Selected 2004 Annual Report Summaries: Magnesium

JOM, Aug 2005

Avisma Titanium-Magnesium Works

NOTABLE: The Russia-based joint stock company Avisma TitaniumMagnesium Works decided in 2004 to merge with the joint stock company VSMPO to form the corporation VSMPO-Avisma. * In 2004, the company began installation and start-up of magnesium alloy die-casting equipment, with the first products planned for delivery by the end of 2005. Initial customers for die-cast products include a Russia-based company that produces electric hand tools, but the company hopes to deliver parts to automobile manufacturers in Europe and the United States in the future. * Avisma reported sales of 26.7 kt of magnesium in 2004, with approximately two-thirds of its sales going to North American markets and the remainder to Western Europe and Russia. The company estimates that it was responsible for 6% of total world production of magnesium in 2004.

Hydro

NOTABLE: Part of Hydro's Aluminium division, Hydro Magnesium operates a primary production plant, two alloy production plants, and a recycling plant, with total foundry capacity in excess of 100 kt. Its four plants are Bécancour in Québec, Canada; Bottrop in Germany; Porsgrunn in Norway; and Xi'an in Shaanxi, China. Hydro Magnesium's largest customer is General Motors. * Hydro reported that production, remelting, and recycling of primary magnesium totaled 98 kt in 2004, up from 92 kt in 2003. * In 2004, Hydro Magnesium doubled capacity at its foundry in Bottrop, Germany, from 7.5 kt/y to 15 kt/y. * In January 2005, Hydro announced plans to upgrade the company's magnesium plant in Bécancour, Canada, improving dehydration and adding four electrolytic cells. The upgrade is expected to increase production by 7 kt/y to 58 kt/y of cast primary metal and should be finished in mid-2006.

ICL-Israel Chemicals Limited

NOTABLE: ICL-Israel Chemicals Limited has four operating segments: fertilizers, industrial products, performance products, and metallurgy. ICL Metallurgy produces and markets pure magnesium and magnesium alloys through a joint venture between the ICL Group and Volkswagen AG of Germany. ICL holds approximately two-thirds of the joint venture, Dead Sea Magnesium Limited, with Volkswagen holding the remaining third. * Dead Sea Magnesium produces magnesium from carnallite-a triple salt consisting of potassium chloride, sodium chloride, and magnesium chloride-that is extracted from the Dead Sea. * ICL Metallurgy's magnesium products are used primarily in casting facilities to produce automotive parts and as a component in the aluminum alloy process in the aluminum industry. * In 2004, ICL Metallurgy produced approximately 28.5 kt of magnesium and was responsible for 3% of the group's total sales.

Latrobe Magnesium Limited

NOTABLE: Latrobe Magnesium Limited plans to build an electrolytic magnesium plant that will produce magnesium from fly ash, a waste product of power plants. The plant would be located in the Latrobe Valley in Victoria, Australia, where Victoria's four major power plants are located. Approximately 12,000 kt of fly ash from these plants are contained in the valley, with an additional 600 kt added each year. The fly ash is high in magnesium content, and the plant is expected to produce approximately 100 kt of magnesium metal and alloys each year. Construction of the plant is expected to be finished by late 2008, with full production expected by late 2010. * In 2004, Latrobe Magnesium began to evaluate a Russian technology that will enable electrolytic magnesium metal production directly from a synthetically produced magnesium/potassium chloride called carnallite. The process is used at the Solikamsk and Avismaplants in Russia, at Dead Sea Magnesium in Israel, and at a small plant in Kazakhstan. Latrobe previously planned to use Alcan technology, but decided the risk was too high for this unproven technology. Use of the Russian technology will provide Latrobe with access to an existing pilot plant in Russia, resulting in major cost savings during the bankable feasibility study. Latrobe visited the Russian Institute of Titanium and Magnesium and the Solikamsk magnesium plant in May and September 2004 to assess the technology first-hand.

Maglndustries Corporation

NOTABLE: In December 2004, Magnesium Alloy Corporation changed its name to Maglndustries Corporation. The company reorganized its operations into three distinct business units: magnesium, potash, and energy. Maglndustries has created three 100%-owned subsidiaries, MagMetals Incorporated, MagMinerals Incorporated, and MagEnergy Incorporated, to encompass the three business units. * Maglndustries is engaged in the financing and development of the Kouilou Magnesium project and energy infrastructure in the Republic of Congo. The company plans to construct a magnesium production facility near PointeNoire that will initially produce 60 kt/y of magnesium. Raw material for the plant will be supplied by the solution mining of Maglndustries' 100%-owned Kouilou carnallite deposit. * Maglndustries has received the rights to use an electrolytic magnesium process developed by the Russian Aluminum Magnesium Institute and the Ukraine State Titanium Institute. The process, used extensively throughout the world, has been granted exclusively to Maglndustries for use in Central West Africa. * In March 2004, Maglndustries signed a Memorandum of Understanding with Ferrostaal AG of Germany. Ferrostaal will lead a bankable feasibility study for the Kouilou Magnesium Project. The study is expected to take 12-15 months to complete and to cost approximately $ 12 million. * In 2004, the company raised a total of $8 million by way of private placements of shares. This funding will allow the company to proceed with the steps needed to advance its magnesium and energy businesses. * MagEnergy has signed a preliminary agreement with Société Nationale d'Electricité, the owner and manager of the INGA hydroelectric facility in the Republic of Congo. The company hopes to allocate part of the electricity generated by this facility to the Kouilou Magnesium plant.