Future Plans

Rationalisation of small, less efficient magnesium producers by Chinese regulators together with projected increases in world magnesium consumption are expected to ensure a strong market for the expanded operation.

The Group intends to expand its magnesium operations to 105,000tpa over three phases.

An important competitive advantage of the Group’s magnesium business is its license to substantially expand capacity – which is uncommon for an existing, relatively small producer as the Chinese government is discouraging small scale magnesium plants. Another significant advantage is the close proximity of the Dolomite Quarry, the Group's source of magnesium ore, which is also owned by a family member of the Group’s joint venture partner, and the Shanxi JV Company holds a call option over that Dolomite Quarry.

Other advantages which are:

• The abundance of relatively low cost coal, as Shanxi has the largest coal reserves in China;
• Access to low-cost ferrosilicon as the Shanxi Province is close to the main ferrosilicon suppliers located in Inner Mongolia and Ningxia Provinces; and
• Access to skilled and low-cost labour, due to the Shanxi Province’s dominance of magnesium production.