RHI Magnesita undertakes major investment in China

Refractory specialist RHI Magnesita will invest EUR20m in its dolomite plant in Chizhou, Anhui province in China.

The step is part of a decisive response to address global pressures in the supply of raw materials to the refractory industry and rapidly provide additional volumes to its worldwide customers, said the company in a statement.

The Chizhou site includes an extensive dolomite mine and raw material production as well as facilities for the production of high-quality dolomite-based finished products. Successful trials are already underway in the brick plant in Chizhou where it is planned to start production by the beginning of 2019. The raw dolomite mine is planned to resume operation by the end of 2019.

Stefan Borgas, CEO of RHI Magnesita, comments: "One of the reasons for the merger of RHI and Magnesita last year was to create a global leader in the refractory industry capable of capitalising on growth potential including in China and Asia. After a detailed analysis of the global supply situation for refractory raw materials, as well as of our own production and supply chain, we have taken swift and decisive action to invest above EUR20m in the Chizhou site in China, further enhancing our leading global market position. After the completion of the investment, RHI Magnesita will be able to offer a fully integrated dolomite source in each of the big regions of the world to our customers and simultaneously offer dual sourcing options.

"The major investment in China marks another important strategic step towards improving our competitiveness and supply security in the medium term. It will increase our level of raw material integration, improving our unique position in the industry. With this investment, we can offer our customers in Asia shorter lead times and provide additional capacity to customers in North America, Europe and Asia from local sources. It strengthens our presence and offering in a strategically attractive market for us long-term."

The refractory industry as a whole is currently facing a number of challenges, particularly in relation to the supply of basic raw materials. Stricter environmental regulations in China have led to local plant closures, resulting in shortages of both magnesite and dolomite, dramatic increases in raw material cost, and supply security issues. These developments have accelerated the shift from magnesia to dolomite based products. The all-time high in stainless steel production has further fuelled demand for refractory products and compounded the pressure on raw material supplies, creating challenges for all market participants.