CHICAGO Alliance Magnesium Inc. plans to build a Canadian $500-million ($451.4-million) primary magnesium smelter in Asbestos, Quebec, it said.
The facility, which will be capable of producing 50,000 tonnes of the metal per year, is expected to be in service by the end of 2016, according to company documents.
Brossard, Quebec-based Alliance said the facility would largely target the automotive, aerospace and can stock industries, according to an investor presentation.
A pilot plant with a 200-tonne-per-year capacity is expected to be completed this year, with a "pre-commercial plant" operating at 2,000 tonnes per year in 2015 before the commercial plant is completed, Alliance said, adding that on-site rolling capabilities could be added at a later date.
"The whole world is hungry for magnesium, and we have to seize this opportunity," Alliance Magnesium president and chief executive officer Joël Fournier said in statement March 3.
Prior to joining Alliance Magnesium, Fournier served as chief scientific officer of Montreal-based Orbite Aluminae Inc., company documents show.
The automotive sector is expected to boost its use of aluminum and magnesium as it looks to make vehicles lighter to meet stricter fuel economy standards, Alliance Magnesium said.
Magnesium, which is expected to see increased applications in vehicles, is also necessary as an alloying element in aluminum products, the company noted.
Alliance Magnesium also expects to benefit from North America accounting for 23 percent of magnesium consumption but only 7 percent of production, as well as from anti-dumping duties in many countries on metal from China, which accounts for the bulk of world production.
U.S. Magnesium LLC is currently the only North American producer of primary magnesium. The Salt Lake City-based company is planning to increase primary magnesium production at its Utah plant by 20.5 percent to 76,500 tonnes per year by 2015 (amm.com, Feb. 11).
In addition, Alliance said it should be able to take advantage of its closer proximity to customers than other magnesium producers, cheap hydropower in Quebec and reserves of tailings leftover from the regions decades of asbestos mining. Tailings of serpentine mineralor chrysotile-asbestoscontain 23.3 percent magnesium metal, making the material potentially valuable for extraction, the company said.
Alliance Magnesium has already secured access to a serpentine deposit with a calculated reserve of 200 million tonnes of magnesium metal, it said.
An initial investment of C$10 million ($9 million) in the project was made possible by a nearly $2.3-million ($2.1-million) interest-free loan from local development officials, according to the company.
Alliance Magnesiums plant wouldnt be the first attempt in the past decade at making magnesium in the Asbestos region. A previous magnesium plant in nearby Danville, Quebec, failed because of import competition.
The Magnola magnesium plant in Danville started production in 2000 but was shuttered in 2003 because of an influx of low-cost magnesium from China that made the plants hydrometallurgical process uneconomical (amm.com, Sept. 5, 2007).