Magnesium market participants are weighing up the European Commission's proposed Critical Raw Materials Act, under which Europe should import no more than 65pc of its magnesium requirements from China from 2030, and increase its own production capacity.
Europe currently sources 97pc of its magnesium from China, EU data show, with the remainder coming from countries including Russia, Israel, and Turkey. The commission's proposals — to limit imports, and to expand local mining capacity by 10pc, processing by 40pc, and recycling by 15pc — have received a mixed response.
Some regard the proposals as a step in the right direction, but there are those that doubt these targets can be met in such a short time.
"Even before the publication of the CRMA, the commission set a target of 15pc of European magnesium imports to be produced in Europe by 2030, which equates to about 40,000t. In my view, this target is quite realistic," one industry figure told Argus.
But one trader was more sceptical: "There is nowhere in Europe that can do it, it's impossible. I understand why there is a focus on it, after the insanity of last year. But you can't force there to be domestic production when there isn't a good supply of raw materials."
"The EU relies almost exclusively on imports for many critical raw materials. Suppliers of those imports are often highly concentrated in a small number of third countries, both at the extraction and processing stage," the proposed act states.
"This concentration exposes the EU to significant supply risks. There are precedents of countries leveraging their strong position as suppliers of CRMs against buyer countries, for instance through export restrictions."
Under the EU's proposal, magnesium is now additionally classified as a 'strategic' raw material, having featured on the 'critical' list since it was first published in 2011.
Strategic raw materials are those used in "technologies underpinning the green and digital transitions or for defence or space applications", characterised by a potential supply-demand imbalance, and where production increases are difficult.
Capacity outside China
By 2027, rest-of-world (RoW) production is forecast to account for 21pc of magnesium supply, at 284,000 t/yr, rising to 24pc, at 400,000 t/yr, by 2032. Production in China will also grow, driven by new investment, according to Australia-based CM Group.
Various projects are under development in Romania, Bosnia-Herzegovina, Serbia, the US, Canada, Australia and the Middle East. But there are major obstacles to scaling production and competing with China, including environmental impact, time pressures and investment costs — particularly for electrolytic processing — and European tax legislation relating to carbon emissions.
And the feasibility of central purchasing and stockpiling might be limited by the shelf life of magnesium, which begins to oxidise after three months.
"I confess I can't help but be a little cynical. The devil will be in the detail, I suppose, but I would say the recent news leaves more questions than answers," one market participant said.
Backdrop to EU proposal
Europe's last magnesium production plant — in France — closed in 2001 because of dumped Chinese imports. But it was not until an acute shortage in late 2021 that supply came under real scrutiny.
"It doesn't feel like the EU has looked at the market at all... Where are you going to get it, where in Europe produces magnesium? Nowhere," one trader said.
Industry association Eurometaux previously advised the commission to impose provisional trade defence measures to safeguard new investments against dumping from China in its dominant markets, such as magnesium and rare earths. It also said existing anti-dumping measures for aluminium and silicon should be retained. The commission made no reference to anti-dumping measures in its proposal.
The proposed act must now go before the European Council and European Parliament, where it may be subject to revision.
