RHI Magnesita plans to invest around R$350M (US$92M) at the Contagem complex in Belo Horizonte including R$285M (US$75M) for the expansion of four of its ten plants and R$64M (US$17M) for the construction of a new HQ. The investment must still be approved by the board in September. The majority of new production would be used to serve foreign markets, with the refractories major hoping to increase its proportion of Brazilian exports from 23% of production to 30–35%.
RHI Magnesita became the world’s largest refractories producer in 2017 following the merger of RHI of Austria and Magnesita Refratários of Brazil. This new investment is the first significant project the company has undertaken in Brazil since the merger.
Expansion and focus on export markets could take advantage of recovery in the refectories sector which strengthened through 2018. Global refractories output increased by more than 3% that year, the first positive grow for several years. Refractories follow trends in the global steel industry where crude steel output strengthened slightly in 2016 and 2017 before seeing a stronger 7% rise in 2018.
Many of the key raw materials used in the manufacture of refractories have experienced price rises in recent years as a result of plant closures brought about by tightening environmental policy in China. China is the leading source of supply for many refractory minerals including graphite and magnesia. In 2018, China accounted for around 50% of global synthetic graphite production, 60% of natural graphite production, and 56% of magnesite production.
In its new report on the graphite industry, released this week, Roskill analyses the supply chains of both natural and synthetic graphite and highlights potential threats to graphite supply out to 2028 that could affect the refractories sector. Government-led pollution control and industry efficiency improvements will continue to disrupt production with graphite prices becoming increasingly vulnerable to capacity closures as overcapacity lessens and stockpiles are used up.
RHI Magnesita has looked to be self-sufficient in some refractory minerals. The company is reported to own the largest magnesite reserve outside of China, located in Brumado in Brazil’s Bahia state. It had previously looked at operating its own flake graphite mines in Brazil and invested in development of the Almenara and Aguas Belas mines and an associated plant in the state of Minas Gerais in the early 2010s. By November 2014, however, it suspended development of the mines, quoting insufficient production rates for the project.
Roskill’s NEW Natural & Synthetic Graphite: Outlook to 2028 report is about to be published and will include analysis of refractory and other market trends, as well as graphite supply and prices to 2028. Click here to download the brochure and sample pages or to access further information.