The New World of China’s Mineral Supply

China’s mineral supply squeeze continues to challenge refractory producers. A range of factors arising in 2017 and spilling into 2018 significantly compounded the shortage of key refractory (and other) mineral exports from China vital to the world’s refractory manufacturing sector.

Introduction

The situation created real problems for re-fractory manufacturers requiring the likes of Dead Burned Magnesia (DBM), Fused Mag-nesia (FM), calcined bauxite, graphite, and fused alumina for making refractory bricks and monolithics.

China is well known as the world’s primary source of most refractory minerals (Tab. 1); there are perhaps >40 types of refractory raw materials (natural and synthetic) pro-duced with a total production capacity of some >30 Mt/a, of which 2–3 Mt/a are ex-ported. What is fundamental to understand is that despite past supply bottlenecks oc-curring over the last two decades, these were short-lived. This time it’s serious, it is not a cyclical phase. The fall-out is unlikely to be temporary for many Chinese mineral and refractory operations.
Unfortunately for the global refractories in-dustry, where certain regions, such as India, relied almost entirely on raw material sup-ply from China, the crisis continues apace into 2019 and the world market must react and adapt to the new world of Chinese re-fractory mineral supply.

China’s minerals woe wears on

Although refractory mineral prices stabilised into early 2018 (Fig. 1) , albeit remaining at high levels, 2017’s “perfect storm” of robust pollution controls and environmental inspections (= mine and plant closures), re-stricted and banned explosives provision (= lack of primary ore availability), and closure of illegal businesses (= reducing capacity) continued through 2018 to tighten refrac-tory raw material supply and increase pric-es, pretty much living up to 2018’s Chinese zodiac animal – Year of the Dog!Uncertainty over physical supply availability and future pricing continues to challenge traders and refractory raw material buyers desperate to secure supply for 2019.

In addition to continuing environmental inspections (Fig. 2), China has upgraded its customs audit of minerals trade resulting in significantly more stringent requirements and declarations for exporting and import-ing parties, and the ongoing US-China trade tariff war is not helping prospects. China’s war on pollution, zealously driven by President Xi Jinping, accelerated in 2018 with the passing of a new Environmental Protection Tax Law and the old Ministry of Environmental Protection becoming the Ministry of Ecology and Environment (MEE).

The continued implementation of the 13th Five-Year Plan (2016–2020) for Ecological and Environmental Protection, including four “green teams” of 120 experts de-ployed to all 31 provinces every two years, was rubber-stamped at the 13th National People’s Congress, March 2018.
“We will step up the environmental en-forcement and inspection” said Li Ganjie, Minister of Ecology and Environment. This crusade and its ramifications on Chinese industry is not going away anytime soon, particularly when 2020 has been officially designated a milestone year for China to be a “Moderately Prosperous Society” (let alone 2049, the centennial of the founding of the Republic).

In early September 2018, the MEE an-nounced 11 more cities added to list of 82 cities under inspection, and more en-vir onment inspections for April–June 2019, significantly, scheduled for just after the imposed “winter shutdown” of October 2018–March 2019.
November 2018 saw a new month long round of environmental inspections in Jilin, Liaoning, Shandong, and Shanxi provinces – all key mineral production centres. Initially, the MEE had been planning a re-peat of the 2017 blanket production cuts of 30–50 % on heavy industry in 28 northern cities during the Winter Shutdown.

However, the MEE relented, and local gov-ernments have been given the power to decide how to meet emission targets during the smog-prone winter heating season. The MEE has set a target of reducing average particulate emissions by about 3 % (down from the original 5 %) over the winter period. How this will pan out remains to be seen.

By Q3 2018, almost all production of high purity magnesia in Liaoning remained closed; all magnesite mining had closed, and had not yet restarted in the Anshan and Dashiqiao area, with some 90 % plants closed failing to meet new environmental standards.

Indeed, new emission standards for the magnesia refractory industry in Liaoning were planned for 1 January 2019, and expected to further restrict both magnesia and refractory production capacity in the province.

Reports suggest that there are plans to restart magnesite mining and exploration in the Haicheng area from mid-September 2019 earliest. Regarding bauxite supply, the primary pro-ducing provinces of Henan, Guizhou, and Shanxi have suffered serious interruptions of bauxite mining and calcined bauxite and fused alumina production, and wi