How Chinese magnesia production can emerge stronger: Liaoning provincial policy responses to reforms

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China has dominated world magnesia supply for decades. The uncertainty of the COVID-19 outbreak has made overall demand for magnesia was lower in the first half of the year in 2020, rebounding to January levels by the third quarter as global lockdowns were eased. Most downstream refractory markers and other downstream sectors reduce their output because of the whole weak supply chain, which has caused limited demand for materials.


This presentation is a part of our current research about ‘The challenging facing by Chinese Magnesia industry’, continued with our market research review in 2019.


Highlight:

  • China Magnesia-producing regions

  • Change: the new norm

  • How Chinese magnesia production can emerge stronger


Key messages

  1. China remains the leading producer of magnesite worldwide in 2020.

  2. Liaoning province has some of the richest magnesite resources in the world, with reserves estimated at 3.52 billion tons, which takes up over 85% of China's reserves and take about 22% up the world's reserves.

  3. The main magnesia-producing region within Liaoning province is split between two hubs: Haicheng, in Anshan city, has larger magnesite resources and primary processing companies; and Dashiqiao, in Yingkou city, has a number of facilities for processing refractory magnesia products.

  4. Change is the new norm in Liaoning magnesia industry since 2017.

  5. We reviewed policies delivered by China central government and Liaoning provincial government, from our review, we identify 4 key priority areas to accelerating magnesia production growth stronger via smart manufacturing and build up a modern production system.


The policy mix employed by China central government and Liaoning provincial government reviewed includes:

  1. More Consolidation: the first one is related with policies focused to improve the consolidation of magnesite industry and accelerating supply side structural reforms. This range from implementing the plan of integration of mining companies and control of mining right, to promoting the control and replacement measures of capacity swap program for total control of magnesite resources, but also trying to apply systematic management in the sector. Among the most magnesia-producing regions also observe some reassuring initiatives.

  2. More Sustainable: the second priority area we identified is related with policies focus on improving the sustainability of the industry and these go from green production, to promoting investment in advanced manufacturing and modernised services to achieve domain independence and industrial upgradation, as well as energy efficient supplies

  3. More Innovative: previous crisis have taught us the importance of protecting innovative firms, in this area we have identified R&D incentives and support for new and recycled materials application, also for adopting digital infrastructure, keep up with China’s New Infrastructure Plan, especially for the application of 5G and Industrial Internet of things.

  4. More Standardised: there is increasing evidence to show us how magnesia industry and market have been affected by overcapacity and fierce competition, governments respond to this deepening inequalities by formulating policies for standardised management, unified application and review standards, and strengthen supervision.

Most of these measures are new, but a common approach was to leveraging policy instruments by conducting centralised management and restricting the market mechanism.


Shiying Jia - How Chinese magnesia production can emerge stronger- Liaoning provincial pol
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