Market and Production
Magnesium demand is forecast to show healthy growth over the next five years, exhibiting an average annual growth rate of 5% to total 1,400 kt in 2017. Rather than reflecting a “new normal”, the mid-2000s explosion in demand was largely tied to surging global and Chinese growth. Both of these factors have now moderated, and growth in magnesium consumption is therefore expected to be more modest going forward. Barring any great market changes or breakthroughs in use, long-term growth in magnesium demand (i.e., post 2017) may, however, be more sluggish, as Chinese consumption continues to ease as China’s economy matures.
Magnesium in the automotive industry
Since the 1930s, the global automotive industry has used a wide range of magnesium components on vehicles: in pistons, oil pumps, mounts, brackets and housings. In the late 1930s to 1960s, the VW Beetle was the first vehicle to use more than 40 pounds of magnesium, primarily in its transmission and air-cooled engine. The 1952 Chrysler had more than 15 die-cast parts, most converted from heavy zinc. Ford Motor Company’s 1998 Partnership for a New Generation of Vehicles (PNGV) demonstration vehicle contained 87 lb of magnesium components.
Starting with 2011 models, the U.S. federal government’s fuel-economy standards, which had been frozen for years, saw the biggest change since the Corporate Average Fuel Economy (CAFE) law was created in 1975. The average fuel economy for cars must improve from the 27.5 mile per gallon (mpg), where it has been since 1990, to 37.8 mpg by 2016, and the truck standard is to rise from 23.5 to 28.8 mpg. This means that cars must improve by 37% and trucks by 23%. Combined, cars and trucks in 2016 should average 34.1 mpg, up 35% from the current 25.3 mpg, a jump of 5.1% per year.
A recent report from the United States Automotive Materials Partnership, a collaboration among carmakers GM, Ford and Chrysler, estimates that by 2020, 250 pounds of magnesium will replace 500 pounds of steel and 90 pounds of magnesium will replace 130 pounds of aluminum per vehicle, resulting in an overall 15% weight reduction.
If those predictions for magnesium usage in cars come true, there is reason to believe that overall magnesium demand will continue to be positive for the foreseeable future. While Europe is holding back, preventing a return to pre-economic-downturn growth levels, the automotive outputs of Asia and South America are making up some of the slack, helping global demand.
Markets Targeted by Alliance Magnesium
End-user markets for magnesium extracted from the proposed plant would be global. At the proposed 50,000 tpy magnesium metal production rate, Alliance Magnesium would only grab a small share of the annual growth in this sector. It would therefore not displace incumbents, but would be a new player.
Alliance Magnesium initiated meetings with large players in the automobile industry at the Global Automotive Lightweight Material Conference in London, UK and at the APMA conference in Windsor Ontario. APMA is Canada’s national association of OEM producers of parts, equipment, tools, supplies and services for the worldwide automotive industry.
Potential clients globally would include volume carmakers, high-end manufacturers, most diversified automotive supplier in the world, which designs, develops and manufactures automotive systems, assemblies, modules and components, many other first tier and mid-tier suppliers, large aluminium consortiums and large aerospace companies and OEMs.
Roskill, a well-recognized industry consultancy group, commented recently on new initiatives to use more magnesium in cars in order to reduce weight and greenhouse gas emissions, saying that:
In October 2012, General Motors said it was testing a new process to form lightweight magnesium sheet metal with a view to increasing its usage in cars. Magnesium, which weighs 33 percent less than aluminum, 60 percent less than titanium and 75 percent less than steel, would cut fuel usage.