Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The EU urgently needs to classify a substance used to line furnaces and kilns for making cement, glass and steel as a critical raw material or supplies will become hostage to China, the world’s biggest producer of high-end industrial ceramics has warned.
Stefan Borgas, chief executive of London-listed RHI Magnesita, told the Financial Times that while magnesite is essential to basic chemical processes underlying Europe’s industrial base, its absence from a list of strategically important materials has disincentivised homegrown production.
Magnesite is used to make refractories, materials that allow furnaces to handle extremely high temperatures above 1,200C. Europe imports most of its magnesite from China, which controls two-thirds of global production.
“We have enough magnesite in Europe that we could secure supply to the European heavy industries,” Borgas said, adding that EU critical materials designation is helping to boost investment in the mining and processing of lithium, nickel and other metals where China also dominates supply.
“For sure it gives a boost to the European production of these materials,” Borgas said. “We have natural resources [but] Europe has neglected its mining capabilities over the last 50 years.”
The call by Vienna-based RHI Magnesita is a sign of how far China’s global surge in industrial exports in response to faltering domestic demand is extending beyond steel and other widely used metals to lesser known but equally critical materials.
The company, which has a listed subsidiary in India and a market value of about £1.5bn, is battling falling prices for refractories as Chinese producers turn to exports to absorb excess capacity. Factories in India are also investing in new refractory production as the country pursues its steelmaking ambitions.
In an effort to boost its supplies of the commodities required to make clean technologies such as batteries and wind turbines, the EU has listed 16 products including nickel, lithium and cobalt as “strategic” as part of a Critical Raw Materials Act that sets targets for their domestic extraction, processing and recycling.
Borgas argued that magnesite should be added to this list because it also underpins the processing and recycling of more than half of these “strategic” minerals.
He said that including it on the list would also help companies cluster together to invest in decarbonising high-emitting processes. The production of one tonne of magnesia from magnesite emitted about 1.8 tonnes of carbon dioxide, Borgas said.
“Being on the strategic raw material list helps to support investment in totally new technologies. [This is] uncharted territory, which for any single company would be very risky. But as a cluster, this could become very interesting.”
The global supply of refractories is running at about 40 per cent above demand but the supply chains for raw materials such as magnesite are becoming precarious, according to RHI Magnesita.
“For every building material for modern society . . . you need refractories,” Borgas said. “You need this ceramic insulation layer inside the furnace in order to protect the plants and the people from this hot material.
“The Chinese have invested into this based on their resources and — very reliably, actually — supply the world . . . Europe and every other continent should take care that they at least use what they have,” he said.
The EU should update the critical raw materials list by May 24 2027, according to the act. Any material must be assessed before it can be added, an EU official said.
