China pulls the brakes on magnesium production, metalworking industry trembles
As if the microchip crisis was not enough, there is another threat ahead for the automotive industry, which directly concerns the iron and steel sector and — first and foremost — aluminum production. We are talking about a heavy shortage of magnesium, an indispensable metal in many production chains. The industry is facing an alarming scenario: as stated by the German association WV Metalle: “Current magnesium reserves are expected to run out in a few weeks, at the latest towards the end of November 2021.”
What is the source of this state of alarm about magnesium? Short answer, China. Over the last month, in an effort to cut energy costs and meet national energy consumption targets, the Beijing government has slowed production at numerous plants, in many cases shutting them down or reducing their operations by 50%. China has an almost total monopoly of global magnesium production, with an 87% share. Russia, Kazakhstan, Israel, and Brazil produce much of the rest.
European industry, which is 95% dependent on Chinese magnesium, has reacted with concern. In a joint statement, a cross-sector group of 12 European metal producing and user associations, from European Aluminium to Eurofer, issued a few days ago an urgent call for the EU to act against the imminent risk of production disruptions across the region. Without further measures, they say, we would face “an international
supply crisis of unprecedented magnitude,” “with far-reaching ramifications on entire European Union value chains, including key end-use sectors such as automotive, construction, and packaging.” Let's be clear: the EU's dependence on the Chinese giant for magnesium supply is nothing new, as this element was listed as a critical raw material for the EU back in 2020.
Magnesium use
38% of the world's magnesium production is used in aluminum alloys, 36% in the field of die casting, 12% in the iron and steel industry, as shown in the image below.
Pure magnesium is little used because of its low hardness and high susceptibility to corrosion. However, magnesium alloys, for example with aluminum, are characterized by high strength and corrosion resistance. Therefore, they are often employed in the construction of motor vehicles, aircraft, ships, and machine components. 45% of the magnesium in Europe is used as an alloying element in aluminum; in amounts ranging from less than 1% to about 10%, magnesium improves the mechanical and anti-corrosive properties of aluminum. “In the iron and steel industry, small quantities of magnesium are added to white cast iron to transform graphite into spherical nodules, thereby significantly improving the strength and malleability of the iron. In addition, particulate magnesium blended with lime or other fillers is injected into liquid blast-furnace iron, where it improves mechanical properties of steel by combining with sulfur and oxygen”. (Encyclopedia Britannica)
“The current Chinese supply shortfall,” say European magnesium users, “has already resulted in record prices and worldwide distortions in the supply chain. Today’s remaining magnesium imports are trading at extortionate prices of about $10,000 to 14,000$/ton, up from approximately $2,000/ton earlier this year, making it almost impossible for European companies to produce or source magnesium-containing materials at a viable level.”
The problem doesn't stop at European borders, of course, and the U.S., for example, is also scrambling to think of ways to use its scrap supply chains to make up for the lack of raw magnesium; while no automakers have issued magnesium shortage-related warnings, for the time being, some aluminum producers are already cautioning that they will have to cut back on aluminum billet production in the coming year if the shortage persists.
Picture: Siegbert Pinger from Pixabay
