Turkey’s leading steel maker Erdemir, which is owned by the Turkish army pension fund OYAK, has signed a deal to buy a 100% stake in miner Kumas Magnesite (Kumas) from local Yildiz Holding and its investment arm Gozde Girisim. The sale price was US$340M, subject to change depending on balance sheet changes by the close of the transaction.
Kumas is the world’s largest high-quality magnesite ore producer and a market leader in the refractory industry in Turkey. Refractories have been classed as essential inputs into the world’s iron, steel and cement industries during the COVID-19 pandemic. OYAK reports that it expects the integration of Kumas with Erdemir to reduce Erdemir’s production costs.
This is the second major Turkish refractories materials deal reported on by Roskill in less than a month. Turkey is a large and growing producer of both steel and refractories, with significant domestic production of magnesia. Turkish producers of steel and refractories are expected to benefit from ongoing upstream changes in China, becoming more competitive as Chinese production costs rise.
China overtook Turkey to become the world’s leading magnesite exporter in 2018 and accounted for more than 60% of the world total in 2019 and 2020. Chinese exports rose from 147,397t in 2017 to 426,314t in 2019, and again in 2020. Nearly all Chinese recorded exports are supplied to Asian countries, with Japan alone accounting for 91% in 2019, although US import statistics report shipments of an additional 71,340t in 2019. Reflecting the restrictions placed on magnesite mining in China, the country also imported an average of 40,800tpy magnesite in 2018/19, mainly from Russia.
Other major trade flows for this key refractory raw material are covered in detail in Roskill’s new magnesium compounds report. China has dominated world refractory markets both in terms of production and consumption, as well as in international trade for many years. There are considerable concerns about availability of raw material supply following new rounds of Chinese environmental inspections in late 2020/early 2021 and markets are expected to be tight.
Roskill’s NEW Magnesium Compounds: Outlook to 2030, 14th Edition report will be published soon and include analysis of recent steel and refractory industry trends on supply, demand, trade and prices, as well as providing forecasts to 2030 and profiles of the main producers. Click here to download the brochure and sample pages for the report, or to access further information.
Roskill’s Natural & Synthetic Graphite: Outlook to 2030, 13th Edition was published in October 2020 and includes analysis of graphite industry trends in supply, demand, trade and prices, as well as an industry cost curve for spherical graphite and forecasts out to 2030. Click here for more information.