SilMag of Norway Postpones Secondary Mg Alloy Production

SilMag, Norwegian magnesium producer, appears to postpone the launch of secondary magnesium alloy production scheduled to start in 2009. A concerned trader source points out SilMag owes the project deferment to the demand and price decline of magnesium since autumn 2008 and difficulty in magnesium scrap collection. Meanwhile, SilMag will start magnesium refining as originally scheduled in 2011. A pilot plant will launch within 2009.

SilMag revealed in May 2008 to acquire Norsk Hydro’s plant and commence magnesium ingot production. The announcement was noticed as a countermeasure against Chinese oligopoly in global magnesium supply, in which China accounts for 80%. However, magnesium demand and market price plunged down along economy deterioration since autumn 2008.

Magnesium scrap generation is decreasing under slow economy. Japanese trader source said magnesium scrap is flowing to existent magnesium producers in Europe and SilMag is facing difficulty in scrap procurement. As a result, SilMag decided to postpone the commencement of secondary magnesium alloy production. It is unclear when to resume the project.

On the other hand, SilMag will start magnesium refining in 2011 on schedule at 35,000 tonnes per annum of initial output by the electrolysis method using magnesian olivines. The pilot plant seems now under construction in Porsgrunn, Norway.

International magnesium market price exceeded $ 6,300 per tonne in summer 2008 when Chinese supply was strategically controlled and productive costs were high. The current price is as low as around $ 2,600.