Integration of magnesite mines to drive caustic calcined magnesia prices to rise in H2

Asian Metal: Hello, Mr. Chen! Please make a brief introduction to your company firstly.

Mr. Chen: Danhai Chemical Industry Talc Powder Plant (hereinafter referred to as Danhai Chemical) is a comprehensive joint-stock company integrating mining, dressing, processing and sales of ores. It is located in Haicheng, which is called the hometown of talc and magnesite. The history of the company dates back to 1980 when a talc power plant was built in Haicheng. The plant purchased Chenma Talc Powder Plant located in Mafeng town, Haicheng city in 1999 and established Danhai Chemical in 2002. In 2017, Danhai Chemical acquired Liaoning Huayi Magnesia, a company invested by a Hong Kong investor, and then founded Haicheng Guangling Refractory Manufacturing Co., Ltd. Focusing on the business related to caustic calcined magnesia, talc powder, calcite powder and other mineral products, Danhai Chemical has now ranked among companies above the middle size in the industry after years of operation and development. The company possesses two talc mines, one magnesite mine and one calcite mine. It has proven reserves of 5 million tons of talc, 8 million tons of magnesite and 6 million tons of calcite with annual outputs of 80,000t of high-quality talc, 300,000t of magnesite and 100,000t of calcite. Using world-advanced jet mills, reverberatory kilns, cantilever Raymond mills and twin-screw extruders, the company can produce 150,000t of talc powder (325-5,000 mesh), 250,000t of magnesium oxide, 90,000t of calcite powder and 10,000t of nanometer granule and sells these products to customers from Southeast Asia and Europe and America. Relying on scientific and environment-friendly formulas, strict testing methods, the company, which abides by contracts and keeps reputation first, develops Danhai series of talc powder, calcite powder and magnesia products widely used in papermaking, painting material, plastic, cable, ceramics, steel and other fields.

Asian Metal: Would you like to let us know the development of caustic calcined magnesia market in the recent two years and the current market conditions?

Mr. Chen: The production capacity of caustic calcined magnesia industry has kept expanding in the recent three years just like that of other kinds of magnesia industries. But what is different is that the severe overcapacity hasn't been seen in the caustic calcined magnesia market. The material can be widely used in industry, agriculture, animal husbandry and building material industry. The demand for high-purity caustic calcined magnesia generally keeps stable now as it can be used in high-purity magnesia and macrocrystalline fused magnesia production. As we all know, the demand for caustic calcined magnesia has weakened to some extent worldwide recently affected by the spread of COVID-19, but this is just a temporary market change caused by an emergency.

Asian Metal: How about the demand of caustic calcined magnesia from various fields in the recent year?

Mr. Chen: The demand for caustic calcined magnesia, a material widely used in thermal power plant desulfurization, agricultural magnesium fertilizer, animal husbandry feed and building material fields in large volumes, has been relatively steady in the above fields in the recent year without sharp decreases. However, the demand for high-purity caustic calcined magnesia from high-purity magnesia and macrocrystalline fused magnesia producers has declined during the period as a result of weaker demand for refractory. Generally speaking, the demand for caustic calcined magnesia from three of top four application fields has been steady in the recent year.

Asian Metal: Has the outbreak of COVID-19 affected the supply and demand of caustic calcined magnesia?

Mr. Chen: The outbreak of COVID-19 hasn't brought great influence on caustic calcined magnesia production as most domestic producers of the material have successively resumed production since early February and logistics has recovered since late February. It's sure that the spread of COVID-19 worldwide has caused the demand to shrink to some extent in short term, but it's just a temporary market change caused by an emergency and the market will finally be back to normal.

Asian Metal: In response to the market impact brought by the COVID-19 pandemic, what will you do to deal with short-term risks as a production-oriented company?

Mr. Chen: I think the most important thing is to ensure sufficient cash flow as it is the key factor for a company to run. We should make effective production plans based on our sales in order to reasonably control our output and stocks. Meanwhile, we should strengthen specific management in order to reduce unnecessary losses and cut management costs. In addition, we should make more efforts to retain customers.

Asian Metal: What do you think of the development trend of both the caustic calcined magnesia industry and the prices in 2020?

Mr. Chen: As far as I am concerned, magnesite prices might go up to some extent in the second half of 2020 as the integration of magnesite mines will be strengthened in Liaoning. Therefore, caustic calcined magnesia prices will rise accordingly in the second half of the year.

Asian Metal: Please share with us your opinions about the development outlook of your company.

Mr. Chen: Overall, our company will develop towards a group company. We can produce all our major products on a scale of above middle size now and we own a relatively complete industrial structure from mining, dressing to processing and sales. Being a group company will help us optimize and integrate internal resources, enhance operational flexibility, reduce comprehensive costs, and at the same time strengthen our risk aversion capabilities and development momentum.

Asian Metal: Thank you for your excellent analysis and wish your company a better future.

Mr. Chen: Thank you! Also wish your company a brighter future.