The Ministry of Industry and Information Technology published“Access Condition for Magnesium Industry”

On March 14,the Ministry of Industry and Information Technology formally published “Access Condition for Magnesium Industry”,which put forward access restriction in aspects of scale layout,technological equipment,product quality,resource and energy consumption,and overall utilization for magnesium smelting enterprises.According to industry insiders,as small and medium sized smelting enterprises become eliminated,magnesium price is expected to stop dropping and rebound,leading enterprises will benefit from the soon-to-start prosperity cycle.

According to the “Access Condition”,the access scale in production capacity of existing magnesium smelting enterprises should be no less than 15,000 t/a; for renovated or expanded magnesium smelting projects,the production capacity should be no less than 20,000 t/a; for newly constructed magnesium and magnesium alloy projects,the production capacity should be no less than 50,000 t/a.It encourages large and medium sized advantageous magnesium smelting enterprises to merge and acquire small magnesium factories.

Industry insiders of the China Nonferrous Metals Industry Association Magnesium Branch pointed out that: “The Access Condition is mainly intended to adjust industrial structure,and control the total volume of production capacity,and phase out backward production capacity.”

It has been learned that,at present there is indeed very serious surplus in production capacity in China’s magnesium smelting industry.According to the “2009 Magnesium Industry Development Report” published by the Magnesium Branch,the 64 magnesium smelting factories which the Association has surveyed had a total production capacity of 1,318,500 tonnes,and the previous Magnesium output was only 501,800 tonnes,in which the surplus capacity has exceeded 800,000 tonnes.

Furthermore,because the domestic magnesium application market has not yet been opened up,only 170,000 tonnes in last year’s 500,000 tonnes magnesium output was consumed in China.Owing to over supply,magnesium price declined throughout 2010,and for a certain period its price fell below its cost.

For this purpose,in addition to inflexible index in size,the Access Condition also put forward a number of requirements in the aspects of environmental protection,and technological process.The Ministry of Industry and Information Technology requires that,newly constructed and renovated or expanded projects should meet the requirements of the Access Condition;existing manufacturers should try to meet the requirements prescribed in the Access Condition as soon as possible.

The Access Condition has been formally implemented since this month.From now on,for any newly built or renovation and expansion projects which cannot meet the requirements of the Access Condition,relevant competent departments will not register them for recordkeeping,financial institutions should not provide loans or credit extension support in other forms,authorities in land management,urban planning and construction,environment protection,fire fighting,and safety supervision departments should not process any related formalities.

According to industry insiders,after the Ministry of Industry and Information Technology has issued final ultimatum to magnesium enterprises not conforming to Access Condition,more than half of the enterprises in the industry will exit the market,magnesium price is expected to reflect its due resource value.