Tech Magnesium provides security of supply & production cost leadership

Commercial & Specialty Mg Alloys are the world's the lightest structural alloys. Depending on structural property requirements, commercial Mg alloy parts are typically between 50 to 70% lighter than carbon steel, 40 to 50% lighter than "high alloy steel" and 20 to 33% lighter than aluminum alloy parts.

As demand for weight reduction continues to increase, growth prospects for ultralight magnesium alloy parts are expected to remain strong. However, as noted below, increasing magnesium supply constraints continue to challenge the competitiveness of magnesium alloy parts.  

Magnesium Supply & Price Constraints in the USA:  Beginning in 2005, the leading American magnesium metal producer succeeded in securing punitive tariffs on imported magnesium from China and the result has been almost 20 continuous years of exceptionally high magnesium prices in the USA.  High magnesium pricing compared to magnesium's Free Market regions has hurt the competitiveness of  American companies that rely on magnesium for their business.  According to USGS reported pricing in the 17 years between 2004 and 2021, the annual US Spot Price for western magnesium was an of average $2,260 higher than the Free Market magnesium price. 

Since COVID, the American magnesium supply situation has worsened. Magnesium supply has become uncertain resulting in significant price and supply volatility. American markets have suffered from the 2 year ongoing force majeure filed by the leading American Magnesium metal producer.  Limited magnesium supply has put significant pressure on Mg part producers who are in competition with other lightweight materials such as aluminum.  To make matters more difficult, the US government recently approved an extension of punitive tariffs on Chinese magnesium imports. According to the  USGS, the average price penalty paid for one ton of magnesium in the US compared to free market prices has sky rocketed to over $11,000 in 2022 and $7,800 in 2023.  While contractual prices are most certainly lower, there is no doubt that magnesium supply uncertainties have left many customers scrambling for material which has had a chilling affect on the industry.

Magnesium Supply & Price Constraints in Free Markets: Since COVID, the magnesium supply situation has also worsened in magnesium Free Markets although not as severely as in the US.  In an attempt to reduce energy consumption and emissions, the Chinese government imposed magnesium production curtailments in late 2021. While supply restrictions have now eased somewhat, the average Free Market magnesium price in 2023 was over $1,000 per ton higher than the 2020 average. The fact that Free Market supply and pricing seems to be at the whim of the Chinese government and may return at anytime in the future remains a major source of concern and uncertainty. Like the uncertainties in the US market, magnesium supply & pricing volatility has unnerved many magnesium customers particularly in automotive markets where security of supply and stable pricing are paramount.

Cost Competitiveness of Magnesium Alloy Parts: Historically, magnesium alloy products have generally struggled to remain competitive with other light weight options particularly aluminum. For example, in the important lightweight automotive sector, the average per vehicle weight of aluminum alloy parts is about 30 times higher than magnesium parts.  

The magnesium alloy market driver is die-casting which has enjoyed relatively good market success in both automotive & select consumer goods. This is because magnesium die-casting has certain productivity & process cost advantages over aluminum die-casting which helps to offset magnesium's higher  metal cost penalty over aluminum.  Other commercial magnesium alloy products particularly wrought extrusions, plate, sheet & forgings have all languished due to higher wrought processing costs for magnesium compared wrought aluminum processing costs.

Production cost leadership & a reduced carbon footprint are the driving forces behind the Tech Magnesium's two CLEAN Mg Processes & its MagShapes Wrought Mg technology. 

Tech Magnesium Technology focuses on 3 Priorities to improve competitiveness of Commercial Mg Alloys products:

1'st Priority - Providing Production cost Leadership

As shown in the left hand figure, in structural applications  magnesium alloy parts will  typically provide a weight saving of  ~25%. when replacing a corresponding aluminum part.  Hence, based on weight savings, for magnesium to be price competitive, the "Mg to Al per unit weight price ratio" needs to be maintained at ~1.33. To sustain such competitive pricing, the Mg to Al production cost ratio must also be maintained at ~1.33.  

Importantly, Tech Magnesium projects that the cost of magnesium produced  with the ULTRA CLEAN Process & CLEAN Process is expected to be less than 1.33 times the production cost of aluminum thereby indicating that Tech Magnesium process will provide  Magnesium Parts producers with a sustainable competitive magnesium pries over the long term - click on the ULTRA CLEAN Process & CLEAN Process tabs above for details.

 2'nd Priority - providing production cost leadership for Wrought Mg extrusions, sheet & plate

The market success demonstrated by magnesium die-casting confirms that commercial Magnesium Alloy products can compete with other lightweight materials if they can avoid excessive processing cost penalties. 

Tech Magnesium's MagShapes Wrought technology is a patent pending process using industrially proven technology adapted to magnesium to dramatically increase productivity & yield of magnesium wrought products. MagShapes technology is designed to achieve the 2'nd Competitive Threshold by eliminating the cost & productivity gap between magnesium & aluminum extrusions to narrow the competitive  gap for plate & sheet products - click on the MagShapes tab above for details .  

3'rd Priority - Getting Magnesium on a Pathway towards Net - Zero

In addition to maintaining cost & productivity competitiveness, magnesium producers also need to utilize process technology that will reduce magnesium's carbon footprint to levels that are compatible with the world's net - zero targets. 

Today, this is not the case, for example, the cleanest aluminum plants with a carbon footprint of ~3.9 to 5.2 kg CO2 per kg aluminum are more than 4 to 5 times lower than the average for plants producing over 80% of world's magnesium in China.  

With investment moving away from assets that are not compatible with the transition to a net-zero world, the magnesium industry clearly needs to get onboard with clean technology. Magnesium Alloy Part producers and automotive companies will increasingly struggle to justify ongoing use of magnesium from the current highly polluting supply sources especially in the face of stiffer regulations for non-compliance.

Importantly, Tech Magnesium's ULTRA CLEAN Process using MgO from magnesite has a carbon foot print of 5.97 kg CO2 per kg Mg. Component parts are sold on a per part basis not per kg. After adjustment to a volumetric basis, a part produced from ULTRA Clean Mg providing a 25% weight saving would have an adjusted carbon footprint of 4.5 which is lower than the 5.2 average for today's cleanest aluminum plants using clean electricity - click on the ULTRA CLEAN Process tab above for details.

Tech Magnesium's Breakthrough Process Technology will provide security of supply & competitive relief for Magnesium Parts producers.

The hallmarks of Tech Magnesium's brkthrough ULTRA Clean Aluminothermic & Clean Silicothermic Processes.

• production cost leadership with a cost per ton that is less than Chinese magnesium, 
• flexible, modular production technology can be scaled to meet market demand, 
• secure western based supply source, and,
• a low carbon footprint on par with the cleanest aluminum plants and compatible with a net-zero pathway