2019 Analysis of magnesium materials industry in Liaoning China
Replus Business (UK) Limited
Magnesite
According to the survey of USGS, the estimated reserves of magnesite in China is more than 1 billion tonnes in 2019. Total annual production of magnesite, in 2018, is about 19 million tonnes. The production of caustic calcined magnesia (CCM), dead burned magnesia (DBM) and fused magnesia (FM) are 5 million tonnes, 5 million tonnes and 2 million tonnes specifically.
World magnesite reserves is 8.5bn. tons in 2019
Data Source: USGS 2019
World magnesite production is 29m. tons in 2018
Data Source: USGS 2019
There are 27 mining areas distributed in 9 provinces of China. Liaoning province is the main storage site for magnesite, which has advantages of high grade, shallow bury and easy open mining. In Liaoning province, the reserves are distributed in Haicheng, Dashiqiao, Xiuyan, Fengcheng, Kuandian, Fushun and Liaoyang, etc.
Distribution of magnesite resources in China (million tonnes)
Data Source: Liaoning special resources industry development centre
According to the survey of Liaoning special resources industry development centre, magnesite estimated reserves in Liaoning province is about 3100 million tonnes, which accounts for over 85.8% of China's reserves and about 20% of the world's reserves. Moreover, the magnesite reserves in Anshan accounted for over 86.3% of the Liaoning province, and the reserves in Haicheng occupied for more than 70% of Anshan.
The production of magnesium refractory materials in Liaoning occupy 90% of national total output and take up to 60% of international total output. From Anshan to Yingkou, there are 65 mining areas, which include 11 large-scale mining areas owning more than 91% of estimated reserves. Around those regions also have 91 production mines, the annual production is about 15.59 million tons, which include 7 large-scale mines accounting for more than 50% of total production.
In Liaoning, there are nearly 500 enterprises producing and processing of magnesium materials, which include more than 3500 different kinds of kilns using to processed raw materials and refractory products, the annual output is around 20 million tons.
Magnesium refractory industry in Liaoning Province
Magnesium refractory materials are very important for high temperature industry, which are widely used in high temperature industry such as steel, nonferrous, building materials, glass, chemical industry and environmental protection.
In the recent years, because of the concept of low-carbon, low energy consumption, environmental protection and creative application, magnesium refractory industry has to transformation. All the business must seek the new and innovative ways to meet the needs of technical innovation and environmental protection.
Liaoning province will transform from a largest production of refractory materials to a strong supply chain province with latest technology, systematization and high-quality products, in order to develop the refractory industry creatively.
The main application for magnesium minerals is to produce magnesium refractories, which take up to 90% of total application in China. There are more than 400 magnesia relevant enterprises in Liaoning Province, which mainly produce light burned magnesia powder, caustic calcined magnesia (CCM), dead burned magnesia (DBM), fused magnesia (FM), medium grade magnesia, high-purity magnesia, dolomite, magnesia synthetic sand, magnesia carbon brick, magnesia calcium brick, magnesia alumina spinel brick, other kinds of magnesia composite materials, and amorphous refractories. The products are usually used in steel, cement, non-ferrous metallurgy, glass and other high temperature industries.
In Liaoning province, there are more than 4000 sets of production equipment and facilities to processing various kinds of magnesium materials, the yearly capacity is more than 28 million tons. However, the capacity utilisation rate of the equipment in Liaoning province is less than 50%, and with the problem of overcapacity, especially for refractory industry.
Furthermore, because of the increasing price and profit forced, more and more capital invested in magnesium industry, which caused more and more new projects for fused magnesia (FM) and raising output of magnesia. The results are repeated construction of facilities, limited profit and lower price with high stock.
The current situation of the whole refractory industry in Liaoning province is messed without order. For the change of policy and environment, most enterprises are still in the process of exploration and planning. Even though some large-scale production enterprises began to replace production and processing facilities such as kilns a few years ago, they are still a long way from systematic transformation.
The market trend and benchmark of magnesium materials are depending on the change of refractory industry. The refractory in China, especially for magnesium refractories, is changing, because of the environmental protection. The total output is decreasing, but they try to maintain a certain scale of production, such as Liaoning province will keep the production of magnesite around 12-14 million tons yearly, magnesium refractory raw materials around 7 million tons, and the relevant products around 3-4 million tons. It is imperative to eliminate backward production capacity and integrate the industry. On September 30, 2018, Liaoning magnesite Mining Co., Ltd. was officially launched. Through the light asset management mode, the company implemented unified planning, design, mining, pricing and sales, and planned to reduce the annual mining volume from 12 million tons to about 8 million tons.
The features of Liaoning Magnesium Industry
• Various products and kilns (with different specification and models)
Liaoning magnesium materials can be separated to two different types, raw refractory materials and refractory products. Raw refractory materials include CCM, DBM, medium grade magnesia, high-purity magnesia, FM, magnesia calcium sand and fused synthetic sand, etc. Refractory products include magnesia brick, magnesia carbon brick, magnesia aluminium brick, magnesia chrome brick, magnesia calcium brick, magnesia amorphous refractory, etc.
The main types of kiln in magnesia refractory industry include light burned magnesia kiln (reflection kiln, suspension kiln, multi-layer furnace, etc.), sintering magnesia kiln (shaft kiln, rotary kiln, etc.), electric melting products kiln (electric furnace, etc.), magnesia refractory products kiln (tunnel kiln, drying kiln, etc.).
• Large number of high temperature kilns with different temperature span
Based on the processing of different products, the temperature range of calcination and burning in kilns is between 1000-2300 ℃, which exhausts the nitrogen oxide and the emission of furnace pollutants are different. High temperature shaft kiln and high temperature tunnel kilns with temperature above 1500 ℃ account for more than 20% of the total number of kilns.
• Uneven level of processing
Some large or medium-sized companies are sourcing technical equipment from other countries to improve facilities and optimise processing, which allowed them to improve their competitiveness. But most companies still have many problems in the processing of raw material, such as small production capacity with large quantity, and non-automation kilns. Some shaft kiln has small capacity but have to process large quantity. The problem of FM processing is lack of production process, old equipment with low efficiency. Due to the mixed type of kilns, the processing of raw ores is insufficient, resulting in waste of resources.
• Large percentage of high pollution fuel
There are 2911 magnesia refractories producing kilns, which included 73.7%, about 2143 high pollution kilns using coal and heavy oil to produce; 25.5%, about 743 kilns using gas or electric energy and 0.8%, about 25 kilns using waste gas.
• Difficult to deal with nitrogen oxide
High temperature shaft kiln and high temperature tunnel kiln with temperature above 1500 ℃ account for more than 20% of the total number of kilns. As a result, the production of nitrogen oxides is greatly increased, and the emissions with low temperature, small volume but has high concentration of nitrogen oxide.
• Technology still needs to be developed
Although suspension furnace and other kilns with technology have been applied in the industry, scientific research has not been done enough, and that kinds of kilns are not popular in the market.
Export
The stability, sustainability and the risk management of magnesium industry also needs to concern, which is the important standard of industry development. Affected by the change of national magnesia export policy and environmental protection storm, the export of Liaoning magnesia has the problem of increasing volume with low price or decreasing volume with high price.
The export of magnesia include CCM, DBM, FM, different magnesium products and MgO-based brick, etc. in China. The annual export volume is about 3 million tons, which is exported to United States, Europe, Japan, India, South Korea, South Africa and other more than 50 countries and regions.
China’s primary magnesia export markets 2018 (total 2,768,427 tonnes)
Data Source: worldsteel
With the increasing environmental regulations after 2017, the price of magnesia is unstable, the export volume has been affected as well. Since 2019, the export volume and export prices of magnesia have been declining, the possible reason are in the following:
• Oversupply, affected by the resumption of magnesite production in Anshan, magnesium enterprises in the whole province have resumed production one after another, resulting in the phenomenon of oversupply and the export price of magnesia is decreasing.
• International trade frictions and the decline of international market demand, especially the impact of trade frictions between China and the United States, have resulted in a sharp decline in exports to the United States.
• Internal vicious competition, which leads to the current export price lower than the domestic price.
Industry Problems and National Policies
Liaoning is the main producing area of magnesium resources in China, but for a long time, the threshold of industry access is low, the level of environmental protection is poor, the mining, processing and smelting of magnesium ores cause serious pollution. According to the news from the Ministry of ecological environment of China, some processing of magnesium products may cause pollution seriously. The inspection found that about 40% of the 1394 kilns in 291 magnesium enterprises in Dashiqiao, Yingkou, have not installed dust removal facilities, there is not enough environment management and the dust pollution is serious.
Overview, the supply chain of Liaoning magnesium industry is scattered, and it is difficult to management. In terms of the number of enterprises, only 23.4% of the magnesium material enterprises in the province meet the specifications. Some small business with no business model and a little bit muddied, they just had simple processing facilities that not just pollutes the environment, but also wastes resources, so it is difficult to reform and upgrade.
Right now, apart from some large business, like Jinlong group, can realised the important of transformation and started to upgrade, the vast majority of small and medium-sized enterprises still think about the short-term profit without preparing or planning to change. In recent years, the environmental protection supervision from central government to local government has been continuously upgraded in China.
In March, 2016, the environmental protection department of Liaoning Province issued “the Interim Regulations on environmental management of comprehensive management of magnesium industry and magnesia industry in Liaoning Province”. Magnesium enterprises have been asked to prevent and control air pollution, and be encouraged to use suspension furnaces, new electric furnaces, new shaft furnaces and other advanced furnaces and asked to use natural gas and coal-fired gas instead of heavy oil and coal. It is hoped that the sealed operation can be gradually implemented in different step of processing and shipment.
In April, 2017, the Anshan environmental protection agency issued guidance about “environmental pollution control of Anshan Magnesium Industry”, which required the air pollutant emission of kilns that be used to process dead burned magnesia should meet the standard of “the air pollutant emission standard of industrial furnace (GB9078-1996)”. The air pollutant emission standard for other kinds of magnesium kilns is tentatively controlled according to 150 mg / m3 of particles and 300 mg / m3 of sulphur dioxide. The nitrogen oxide emission standard of magnesium kilns is controlled around 300 mg / m3, which will be implemented when the central or local government issue the new emission standards of magnesia processing.
In May, 2017, Yingkou Municipal People's government issued “2017 implementation plan for environmental governance of magnesium products enterprises in Yingkou”. The standard of emission limits for smoke (powder) dust is 200 mg/m and for sulphur dioxide is 850 mg / m3. According to the emission concentration limits of pollutants and different categories and fuel properties, the emission standard of other kilns and facilities will be following the rules in “the emission standard for air pollutants of industrial furnaces (GB9078-1996)” and “the comprehensive emission standard for air pollutants (GB16297-1996)” temporarily until the central or local government issue the new emission standards.
In April, 2018, Liaoning industrial special resources office has officially issued “the 13th five year plan for the development of magnesium industry in Liaoning Province”, “the guiding opinions on structural adjustment, transformation and upgrading of magnesium material industry in Liaoning Province”, “the specifications of magnesium refractory industry in Liaoning Province” in order to promote the structural adjustment of magnesium industry transformation and upgrading. The aim of that is to make sure the whole magnesium industry in Liaoning is forced on energy saving and environmental protection, which will help to improve the quality and efficiency of economic development. Meanwhile, promoting structural optimisation, technological innovation and industrial upgrading is also important to magnesium industry. In Liaoning province, the future development direction of magnesium industry is high efficiency, low consumption, emission reduction, recycling and green sustainable development.
According to “the three-year special action plan for pollution prevention and control in Liaoning Province (2018-2020)”, small business of magnesia is the focus of environmental governance. It’s pointed out that the small business of magnesia should be improved synthetically. Combining with the county economic development and county reconstruction and upgrading to comprehensively control, the small-sized enterprises of magnesia who are distributed in different areas with low level equipment and poor environmental protection facilities should be controlled. In “The three-year action plan of Liaoning Province to protect the blue sky (2018-2020)”, it shows that the core work of control the regional pollution of magnesium industry is to put many small size enterprises in good order.
The pressure of energy conservation and emission reduction is increasing because of the continuous upgrading of environmental protection, however, in fact, it is still difficult to reach the emission standards, especially for magnesium processing. Some shaft kilns of high-purity magnesia have been reformed for many times, but the emission of nitrogen oxides still fail to achieve the expected results. Moreover, some light burning kilns are still using single section gasifier, but, according to the guidance of “industrial structure adjustment (2019 version)” issued by national development and Reform Commission, single section gasifier is listed as the eliminated equipment.
Future Outlook
Transformation should reintegrate different foundation of industry, establish the supply chain system and produce high quality products to improve overall control and enhance competitiveness. It needs the combination of basic knowledge, research, with new technology and global industrial chain management and control.
The basic ability of magnesium industry in Liaoning province has been improved greatly, however, there is still a big gap between the advanced level of technology and the reliability of its performance, especially in the level of technology and equipment.
In the future, Liaoning magnesium industry will be integrated to concentrated development of the industrial chain. It has to solve the problems about the upstream and downstream distrust, information asymmetry, upstream cannot find the downstream and other issues. Combined with the environmental policies to analyse the existing problems in the enterprise system and targeted transformation will be more effective. Therefore, based on scientific knowledge to practice and promote is the best way to sort small problems out and finally achieve the aim of industry transformation.
The application innovation will be the purpose of magnesium companies in Liaoning province, which needs to focus on the knowledge and research of magnesium, and improve the technology, equipment and the weak of processing gradually. Gathering all resources to develop the industry, promoting new kilns, establishing system and technical processing should combine with creative ideas and automated technology.
The successful transformation of magnesium industry in Liaoning province means it has to be developed effectively and grown steadily. The innovation will drive the industry from traditional production to an innovation system based on real market and creative application, which will accelerate the development of magnesium industry. The industry will change to more digital, international, intellectual and networking, which will cultivate and expand the new material industry, as well as to transform and upgrade the traditional industry, and to upgrade the supply and value chain. It should get rid of mutual price pressure and destructive competition among mining areas. Improving the in total profit is more important than achieve short-term benefits, of course, profit not means competing on price, but the quality and service, the price have to be kept in a reasonable range to ensure stable growth.
Fully combined resources and encourage all parties, increase the investment in innovation, and fix up the weakness of magnesium industry will be the future. Strengthen the innovation ability of enterprises should encourage enterprises to carry out basic, critical and cutting-edge innovation research, and improve the ability and participation of enterprises in the implementation of innovation driven strategy of the country.
Overall, Liaoning province plan to enhance the ability of independent innovation, actively build an open collaborative innovation system, guide and support enterprises to join universities and scientific research institutions to tackle technology problems, which will be the benefit for further improvement of the whole industry. Companies have to learn new knowledge and technology from worldwide to solve the “bottleneck” problems, and work closes with universities and research institutions to establish their own R&D and finally get the results to commercialisation.
The combination of policies is also an important part of the transformation. Strengthen the guidance of industrial policies, raise the entry threshold, and comprehensively implement “the 13th five-year plan for the development of magnesium industry in Liaoning Province” (Revised) and “the guiding opinions on restructuring, transformation and upgrading of magnesium industry in Liaoning Province” (Revised). Government departments will guide enterprises to actively adopt new technology and upgrade traditional industry. The companies will develop effective energy, green and functional refractories, fully used low-grade resources to develop non refractory industries, further expand product application fields, and form brands. By using the “discharge standard of industrial pollutants for magnesia refractories in Liaoning Province" to push companies and enhance the level of processing.
Outlook of Refractory
At present, the global economy is turbulent, and the development of refractory industry is unbalanced. Affected by the development speed of high temperature industry and market competition. The refractories industry in developed countries such as Europe, America and Japan are growing slowly, which gradually transferring to emerging markets and countries and regions with rich resources, which will be the future development direction of refractories industry.
The future of China's refractories will not only be a big producer, but also a consumer. According to our research, by 2020, the estimated output of crude steel in China will reach to 700 million tons, and the yearly demand for refractory materials is about 8.4 million tons. For the cement industry, the estimated production will be about 2.8 billion tons, and the production of cement clinker is about 1.6 billion tons, and the annual demand for refractories is about 720,000 tons. The glass industry needs about 380,000 tons of refractories by 2020. Ceramic, lime and other industries need about 350,000 tons of refractories annually. The annual demand for refractories in building materials industry is about 1.45 million tons. In China, there are ten types of nonferrous metals, the total output, by 2020, will be about 45 million tons, and the demand of refractories is about 2.5 million tons. The demand for refractories in the chemical industry is about 400,000 tons. The power electronics industry may need 500,000 tons refractory materials. The demand for refractories in the mechanical industry is about 400,000 tons.
By 2020, the estimated production of magnesium refractory materials ( including monolithic refractory) is about 5 million tons in Liaoning province, and the output of magnesium refractory raw materials and products will be about 12 million tons, which include 3.5 million tons of light burned powder, 3 million tons of sintered magnesia, 1.2 million tons of fused magnesia, 1.4 million tons of amorphous refractories, 2.1 million tons of various magnesia bricks and 800,000 tons of other refractories.
The sales percentage of magnesium materials in Liaoning market will be changed as well. The percentage of non-refractory materials such as magnesium building materials and magnesium chemical materials will reach more than 20%, the percentage of monolithic refractory will reach more than 30%, and the proportion of magnesium refractory materials will drop to more than 75%. For another, the ability of eliminating old kilns and compressing the capacity of raw materials will be increased to more than 30%.
The future development of refractory in China is high speed and high quality, the business model will be change from manufacturers to engineering projects and service providers. The processing will be developed to three "low" (low-temperature firing, low-density, coarse grain and fine production) from the past three "high" (high-temperature firing, high-density, high-purity raw materials). In technology, the industry will improve to integrated innovation and the development of comprehensive benefits.
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