In 2013 Magontec Limited signed a series of agreements with the Qinghai Salt Lake Magnesium Co. Ltd (QSLM). These agreements committed Magontec to the construction of a new magnesium alloy cast house production facility and QSLM to the supply of 56,000 metric tonnes per annum of liquid pure magnesium

The agreements signed by Magontec and QSLM comprise a Magnesium Alloy Cast House Operating Agreement, an Off-Take Price Agreement and a Lease Agreement. These agreements describe and define the operating relationship between the two companies, provide Magontec Limited with a 10 + 10 year lease and the exclusive right to manufacture all types of magnesium alloy at QSLMs Golmud facility.

The financial relationship between QSLM and Magontec was also established in the agreements. QSLM is currently a 29% shareholder in Magontec Limited and has a seat on the Magontec Limited main board. The two companies enjoy a strong relationship and have worked together over three years during the construction phase.

The QSLM electrolytic magnesium smelter is located at Golmud in Qinghai Province PRC. The smelter has an output capacity of 100,000 metric tonnes per annum and produces the lowest CO2 embedded magnesium in the World. Energy for the complex is supplied from regional hydro facilities (75%), solar (9%) and wind as well as a local thermal power station.

QSLM is a subsidiary of Qinghai Salt Lake Industry Co Ltd (QSLI), a Chinese State Owned Enterprise that is listed on the Shenzen Stock Exchange (000792). QSLI has been extracting potassium from the Chaerhan Salt Lake systems for over 60 years. The residue from this activity includes a high magnesium and chlorine containing deposit. Chinese Government estimates assess these deposits to contain around 4 bn metric tonnes of magnesium. Over the coming years QSLM is expected to grow its output of pure magnesium by building additional capacity at the Golmud site. Magontec Limited, as a close partner company, is expected to continue to operate as the magnesium alloy manufacturer at this site.

 

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