Industry trends: Magnesium crisis in the aluminium industry

In recent months, we have heard several times that there is a shortage of magnesium, one of the most important alloys of aluminum. Magnesium improves strength and corrosion resistance.

The annual ca 160,000 ton European Mg demand is currently almost entirely covered by Magnesium of Chinese origin. For 20 years, it has not been produced in the EU, but only recycled. In the early 2000s, China acquired a monopoly on this material. At first, the price difference between Mg in China and Mg in Europe was not significant, but after energy prices radically increased in Europe due to taxes, CO2 emissions levies and network tariffs, as an industry with higher energy demands, it left Europe and China became the world's leading supplier of this strategically important product (too). 

China started producing magnesium in the 1970s. While in the 1990s it produced just under 10,000 tonnes a year, in 2000 this number was more than 200,000 tonnes. It now produces between 800,000 and 1,000,000 tonnes, accounting for 90% of the world's production. 

Under the pretext of complying with environmental regulations and keeping the air clean, China has made raw materials scarce before the 2022 Winter Olympics. Energy-intensive manufacturing companies partially shut down, leading to further shortages of raw materials. This leads to the current high prices. While at the beginning of 2021 the price of Magnesium was around USD 2,000, in September 2021 it was already above USD 10,000 per tonne. 

The near future does not seem optimistic. There are attempts to produce in Europe using new technologies, but the results are expected in the medium and long term.