Eric Onstad

LONDON (Reuters), UE policymakers launched a push to revive domestic magnesium production, which is used in steel and aluminium products. According to official documents, at least three firms are working on these projects.

A document from the European Commission that was made available to Reuters focuses on magnesium. It also outlines a goal of reducing dependence on China’s major producer. The document states that investment in Europe to restart smelting activities by 2025 will require up to 2 Billion Euros ($2.12B).

Since the West placed sanctions against Russia after its invasion of Ukraine, Feb. 24, this issue has become important for Europe.

Russia was last year’s fourth largest magnesium producer in the world, producing an estimated 21,000 tons of production.

Europe has not imported much from Russia, and it isn’t sanctioned for magnesium. But Russia’s isolation means that Russia can be used as an alternative source of supply if China cuts its supplies.

The EU Executive, the Commission is concerned that any decrease in China’s shipments of magnesium could have a negative impact on production of automobiles and airplane parts that depend upon the mineral. China provides over 90%.

Late last year saw China’s supply drop, which triggered a fall in European prices and focused the EU’s efforts on ensuring domestic supplies.

In response, policymakers gave magnesium the same priority as rare earth magnets for electric vehicles.

China dominates both and supplies 93%.

The EU document stated that magnesium has “continually been flagged as one the most critical raw materials with high supply risk, but with no improvement over the time.”

Paul Voss (director general, European Aluminium Association) stated that the magnesium case was a good example of how the EU makes its economy more dependent on Chinese imports.

This document states that the EU should strive to import 15% of its magnesium from within the EU by 2030.

Joaquim de Almeida (head of the European Commission’s Internal Market and Industry department) stated that during the first month of work on the ad hoc group for magnesium, “we have identified… many projects at various stages of development.”

VITAL COMPONENT

According to CM Business Consulting figures, the magnesium market is small with only 1,000,000 tonnes annually of production. This compares to 67 million tons of aluminum. However, it plays a crucial role in providing compressed strength for a variety of products.

Alan Clark from CM Business Consulting stated that “The aluminum can, as we know and the wings of a modern Airbus carrier wouldn’t exist without magnesium.”

The aluminium industry is having a great run because magnesium has no replacement.”

Magnesium prices rose dramatically after efforts by the Chinese government to cut power consumption resulted in a decrease of the total output of several metals.

European trade groups raised concerns in October that magnesium shortages might lead to plant closures.

Although Chinese exports to Europe were reestablished, EU policy-makers realized that they needed to boost production.

In 2001, the last European magnesium plants – France and Norway – were closed due to competition from China’s cheap imports.

Three potential European projects could be developed to produce magnesium over the next few years. Two are in Romania, and one in Bosnia. Krzysztof Kubiski, an official at EIT Raw Materials, stated that there were three such possible European projects.

EIT is a EU-funded institution that implements an EU action plan in 2020. It aims to protect critical minerals within the bloc.

Verde Magnesium has received backing from Amerocap private equity firm. It is looking to revive a brownfield mining site in Western Romania. The government is required for permission.

Bernd Martens is the chairman. He was previously head of purchasing for automaker Audi.

Verde plans to start production in 2025.

($1 = 0.9443 euros)