Exclusive-Europe Aims to Revive Magnesium Output by 2025 to Reduce Reliance on China By Reuters

By Eric Onstad

LONDON – European Union policymakers are actively working to revive domestic magnesium production, a crucial ingredient in aluminium and steel products, with at least three companies engaged in relevant projects, according to internal documents and officials.

A report from the European Commission emphasizes the need to reduce the bloc’s reliance on China, the leading producer of magnesium. The document indicates that an investment of up to 2 billion euros (approximately $2.12 billion) will be necessary to restart smelting operations in Europe by 2025.

The significance of this issue has grown, particularly since the West imposed sanctions on Russia following its invasion of Ukraine on February 24. Last year, Russia was the fourth largest magnesium producer globally, with an output of around 21,000 tonnes.

Although European imports from Russia have been limited and magnesium itself is not subject to sanctions, Russia’s isolation has removed it as a potential substitute for Chinese supplies, which account for over 90% of the magnesium imported into the EU. Any reductions in shipments from China could hinder production lines for automobiles, aircraft components, and other magnesium-dependent products.

Late last year, a decrease in Chinese supplies led to a spike in magnesium prices in Europe, highlighting the urgency for the EU to secure its domestic supply chain. As a result, policymakers have elevated magnesium to a high priority alongside rare earth magnets in their action plan focused on securing critical minerals.

The EU document recognizes magnesium as a raw material with significant supply risks, with no improvements of note. Paul Voss, director general of the European Aluminium Association, remarked on the dangers of EU economic dependence on imports from China.

The Commission aims to have 15% of its magnesium needs sourced domestically by 2030. Joaquim Nunes de Almeida, head of the European Commission’s Internal Market and Industry directorate, noted that various projects at different development stages have been identified in early discussions.

The magnesium market is relatively small, with around 1 million tonnes produced annually, compared to 67 million tonnes of aluminium. Nevertheless, magnesium is critical for adding strength to a variety of products. As Alan Clark from CM Business Consulting pointed out, essential items like aluminium cans and aircraft wings rely heavily on magnesium, which has no viable substitutes.

Prices for magnesium surged late last year due to the Chinese government’s measures to reduce power consumption, which affected the production of several metals. In October, industry experts expressed concern that prolonged magnesium shortages could jeopardize millions of jobs in Europe. While shipments from China have since resumed, EU policymakers are keenly aware of the necessity to revitalize local production.

The last two magnesium production facilities in Europe, located in Norway and France, were closed in 2001, primarily due to competition from low-cost imports from China. Currently, there are three potential magnesium production projects in development, with two in Romania and one in Bosnia, according to Krzysztof Kubacki from EIT Raw Materials, an organization supported by the EU to implement critical minerals initiatives.

One of the potential projects, Verde Magnesium, backed by private equity firm Amerocap, aims to renovate a brownfield mine in western Romania and is in the process of obtaining government permits. The chairman of Verde, Bernd Martens, previously served as the head of purchasing at Audi, a premium automotive brand under Volkswagen. Verde aims to commence production by 2025.