Report on magnesium metal and technologies & magnesium oxide
Magnesium (The Magnesium Homepage)
World production of magnesium is about 440,000 tonnes (330 000 tonnes in primary production, the balance as recovery or secondary magnesium). In 1985 production was around 300 000 tonnes, in 1997 it was 367 000 tonnes (as primary forms) Secondary production of magnesium (recycled) is growing faster with production at 81 000 tonnes in 1997).
There are eight magnesium projects under review in Australia that could supply over 50 per cent of current world demand. The importance of the end market is stressed as the US car manufacturers Ford and General Motors have either an interest or potential interest in two of the projects.
Like the development of laterite nickel, they are predicated on new technology lowering the cost of production from US$1 per pound for traditional production, to below US$0.70 per pound. The current (April 2001) price is US1.30 per pound.
Primary magnesium consumption was forecast to grow by 6.8 per cent per annum over the 2000-15 period while US magnesium prices were expected to average $US1.45 per pound over the 2001-10 period.
Starters include: Australian Magnesium Corp (Kunwarara, Qld, cash operating cost US 65 cents /lb); Crest Magnesium (Lyons/Arthur River project); Pacific Magnesium Corporation (formerly Golden Triangle Resources) (Main Creek, Tas project, US62 cents/lb and the Woodsreef, NSW tailings project, US 57 cents/lb); South Australian Magnesium Project (Samag) - with Pima Mining (Leigh Creek, SA, US61 cents/lb); Mount Grace Gold Mining (Batchelor, NT); Anaconda Nickel (Murrin Murrin in W.A.) and Pilbara Magnesium Metal Associates (based on Dampier Salt’s bitterns).
Some industry specialists predict Australia could produce 800,000 tonnes of magnesium, used to make more fuel-efficient cars, every year by 2020, almost double the 450,000 tonne-a-year existing world market. Australian magnesium exports could account for 50 per cent of the growth in world demand over the next 20 years.
The federal government has approved (December 2002) a funding application by Latrobe Magnesium Ltd, and agreed to contribute $1.4 million towards a $20 million bankable feasibility study into the proposal. A pre-feasibility study earlier this year found the $984 million Latrobe Magnesium Project proposed for one of Victoria's most depressed regional areas using fly ash from power stations, had the capacity to produce 100,000 tonnes of high quality magnesium a year at one of the lowest capital and production costs in the world and one of the cleanest processing methods with no carbon dioxide emissions during processing. Latrobe Magnesium Ltd is now raising $20 million for a full feasibility study expected to start in March 2003.
The federal government has agreed to contribute $1.4 million towards the study on the condition the figure is matched by the Victorian government with whom discussions are continuing. The federal government grant was subject to that,
§ the company enter into a dialogue with the Australian Greenhouse Office on the expected level of greenhouse emissions.
§ intellectual property arising from the feasibility study would revert to joint ownership with the government should Latrobe Magnesium not continue with development of the magnesium plant.
The study is expected to take two years. Construction of the plant would take a further two years with processing not expected before 2008.
Update Australian Magnesium Corp: In March 2000, it was announced the AMC project will go ahead at Stanwell (besides the Stanwell powerstation) to cost A$1.2 billion and production in mid 2003. $160 million had been spent on R&D over eight years. It will produce 96 000 tonnes of magnesium metal of which 45 000 tonnes will be purchased by the US Ford Motor Company. It is anticipated to produce at US$0.64 per pound and at project prices, projected to provide an ROI of around 16 per cent. Normandy Mining will assume a 62 per cent interest in QMC.
By 2004, world demand for magnesium is projected to increase ten-fold to 5 million tonnes per year.
Commercial Minerals with with Queensland Metals Corporation Limited (QMC) has mining and exploration licenses covering 1.2 billion tonnes of magnesite ore from the Kunwarara deposit, 60 km north-west of Rockhampton. QMC owns 60% of QMAG which produces high grade refractory magnesia and other magnesia products at Parkhurst in Rockhampton. It operates three electrofusion furnaces to produce 15 000 tonnes of magnesia while some 100 000 tonnes of dead burned magnesia is exported.
QMC has a collaborative research project with the Australian government owned research group, CSIRO, with a A$135 million pilot plant at Gladstone (its partners include Normandy Mining and the Ford Motor Company). The patented process (Australian Magnesium) involves leaching magnesite in hydrochloric acid to produce magnesium chloride. After purification and drying, it will be smelted in an off-the-shelf Alcan electrolytic cell that requires 99.9 per cent pure magnesium chloride. It will however produce more metal per production cell than the Samag project to reduce energy costs.
The project is anticipated to cost A$700 million. Energy at US$0.025 cents per KWh is anticipated to represent 40 per cent of the US$0.55 per pound cash cost of production (world av. US$0.95) with a magnesite mining cost of US$20 per tonne.
It has received A$300 million in grants from the federal and Queensland governments and Ford provided $50 million.
July 2001: The company hopes to produce magnesium at about US 64 cents per pound compared to a current world price of about $US 1.40 per pound. However, the low Australian dollar could see costs under US 50 cents a pound.
August 2001. An initial bid to raise A$680 million in equity funding, on top of a $930 million debt package, was $100 million short of target. The Federal government has since approved a A$100 million loan guarantee while the Queensland government offering a further A$100 million of subordinated debt. PIMA Mining has indicated it is now seeking A$100million from the federal government to avoid relocating to lower cost New Zealand.
In May 2003, the project has stalled with cost overruns of A$200m and, according to the CEO, "the future of the project was under review".
In June 2003, the project was mothballed The Federal Government which previously provided a $50 million loan to AMC through CSIRO and provided a $100 million guarantee facility, has indicated while not offering more funding, is prepared to restructure its assistance.
July 2003, AMC and Ford released each other from their binding supply agreement, A$2 billion a year over 10 years to AMC. Ford was to have taken almost half AMC's planned annual production now indefinitely on hold. Ford had contributed $US30 million in 1997/98 to help fund the Gladstone demonstration plant and magnesium project feasibility study. It agreed to relinquish any rights. AMC major stakeholder Newmont Australia has agreed to pay the $US10 million to Ford on behalf of AMC, while the remaining $US20 million has been waived.
The Stanwell plant has been placed on care and maintenance after the company could not agree on a fixed construction cost with its builder Leighton Holdings Ltd. AMC said the project and related expenditure cost the group A$137 million in the June quarter and it had $74 million left in the bank by the end of June.
In August 1998 Pacific Magnesium proposed a $700 million project in Tasmania which has a 47 million tonne at 43 per cent magnesium oxide deposit south of the Savage River iron ore mine. A scale of production of 80 000 tonnes is proposed costing A$700 million. It may build the refinery in Victoria shipping the beneficiated ore across Bass Strait from Tasmania. See also their NSW deposit.
Crest Resources has rights to purchase technology for 20 years from the Ukrainian National Research and Design Titanium Institute to produce magnesium metal. It has a magnesite deposit at Arthur-Lyons River in Tasmania, 53 km from Burnie and is undertaking a feasibility study. The deposit can sustain production at 190 000 tonnes per year for 100 years.
At 95,000 tonnes per year, the project would cost A$1bn and produce magnesium at US$0.65 per pound (current 1998 prices are around US$1.30 per pound). It was calculated it would produce a cash operation surplus of A$246 million at US$1.30 a pound per year. Multiplex, a large construction business has a 51 per cent equity in the project (that would rise to 60 per cent with plant expansion).
Discussion with General Motors to be involved with the project are underway.
Power will represent 40 per cent of production cost and the Tasmanian Government has promised to supply energy at the same cost as Duke Energy. Duke has proposed a 330 km gasline from Longford in Victoria and converting an oil-fired power station to gas. Duke Energy International said that its proposed $350 mill natural gas pipeline to Tasmania would be delivering gas from mid 2002 – initially about 50 petajoules/year, about 30 petajoules of would be for Crest Magnesium's proposed Bell Bay, Tasmania magnesium smelter.
Esso, BHP, and Duke Energy have signed a Memorandum of Understanding (MoU) which should see Bass Strait gas piped to Bell Bay, Tasmania by about May 2002; a MoU has also been signed with Tasmanian Hydro Corporation for rights to convert the Bell Bay power station to gas-firing. The converted station is expected to supply energy to Crest Magnesium’s proposed magnesium smelter project.
Three sites were under consideration with Bell Bay (25 km north of Launceston) selected though with higher energy costs than alternative sites in Victoria and New South Wales. Discussions are under way with US Duke Energy to build a 280 km gas pipeline from a new Bass Strait gas reserve (Yolla - 150 km north of Port Stanley) to power a the dormant Government-owned (600 MW) power station to supply 200 MW for the project. This part would bring the cost of the project to over A$1 billion.
In February 1999, Crest Magnesium indicated it wants to increase production to 190 000 tonnes per year by spending a further A$1bn over ten years. Production is planned to begin in 2002.
In May the Federal Government granted it Major Projects Facilitation status which will fasttrack the project. The venturers claim it will require for infrastructure including a 32km rail link from the existing line.
Market reports indicate that Xstrata (formerly Sudelektra, and 42%-owned by Swiss-based Glencore) will soon decide whether or not to take a controlling interest in the Crest Magnesium, $920 mill, 95 kt/year magnesium metal project in NW Tasmania. Xstrata also holds 51% of Precious Metals Australia's Windimurra, WA vanadium project, and Glencore holds a 40% stake in the Murrin Murrin, WA laterite nickel project.
The New South Wales government is trying to win over the Crest/Multiplex magnesium smelter project by saying that the State has surplus power and available infrastructure already in place, removing any need for Federal government incentives; the Federal government has given the project major project facilitation status, and is looking kindly on a Tasmanian government request for financial assistance help. The company favours the Tasmanian (Bell Bay) option.
In June 2000, the Tasmanian government announced it would pay for the 50 km rail line enabling the railing of ore to Bell Bay for A$10 per tonne. (The line would also be used to move logs).
Pacific Magnesium Corp has a ore in waste rock and tailings dumps at Woodsreef in Northern New South Wales. It contains about 70 million tonnes of serpentite ore containing about 38 per cent magnesium oxide. It plans to use Russian and Israeli technology for an 80 000 tonne magnesite refinery.
Mt Grace Resources has started a pre-feasibility study for its Batchelor deposit 85 km south of Darwin. Preliminary estimates indicate prospects for a 50 000 tonne per year magnesium metal project to cost A$570 million.
Mt Grace Resources NL has signed an option agreement with Magnesium Development International to licence the Heggie metallothermic process to produce magnesium metal from magnesite from its Winchester deposit 85 km S of Darwin; the resource comprises 20.7 Mt averaging 41.9% MgO (30 years mine life), and contains 9% insolubles including 0.5% CaO. In 2001, it announced a 10 000 tonne per year agreement with German raw material group, Frank & Schulte.
Update January 2002.
Discovery of magnesite deposit near Port Pirie could lead to significant operating cost savings.
The SAMAG project will deliver the lowest full cost position (cash operating costs plus capital service) of all current and committed Western producers," Pima said.
Update: June 2001
Signs agreement with ANP to build a A$200m, 230 megawatt gas-fired power plant adjacent to the Samag site using gas from BHP Minerva gas field in the offshore Otway Basin (once considered for an ammonia/urea plant in Victoria). Samag will require 170Mw of power to produce 52,500 tonnes of magnesium. By selling surplus power into the grid, is can reduce power costs enabling magnesium metal production costs to fall to US$0.55 per pound.
Samag, 80% owned by Pima Mining, has upgraded its magnesite resource base in the Leigh Creek, SA region to 388 Mt and propose a $670 mill, 520 kt/year magnesium metal plant, expected to produce at US60-65 cents per pound of metal.
Pima Mining reported that additional drilling had enabled it to increase its magnesite resource base from 388 Mt to 474 Mt, including a 'measured reserve' of 32 Mt; the Mt Hutton and Mt Playfair prospects have 100 Mt averaging 42.8% MgO, and the Witchelina prospect has 222 Mt. The company expects to complete a bankable feasibility study by March 2000, after which it could build a commercial plant in 18 months. The increased resource will enable the company to consider increasing capacity of its proposed Mg metal plant at Port Augusta, SA.
The South Australian Government has given Samag (80% Pima Mining) magnesium project Major Development Status, enabling it to be fast-tracked through the various approval processes; a jv comprising Geo Processors of Sydney and Takata Physics International Corp of Japan has built a $3 mill metallurgical pilot plant to test the ore.
Pima Mining said that it hoped to bring a big partner (an Asian car manufacturer was hinted at) to its proposed $983 mill Mg metal project. The company proposes to build a US$400 mill, 52 kt/year Mg metal plant at Port Pirie, SA, capacity of which could be doubled for another $260 mill. A low-calcium magnesite ore could be mined from Mt Hutton, SA near Leigh Creek, where inferred resources total 474 Mt of magnesite. The company said that it now needed to delineate sufficient reserves to sustain a +30-year operation and firm up power contracts, all of which it expected to do as part of its feasibility study due to be completed by August.
In August, Pima announced it had negotiated a deal with the Dow Chemical Company to buy Dow's (50 year old, but a technology that has produced five-times as much metal world-wide than other technologies but more energy intensity and more production 'cells') electrolytic magnesium production technology to produce magnesium metal from magnesium chloride; the project is based on Pima’s Willouran Range, SA magnesite resources.
In November 2000, Samag announced that German Thyssen Krupp Metallurgie would purchase all the metal produced for the first ten years of production. It aims to produce 52 000 tonnes per year beginning 2004. It is seeking A$630million.
There are magnesite deposits at Bulong, Ravensthorpe, Eulaminna and Lawlers.
Pilbara Magnesium Metal Associates has expressed interest based on Dampier Salt’s bitterns.
Anaconda Nickel has announced plans for a feasibility study of a proposed $1 billion magnesium metal plant near Murrin Murrin, based on large resources of magnesite occurring within its existing tenements, but that any prospect for development would depend largely on the availability of a low-cost gas supply. The government of Western Australia said that it would consider providing assistance to a proposed $100 mill gas pipeline from Geraldton to the Leonora region; Anaconda Nickel said that such a project would improve the development prospects of its large magnesite resources.
WestMag (July 2001) is undertaking a feasibility study for a A$35 million project with an initial capacity of 50,000 tonnes a year with the potential to boost production to 100,000 tonnes a year at a cost of $15 million. The company plans to become Australia's most cost-effective producer of magnesia supplying the laterite nickel industry as well as major export markets. The nickel industry uses 10 000 tonnes per year (cost A$400 per tonne - magnesium hydroxide A$5400 per tonne) but this could rise to 350 000 tonnes by 2011.
The magnesia facility or wet plant will be constructed at Port Hedland using the bitterns (salt production concentrate that contains hundred fold concentration of magnesium) from Cargill Salt with the dolomite quarrying and calcining operation at the Governor deposit 350 kilometres south east of Port Hedland on the Great Northern Highway.
Westmag is hoping to bring the project into production by 2003 to capitalise on the expected increase in demand of about 60,000 tonnes a year.