Alcoa looks to reopen Northwest Alloys magnesium plant

By Tom Stundza -- Purchasing, 5/21/2008 10:56:00 AM

Alcoa is studying the possible restart of its former Northwest Alloys primary magnesium plant in Addy, Wash., as magnesium prices have jumped to an average $3.35/lb this month from $3.03 in April. “We are evaluating and investigating at what point it would make sense to restart the facility,” says Kevin Anton, president of Alcoa Materials Management. Northwest Alloys closed in the autumn of 2001 due to high Pacific Northwest power costs from the Bonneville Power Administration.

Northwest Alloys had a projected operating rate of 30,000 metric tons/year of magnesium in 2001. Back then, spot magnesium sold for $1.21 (2001 annual average) while it is annualized for 2008 at $2.89. Alcoa is looking at reopening Northwest Alloys because magnesium is used in primary aluminum smelting, so “we are — if not the largest — then one of the largest buyers of magnesium in the world,” Anton tells reporters.

Prices are up because magnesium demand has surged globally, according to Roskill Information Services in London, which says 2007 purchases totaled 860,000 metric tons. That reflected a 60% increase in buys by China to 250,000 metric tons. Analysts believe China will source almost 30% of global supply of oxide and metallic magnesium again this year to fuel its aluminum smelters, steel furnaces and metal-processing plants.

Magnesium supplies in the U.S. remain tight. North American capacity is limited with Israel and Russia the principal magnesium suppliers to the U.S. The only new plants that were being constructed are in China, but antidumping duties assessed on most forms of magnesium imported from China some time ago limit the imports of magnesium from the Middle Kingdom.