Millions Of Jobs At Risk As Europe Faces Magnesium Shortage

ER Editor: Note that the EU made itself dependent on places like China for industrial magnesium back in 2001 !!

See also this report for the ins and outs of magnesium production from titled EU in talks with China to avoid “catastrophic” magnesium crunch:

European leaders, worried about the effect a global shortage of magnesium will have on the European Union’s industrial recovery from the pandemic, have open talks with China, which supplies the block with about 95% of the silvery-white metal used to make aluminum.

Local companies, including Norway’s Norsk Hydro, have stopped producing magnesium because they were unable to compete with lower costs at Chinese producers.

That would not have been a problem should Beijing not have recently ordered roughly 35 of its 50 magnesium smelters to close until the end of the year to conserve power supplies. This means current European inventories will be exhausted by the end of November, Germany’s association of metals producers WVM warned on Tuesday.


Millions Of Jobs At Risk As Europe Faces Magnesium Shortage

Tyler Durden's Photo TYLER DURDEN

Europe purchases 95% of its magnesium from China, and will run out of the industrial metal used to strengthen aluminum by the end of November that could threaten millions of jobs in sectors from automobiles to aerospace to defense and much more, according to Bloomberg.

Three trade groups, including European Aluminium, Eurometaux, and industriAll, warn shipments from China are dwindling quick due to power cuts to energy-intensive magnesium smelters. They said if reserves of the industrial metal aren’t increased in the near term, it may result in trade production shortages, factory closures, and job losses.

“Supply of magnesium originating from China has either been halted or reduced drastically since September 2021, resulting in an international supply crisis of unprecedented magnitude,” the trade groups said. They urged Brussels “to urgently work toward immediate actions with their Chinese counterparties to mitigate the short-term, critical shortage issue, as well as the longer-term supply effects on European industries.”

Magnesium, which is used extensively in the aerospace industry, is a metal for producing aluminum alloys in the automotive industry and could compound issues for European carmakers already dealing with crippling chip shortages.

Morgan Stanley’s Amy Sergeant and Ioannis Masvoulas told clients last week that Europe stands out as the most exposed region to magnesium shortfalls from China. They said Europe shuttered its last magnesium smelter in 2001. This means that there’s no way for Europe to domestically increase magnesium supplies and hinges all on China’s output.

Days ago, Barclays analyst Amos Fletcher warned clients, “there are no substitutes for magnesium in aluminum sheet and billet production.” He said if “magnesium supply stops,” the entire auto industry will grind to a halt.

European Aluminium, whose members include Norsk Hydro, Rio Tinto, and Alcoa, said, “the current magnesium supply shortage is a clear example of the risk the EU is taking by making its domestic economy dependent on Chinese imports. The EU’s industrial metals strategy must be strengthened.”

Morgan Stanley warns: “Should magnesium shortages persist through to 2022, there is a growing risk of downstream demand destruction as smelters may be unable to produce specific aluminum alloys for the automotive, building, and packaging sectors. In that scenario, we could see a shift towards commodity-grade standard ingot.”

The unintended consequences of European officials deciding decades ago to rely entirely on China for magnesium could spell disaster for millions of jobs if reserves aren’t replenished soon.

ER: Was this the entire point all along?




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