2011 September – Interview CEO Gunter Franke by Japan Metal Bulletin

Market demand and prospects for the magnesium industry

Questions by Japan Metall Bulletin, answers by Gunter Franke, CEO of Magontec Group. Full article see attached photo.

Q: How do you see the current world market demand for magnesium in NA, Europe, China and other Asian countries including Japan?
The demand of magnesium is showing similar recovery as other similar materials since the return of the market in 2010. The global supply to the aluminium industry reached the biggest segment, but die casting sets to overtake it in 2-3 years from now. Based on the recession and the infant industry policy of the United States, it has lost its attraction in volume leverage and innovation. The European Automotive market, the most attractive segment, is challenged by a volatile magnesium supply base, and is not moving forward as expected. The growth is in China, where standard magnesium alloys are currently proliferating into a new range of applications. Japan is a very mature and innovative market, and combined with a solid supply base, magnesium could experience a kick-start in the industry.

Q: What about the production situation of magnesium primary ingot in China?
China is constantly changing, but still 80% of global supply comes from there. The consolidation of the production base is happening quickly and in so called fully integrated plants. The magnesium is in most cases not the main revenue focus and remains as a minor segment only profit driven. Thus, there is enough capacity but probably less focus on marketing, quality and service.
In the Chinese magnesium industry, the first generation used coal and the second generation used coal gas as energy source. Now, we see the third generation. It still uses the pigeon process in an integrated plant, producing energy, coke, coke oil, ferrosilicon and magnesium. Under such a system, magnesium is a by-product. They use coke off gas as an energy source. In Northwest China, there is a big project going on by the government. They have imported a facility from Canada which electrolytic process based on Norsk Hydro’s technology.
As said before, the consolidation is rapidly proceeding. As far as we know only projects with a name plate capacity of >50.000 mt p.a. are subject for approval. Smaller plants are either closed or got a phase out period. The integrated industrial concept by using the coke off gas has significantly improved the economics and environmental load.

Q: What do you see in the current move of “getting independent from China” as you can see in Malaysia, where a new smelting facility got started last year, and the project of POSCO to start its plant in summer 2012?
The Malaysian plant is certainly very interesting, and it remains to be seen if they can operate their technology in the local circumstances and their current raw material supply. The POSCO plant is also highly interesting, since it’s using a relatively new technology of the pigeon process. But output is mainly targeted for their internal down stream activities. It will be the key to secure cheap energy source. It is very important for us to have smelting capabilities outside China. Personally, I think that between 2006 and 2008, when magnesium price was volatile, many magnesium applications were stopped or put on hold because of instability of both price and supply.

This website uses cookies. If you continue to use this site, you consent to the use of cookies. For further information, please refer to our privacy policy.

I Agree