Andy Home, Automotive News, ET Auto
LONDON: Magnesium is not what most people think of as an essential mineral.
But the human body cannot function without it, with the United States Food and Drug Administration recommending a minimum daily intake of 420 milligrams.
And a wide range of manufacturing activities cannot function without it either, as the European Union (EU) is quickly discovering.
Europe is facing a magnesium crisis, threatening production and jobs in the steel, packaging, construction and automotive sectors.
The European Commission is in talks with China, its dominant supplier, on both “immediate shortages” and “long-term solutions to deal with this strategic dependence”.
China supplies 95% of Europe’s demand for magnesium, which last year amounted to around 155,000 tonnes.
Or he did until recently. Exports have plummeted, prices have skyrocketed, and Europe is at risk of running out of what it officially designates as a critical mineral.
This is not the result of any geopolitical tension, but rather of China’s attempt to peak coal consumption by 2025, a key step on the road to carbon neutrality by 2060 .
The continuing energy crisis in China is partly due to one-off events such as drought in hydropower-rich Yunnan Province and soaring coal prices, but it is also a direct result of new quarterly targets for Beijing’s energy efficiency.
Provincial governments have imposed lower energy consumption on heavy industrial users. The country’s huge aluminum smelting sector, largely powered by coal, has already seen more than three million tonnes of annual capacity impacted.
The impact on niche sectors such as magnesium has been less reported. But 25 production plants in magnesium production centers in Shaanxi and Shanxi provinces were recently closed and five more are operating at half capacity, according to the European Aluminum Association (EAA).
The only US producer of primary magnesium extracts it from brine, but in China most of it is produced in blast furnaces that use a lot of energy and emit a lot of carbon. They are an obvious target for provinces racing to meet quarterly power goals.
The same goes for the producers of ferrosilicon, which is used in the magnesium production process, which is a double whammy for the Chinese supply chain.
It’s a long way from the Yulin Magnesium Center in Shaanxi Province to a German auto factory.
But magnesium infiltrates almost unnoticed in multiple metal applications, primarily aluminum alloy, which it makes both lighter and stronger. It is the form of aluminum used by automakers, who now face an additional headache due to the continuing shortage of semiconductors.
But magnesium is also used with zinc in die casting, to remove sulfur from iron and steel production, and to make a titanium sponge, threatening a metallic domino effect of disrupting supply chains.
This is why 12 industrial organizations jointly called on Brussels to take urgent measures, in particular the Association of European Automobile Manufacturers, the pressure group on steel Eurofer, the ferroalloys group Euroalloys and the European union IndustriAll, representing seven million workers in the bloc’s manufacturing sector.
Supply issues in Europe are particularly acute as magnesium does not store well, meaning stocks in Europe were initially low and are now critical, possibly only extending until the end of November. , according to the cross-sectoral group behind the call to action.
All that remains is to reach prices of up to $ 14,000 per tonne, compared to just $ 2,000 at the start of the year.
UNDER EUROPE’S RADAR
Europe is kicking off the creation of national supply chains for critical minerals, but its efforts so far have largely focused on battery metals such as lithium, nickel and rare earths.
Magnesium seems to have slipped under the collective radar.
It should be noted that the United States, which also ranks magnesium as a critical mineral, does not depend on China in the same way for its supplies. It has its own production, both primary and secondary, and imports most of its balancing needs from Canada (23%), Israel (20%), Mexico (11%) and Russia (9% ), according to the United States Geological Survey. (USGS).
In addition, new magnesium supply projects are underway in Nevada and Canada.
That’s the thing with magnesium. It is not uncommon at all. The global resources from which it can be recovered “range from large to virtually unlimited” with “enormous” amounts available from minerals containing magnesium and “billions of tons” in brine deposits, according to the USGS.
METAL OR ENERGY?
Europe should obviously add magnesium to its list of domestic supply priorities.
But in the meantime, he’ll have to talk to China.
As with many other essential minerals, part of the problem is China’s dominance of the supply chain. The country currently accounts for about 87% of world production. He built this dominance by subsidizing the development of processing capacity, which resulted in increased exports and low prices.
Europe’s last magnesium producer closed in 2001 “due to dumped Chinese imports,” according to the EAA.
But right now, Europe needs the magnesium from China, and fast.
There are reports that some producers have been allowed to reopen their production facilities, which should lead to a certain slowdown in supply in the coming weeks.
China’s so-called double-check energy targets, however, are not going to go away. Indeed, they are designed to tighten with each five-year plan as policymakers attempt to switch from coal to renewables.
It’s a good thing if the world is to meet its global warming targets. But as aluminum has already shown, shutting down Chinese coal plants is a problem if it means less metal for a world that needs more material to decarbonise itself.
The aluminum paradox is now being played out in the magnesium market.
“The scarcity of magnesium may be an example of how China’s energy use and carbon emissions are closely linked to global supply chains,” according to an Oct. 25 editorial in The Global Times, part of the state-backed media group China Daily.
As China is attempting to decarbonise itself, the magnesium crisis in Europe cannot “be resolved simply by increasing production,” he added, calling for an economic and trade consultation mechanism for the ‘EU magnesium supply.
Talks are now underway, but Europe may have to accept that for now at least it can have greener Chinese energy or more magnesium, but not both.