of dynamite for mining in many areas, leading to a magnesia supply shortage. In 2017, the export taxes for DBM and FM (10%), CCM (5%) and the quota fee (around RMB 260-350 ($30.20-52.76) per tonne) were cancelled. Consolidation is forthcoming in Liaoning, with state-owned Haicheng Magnesite Refractory General Factory taking control of all magnesite mines in Haicheng, accounting for a third of the total resources in China. Anshan is also planning to consolidate all local magnesia companies into one state-owned conglomerate. 

Supply constraints have led to an unprecedented rise in magnesia prices due to material shortages. 

CCM, DBM and FM fob China prices from January 19 to October 31 are shown in Table 1, including percentage increases covering the first 10 months (48% for CCM, 220% for DBM and 326% for FM). 

The halting of operations at several small companies, magnesia producers being able to pay cash on delivery, magnesia kilns halting operations for environmental protection (341 kilns in Daashiqiao and 529 kilns in Haicheng) and a rise in coal prices propelled the domestic Chinese magnesia price higher.

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Figure 2: Two shaft kilns for CCM at the Lower
Angara production site
Magnezit 

Exports

Although China has previously exported little ore, it shipped 118,453 tonnes of magnesite to Indonesia (76,907 tonnes - 65%), Japan (33,308 tonnes - 28%), the Philippines (7,200 tonnes - 6%) as well as Malaysia, South Korea and India (1,038 tonnes - 1%) over the first nine months of 2017. Magnesia export volumes in the first three quarters of the year are shown in Table 2 alongside year-on-year percentage increases.

Imports

China is now importing significant tonnages of magnesia, mainly from North Korea 

(Table 3). Magnesia imports totalled 153,054 tonnes in 2016; imports in the first nine months of 2017 were 137,043 tonnes.  

Magnesia imports from North Korea into China in 2016 were 114,876 tonnes of CCM (97% of total imports) at an average price of $170 per tonne, 27,810 tonnes of DBM (89%) at an average price of $162 per tonne and 2,360 tonnes of FM (95%) at an average price of $390 per tonne. 

In the first nine months of this year, China imported from North Korea 104,808 tonnes of CCM (99% of total), 22,502 tonnes of DBM (82%) and 2,202 tonnes of FM (55%). Prices averaged $138 per tonne, $130 per tonne and $325 per tonne respectively.

Another main importer of FM was Russia with 1,545 tonnes (38%) at an average price of $636 per tonne.

With difficulties in supplying magnesia set to continue, growing shortages and, therefore, higher prices are expected into 2018. Stronger FM prices are prompting RHI to consider a restart of its Porsgrunn plant in Norway by the end of December 2017 after operations there were suspended in August 2016. 

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Supply sources outside of China

With the Chinese magnesia industry essentially in a state of near-ruin, other producers have reaped the benefits. But is there enough supply elsewhere to sate the market if the Chinese mines do not come back online?  

Russian Magnezit Group

Magnezit Group was, for many years, developed around the magnesite deposit of Satka (Chelyabinsk region, Russia), while also managing mines and plants in the Lower Angara area (Krasnoyarsk Territory) in Siberia.

Nowadays, however, Magnezit produces a new line of materials for manufacturing refractory products used in heat-containing industrial vessels. Magnezit produces FM and DBM with an MgO content >97%, CaO/SiO2 ratio of at least 2 and a high degree of crystal size consistency. 

The company has total reserves of 270 million tonnes split between Russia (Chelyabinsk region - 150 million tonnes, Krasnoyarsk - 110 million tonnes) and Slovakia (Lubenik) - 10 million tonnes. All magnesite comes from the company’s own ore supply and is delivered to the group’s plants. The magnesite reserves and resources audit is based on the JORC code, which Russian plants have followed since 2006 and since 2008 in Slovakia. 

In 2011, Magnezit Group obtained a license to develop the Talsk magnesite deposit in Razdolinsk (Kransnoyarsk Territory). The neighboring Kirgiteisk deposit was developed in 2006, so the two deposits have 110 million tonnes of pure crystalline magnesite (a view of the Kirgiteisk mine is shown in Figure 1). The chemical characteristics of the three grades KM-1, KM-2 and KM-3 in the Kirgiteisk deposit are shown in Table 4. 

The Satka site produces high-quality DBM using two kilns, each with capacity of 50,000 tonnes per year, and multiple-hearth furnace (100,000 tpy) and grinding and briquetting equipment for burning magnesia. 

The Lower Angara site has two shaft kilns, each with capacity of 50,000 tpy, for high-quality CCM production. The CCM goes to the melting workshop for use in FM production. A view of the two shaft kilns is shown in Figure 2. 

Today, Magnezit produces CCM-95 and CCM-97M, with the chemical analysis of ignited material shown in Table 5.

DBM is produced in three steps. It first enters the multiple-hearth furnace, then undergoes grinding and briquetting before finally entering the shaft kiln. The chemical analysis and grain bulk density is shown in Table 6 with the quality of the FM in Table 7.

Different FM crystal sizes are formed in a block after melting with small crystals (100-300 µm), middle size crystals (300-1,000 µm) and large crystals (1,000 µm or more). A Magnezit FM crystal is shown in Figure 3.

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Industrial Mining Company (IMC), Ma’aden, Saudi Arabia 

Ma’aden is the Saudi state company responsible for exploiting mining resources other than oil. IMC, a 100% subsidiary of Ma’aden, is involved in developing magnesite, bauxite and kaolin. IMC owns two magnesite deposits, Zarghat and Jabal Rukham, in the east of the Kingdom of Saudi Arabia. IMC, which started operations in 2011, has invested up to $80 million in the Zarghat mine and Madinah plant. The company currently sells 36,000 tpy, which is 90% of its multiple hearth furnace (MFH) capacity of 40,000 tpy.

The resources in Zharghat contain both microcrystalline magnesite (with high % MgO, low iron <0.03%, high achievable density or reactivity) and macrocrystalline (low silica). Some of the magnesite is pure; however, the lowest grade has micro veins containing impurities such as dolomite and clay. A comparison of the magnesite ore chemistry is shown in Table 8.

After blasting ore is crushed and screened into 3/10/25/50 mm sizes, optical sorting is carried out on the material larger than 25mm material and prime grades high grade (HG), technical grade (TG) and standard grade (SG) are produced. At present only prime grades are used with chemistry shown in Table 9.

An off-spec grade lower grade (LG) is produced with MgO (max) 93.9%, CaO (min) 2.51%, Al2O3 (min) 0.31%, SiO2 (min) 3.01% and Fe2O3 (min) 0.21%

The Madinah plant has integrated milling facilities. There is a pressurized vertical shaft kiln and a mixing plant with capacity of 32,000 tpy of DBM. Following an unsuccessful trial in 2011/2012, the shaft kiln stopped. The start-up of the vertical shaft kiln, direct sintering, of 32,000 tpy, commenced in July 2017 with low SiO2, 92% and 95% MgO DBM. In September 2017, a 36,000 tpy mixing plant for monolithics was commissioned. A view of the Ma’aden CCM and DBM plant, Madinah, Saudi Arabia is in Figure 4.

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Figure 3: Russian Magnezit FM from Lower
Angara (approx. scale 15 cm)
Magnezit Group 

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Figure 4: View of Ma’aden CCM and DBM plant,
Madinhah
Nicolás Gungutia, GANMAG

Enter Ganmag Magnesite Solutions

Interestingly, Ma’aden has retained the services of Ganmag, a magnesia consultancy set up by Nicolas Gungutia. 

With Ganmag’s help, it plans to raise output, develop markets and products, decrease costs and increase magnesite reserves. The first phase is under way; the objective is to increase sales by 2.5 times, double turnover, reduce mining costs by 20%, lower variable costs by 40%, cut fixed costs by 2.5 and boost  reserves to 4 million tonnes from 1.7 million tonnes currently.

 

AusMag (Korab Resources,) Northern Territory, Australia

AusMag is based in Western Australia with Korab Resources Ltd holding 100% of issued shares. AusMag owns 100% of the Winchester magnesite deposit, located 85km from Darwin port. 

The Winchester magnesite deposit is located 2km from Batchelor in the Northern Territory and Mineral Lease ML30587, covering 362

hectares, and was granted the right to expand for an initial period of 25 years up to October 20, 2040. The deposit is overlain by 6m of clay, with a magnesite depth of at least 130m. Only 6-7% of the deposit has been drilled by reverse circulation (RC) and diamond core drilling techniques, compliant with JORC requirements; the Winchester resources are shown in Table 10.

After the completion of the company’s prefeasibility study in 2015, Korab established the different stages needed to bring the mine into production. But it is yet to provide a timetable for this.

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Editor’s note: Table 11 was edited post publication to correct the information shown for Kumas.

Acknowledgements

Thanks are due to Dr Dmitry Borzov (Magnezit Group), Professor Wen Lu (based in China), Andrej Kapinski (AusMag, Korab Resources), Nicolas Gungutia, Ganmag Magnesite Solutions, Industrial Minerals and others for their materials and information.

*USGS Figures