Nicolás Gangutia, 15th May 2019

FUNDAMENTALS OF MAGNESITE BUSINESS: KEY FACTORS FOR SUCCESS

FUNDAMENTALS OF MAGNESITE BUSINESS

1. KEY FACTORS FOR SUCCESS 1.1 Know the magnesite market, listen to the stones and

feel the process 1.2 Understand costs in magnesite business 1.3 Navigate through regulations and compliance

2. CONCLUSIONS

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MAGNESITE BUSINESS

DEPOSIT

PRODUCTION

SALES

FUNDAMENTALS OF MAGNESITE BUSINESS

FUNDAMENTALS: THE 3 PILLARS

KNOW THE MARKET

I

FEEL THE PROCESS

III

LISTEN TO THE STONES

II

UNDERSTAND THE COSTS MgCO3+Q→MgO+CO2

IV

V - REGULATIONS

I - KNOW THE MAGNESITE MARKET

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I - KNOW THE MAGNESITE MARKET: 1. Understand application

Thanks Mike!!

By Mike O’Driscoll, Imformed, “Basic Instint. Magnesia Supply to the Refractories Industry”, October 2017

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Physical and chemical impurities are more important than MgO

I - KNOW THE MAGNESITE MARKET: 2. China

China is the first producer, first consumer and first exporter → MgO prices for CCM, DBM and EFM are driven by Chinese prices and costs (source: Asian Metal).

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However, after 30 years of low prices Chinese domination, Magforum exists… and there are profitable magnesite producers in this audience, WHY??

→ Because of quality in terms of both chemical and physical properties: CCM with Fe2O3<0,1% and very high and/or controlled reactivity (microcrystalline companies) and synthetic magnesia plants. DBM with high CaO, low SiO2, high Fe2O3 (Alpine magnesite) produced in rotary kilns.

But the key factors are sales and marketing business models:

→ Because of extreme high end market and application know how regardless magnesite quality. It is the case of integrated refractories companies or niche market specialized companies

→ Because of R&D for new applications development (water treatment in USA). And the big mistake: Due to high prices trend (6 years in the last 30 years), go to compete against

Chinese qualities and prices without market knowledge and no R&D.

I - KNOW THE MAGNESITE MARKET: 2. China

II – LISTEN TO THE STONES

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II – LISTEN TO THE STONES: 1. Source

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KEY PARAMETERS • Natural magnesite deposits.

• Different origins: sedimentary, metasomatic replacement, alteration of ultramaphic rocks.

• Different structures: stockwork, lenticular, veins…

• Different properties of magnesite: macrocrystalline or micro/crypto crystalline.

• Sea water and magnesium-rich brines (MgCl2).

• After a chemical precipitation process produce Mg(OH)2, which subsequently calcined give rise to what is usually called synthetic magnesia.

• High purity but high cost .

• CRYSTAL SIZE OF MAGNESITE • DEPOSIT STRUCTURE • CUT-OFF • DEPTH / MINING RATIO • HETEROGENEITY AND

IMPURITIES

•BORON CONTENT (depending on the application)

• Sedimentary precipitation of hydromagnesite in alkaline Mg rich waters in high temperature and high content of H2S environment and later dehydration, leads to the MgCO3 precipitation forming veins and lens. •Hydrothermal alteration of serpentinized areas form magnesite in veins,

lens or massive bodies. •Weathering of serpentines by CO2 laden waters and precipitation of

magnesite/magnesium hydroxide in cracks and fissures (stockwork). •HOST ROCK IS USUALLY SERPENTINE

MACRO CRYSTALLINE •Hydrothermal metasomatic replacement of dolomites or

limestone. •Magnesium rich water circulation along fissures, capillary

openings or cleavage plains. •HOST ROCK IS USUALLY DOLOMITE.

MICRO/CRYPTO CRYSTALLINE

II – LISTEN TO THE STONES: 1.1 Natural

II – LISTEN TO THE STONES: 2.1 Macrocrystalline mines

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II – LISTEN TO THE STONES: 2.1 Macrocrystalline mines

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II – LISTEN TO THE STONES: 2.2 Microcrystaline mines

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II – LISTEN TO THE STONES: 2.2 Microcrystaline mines

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II – LISTEN TO THE STONES: 3. Mineral

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• Crystals are not visible for human eye and are normally purest than macrocrystalline purer with very few impurities, which however are heterogeneous due to contamination from the hosting rock.

MACRO CRYSTALLINE • Crystals are well developed with few impurities,

which are generally homogeneous from the point of view of basic composition, density and hardness.

MICRO/CRYPTO CRYSTALLINE

CHARACTERISTIC MACROCRYSTALLINE MYCRO-CRYPTOCRYSTALLINE Usual host rock Dolomite Serpentine Usual structure of deposit Massive, lenticular Lenticular, veins, stockwork

Impurities Homogeneous Heterogeneous Higher CaO Higher SiO2 Higher Fe2O3 Lower Fe2O3

Physical properties Larger grain size Lower grain size (1-10 microns) Lower SSA (1-3) Higher SSA (2,9-17,6) Lower porosity Higher porosity

Calcination products

CCM with lower SSA and reactivity CCM with higher SSA and reactivity DBM with low bulk density in single firing

DBM with higher bulk density in single firing

Lower grades because of silica and iron

Very pure, higher grades but sometimes very heterogeneous due to host rock contamination (stockwork)

Low extraction cost (depending on mining ratio)

very variable extraction and beneficiation costs depending on the structure of deposit

II – LISTEN TO THE STONES: 3. Mineral

II – LISTEN TO THE STONES:

THE DIFFERENT BEHAVIOUR OF MAGNESITE COMPARED TO HOST ROCK AND IMPURITIES IS MORE IMPORTANT

THAN MAGNESITE QUALITY AS IT IS.

II – LISTEN TO THE STONES: 4.1 Crushing Resistance

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Magnesite

Example of crushing behaviour: feeding magnesite 43.85% MgO and 4.99% CaO • Magnesite concentrates in fraction <5 mm. • Beneficiated magnesite 45.57% MgO and 3.21% CaO

II – LISTEN TO THE STONES: 4.2 Density

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Examples of behaviour with different densities: feeding magnesite 44.72% and 43.68% MgO

• Beneficiated magnesite: 46.38% MgO

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Magnesite

Examples of behaviour with different densities: feeding magnesite

5.18% and 3.17% CaO

• Beneficiated magnesite: 1.82% and 1.3% CaO

II – LISTEN TO THE STONES: 4.2 Density

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Example of behaviour during calcination - DECREPITATION

II – LISTEN TO THE STONES: 4.3 Calcination

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Example of behaviour during calcination - DECREPITATION

SHATTER

II – LISTEN TO THE STONES: 4.3 Calcination

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Example of behaviour during calcination - DECREPITATION

Shatter test

II – LISTEN TO THE STONES: 4.3 Calcination

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Example of behaviour during calcination - DECREPITATION

Shatter test

II – LISTEN TO THE STONES: 4.3 Calcination

II – LISTEN TO THE STONES:

MAGNESITE DEPOSITS ARE CREATED RATHER THAN DISCOVERED

It is worthiest to focus the effort on adapting the market demands to your deposit than trying to fight against nature. Efforts to increase the quality of the deposit to reach highest grade markets may boost the kiln feed costs beyond the potential benefits.

III – FEEL THE PROCESS

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III – FEEL THE PROCESS: 1. Process flow

Pre-beneficiation

Beneficiation

Final preparation

Mining

Calcination

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III – FEEL THE PROCESS: 1. Beneficiation

Physical/ chemical characteristic Beneficiation System Blasting resistance Pre-beneficiation Pre screening before crusher crushing resistance Pre-beneficiation Screening after crusher Decrepitation Post calcination beneficiation Screening after kiln Magnetic diference Beneficiation Magnet Density diference Beneficiation Heavy media dense/GIC Colour /NIR Beneficiation Hand sorting/optical sorter Cristal differences Beneficiation XRF sorter Tribostatic diference Beneficiation Tribostatic Chemical affinity difference Beneficiation Flotation direct or reverse

The best beneficiation is no beneficiation

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Grain size distribution for a microcrystalline magnesite deposit with serpentine and beneficiation method proposed

Magnetic Separation

Optical Sorting

Removed

III – FEEL THE PROCESS: 1. Standard beneficiation for micro magnesite deposits

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III – FEEL THE PROCESS: 2. Calcination. Rotary kiln

Rotary kiln with preheater

ROTARY KILN

Micro Macro

Very high reactive magnesite

High reactive CCM

Controled reactivity CCM

CCM

Hard burnt CCM

Low density DBM

high density DBM

Homogeneity of product

High Decrepitation

Chemistry requirements

Feed size flexibility

Capex

Risk

Energy efficiency (Kcal/Kg MgO)

No preheater Preheater

CCM 2000 1700

DBM 2500 2100

PROS: THE MOST POLYVALENT SYSTEM REGARDING CHEMISTRY, FEED SIZE AND FUEL. IDEAL FOR LARGE PRODUCTIONS OF ANIMAL FEED CCM AND LOW DENSITY DBM IN MACRO. IN MICRO, THE BETTER SYSTEM FOR HIGH GRADE DBM. CONS: VERY LOW ENERGY EFFICIENCY AND HIGH CAPEX.

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III – FEEL THE PROCESS: 2. Calcination. Multi hearth furnace

MHF

Micro Macro

Very high reactive magnesite

High reactive CCM

Controled reactivity CCM

CCM

Hard burnt CCM

Low density DBM

high density DBM

Homogeneity of product

High Decrepitation

Chemistry requirements

Feed size flexibility

Capex

Risk

Energy eficiency (Kcal/Kg MgO)

No preheater Preheater

CCM 1800 1200

PROS: THE ONLY SYSTEM FOR REALLY CONTROLLING REACTIVITY IN CCM. RECOMMENDED FOR HIGH VALUE MARKETS OR FOR BRIQUETTES PRODUCTION FEEDING SECOND SINTERING STEP. DUE TO FINES RECOVERY IT IS THE BETTER ALTERNATIVE AFTER FLOTATION OR SYNTHETIC MAGNESIA. CONS: HIGH ENERGY CONSUMPTION WITHOUT PREHEATER.

III – FEEL THE PROCESS: 2. Calcination. Presurized shaft kiln

RCE /PRESURIZED SHAF KILN

Micro Macro

Very high reactive magnesite

High reactive CCM

Controled reactivity CCM

CCM

Hard burnt CCM

Low density DBM

high density DBM

Homogeneity of product

High Decrepitation

Chemistry requirements

Feed size flexibility

Capex

Risk

Energy efficiency (Kcal/Kg MgO)

CCM 1000

DBM 1400

PROS: THE BEST ENERGY EFFICIENCY KILN BOTH FOR CCM AND DBM. CONS: VERY EXIGENT KILN IN TERMS OF DECREPITATION, SIZE AND CHEMISTRY. NON HOMOGENOUS PRODUCT. RECOMENDED FOR HARD BURNT CCM ADDREESED TO FM.

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III – FEEL THE PROCESS: 2. Calcination. RCE 2nd STEP

2 ND STEP RCE KILN

Micro Macro

Very high reactive magnesite

High reactive CCM

Controled reactivity CCM

CCM

Hard burnt CCM

Low density DBM

high density DBM

Homogeneity of product

High Decrepitation

Chemistry requirements

Feed size flexibility

Capex

Risk

Energy efficiency (Kcal/Kg MgO)

DBM 400

IDEAL FOR HIGH QUALITY/HIGH DENSITY DBM, DBD.

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III – FEEL THE PROCESS: 2. Calcination. Chinese CCM shaft kiln

Chinese shaft kiln

CHINESE CCM SHAFT KILN

Micro Macro

Very high reactive magnesite

High reactive CCM

Controled reactivity CCM

CCM

Hard burnt CCM

Low density DBM

high density DBM

Homogeneity of product

High Decrepitation

Chemistry requirements

Feed size flexibility

Capex

Risk

Energy efficiency (Kcal/Kg MgO)

CCM 1500

PROS: MORE THAN 3 MT OF CCM PRODUCED. EXTREMELLY EASY, CHEAP AND EFFICIENT KILN. IT USES NATURAL DECREPITATION OF MAGNESITE. CONS: NO REACTIVITY CONTROL AND HIGH LOI. FEED MATERIAL SIZE MUST BE COARSE >100 MM

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III – FEEL THE PROCESS: 2. Calcination. Shaft kiln SHAFT KILN

Micro Macro

Very high reactive magnesite

High reactive CCM

Controled reactivity CCM

CCM

Hard burnt CCM

Low density DBM

high density DBM

Homogeneity of product

High Decrepitation

Chemistry requirements

Feed size flexibility

Capex

Risk

Energy efficiency (Kcal/Kg MgO)

CCM 1500

DBM 1800

PROS: RELATIVELY LOW CAPEX. POSSIBILITY TO PRODUCE LOW GRADES DBM AND HARD BURNED CCM. RELATIVELY EFFICIENT. CONS: NO CONTROL, MATERIAL SIZE MUST BE COARSE>60MM. FOR CCM, INDIRECT FIRING AND DECREPITATION NOT ACCEPTED.

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III – FEEL THE PROCESS: 2. Calcination. Chinese flash kiln

MHF FLASH KILN

Micro Macro

Very high reactive magnesite

High reactive CCM

Controled reactivity CCM

CCM

Hard burnt CCM

Low density DBM

high density DBM

Homogeneity of product

High Decrepitation

Chemistry requirements

Feed size flexibility

Capex

Risk

Energy efficiency (Kcal/Kg MgO)

CCM 800

PROS: VERY EFFICIENT CCM KILN FOR FINES. IT IS MORE AND MORE USED IN CHINA AFTER NEW FLOTATIONS. CONS: NON CONTROLLED AND HETEROGENOUS REACTIVITY NOT ALLOWING GOOD QUALITY BRIQUETTES (LOW DENSISTY DBM IN DOUBLE STEP)

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III – FEEL THE PROCESS: 2. Calcination Indirect flash kiln

MHF INDIRECT FLASH KILN

Micro Macro

Very high reactive magnesite

High reactive CCM

Controled reactivity CCM

CCM

Hard burnt CCM

Low density DBM

high density DBM

Homogeneity of product

High Decrepitation

Chemistry requirements

Feed size flexibility

Capex

Risk

Energy efficiency (Kcal/Kg MgO)

CCM 900

PROS: ALLOWS PRODUCING VERY HIGH REACTIVITY CCM. THE ONLY KILN WHERE CO2 PRODUCTION COULD BE REUSED FOR OTHER PROCESS.

IV – UNDERSTAND THE COSTS

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IV – UNDERSTAND THE COSTS

MgCO3 + → MgO + CO2

2.1 1 1,1

Raw material cost: 1) Kiln feed cost 2) Calcination ratio

Energy cost:

1) Product: DBM/CCM 2) Energy consumption (efficiency) Kcal/Kg MgO 3) Cost of fuel (USD/Kcal)

Q

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IV – UNDERSTAND THE COSTS: 1. Raw material cost

KILN FEED MATERIAL costs will depend on:

1) Open pit or underground: 1€/MT to 30€/MT. 2) Mined MT versus kiln feed material, which depends on:

a) Ore yield ρore (deposit structure, overburden). b) Mineralization yield ρM (percentage of magnesite). c) Pre-beneficiation yield ρPB (magnesite quality, target market). d) Beneficiation yield ρB (magnesite quality, target market).

3) All logistics from mine to kiln. 4) All other works (energy, additives, salaries, etc.) from mine to kiln.

Mined MT/MgCO3 MT= 1

ρore · ρM · ρPB · ρB

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IV – UNDERSTAND THE COSTS: 1. Raw material cost

ρore

ρM

ρPB

ρB

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IV – UNDERSTAND THE COSTS: 1.1 Mine benchmarking

Macrocrystalline open pit mine: 2€/MT ρore = 0,5 ρM = 1 ρPB = 0,7 ρB = 0,8

Logistics: 2€/MT Kiln feed costs = 2 x 3,57 + 2 = 9€/MT If calcination ratio is 2,5, cost of raw material will be:

9 x 2,5 = 22,5 €/MT

Mined MT/MgCO3 MT = 1

0,5 · 1 · 0,7 · 0,8 =3,57 MT mined/MT Kiln feed

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IV – UNDERSTAND THE COSTS: 1.2 Mine benchmarking Chinese 92%MgO CCM, 3 years ago

Macrocrystalline open pit mine: 1 USD/MT ρore = 0,9 ρM = 0,8 ρPB = 0,7 ρB = 1

Logistics + beneficiation: 2 USD/MT, so kiln feed cost:

2 MT x 1 USD/MT + 2 USD/MT = 4 USD/MT With a calcination ratio of 2,4, raw material cost will be:

4 USD/MT x 2,4 = 9,6 USD/MT

Mined material/MgCO3 MT= 1

0,9 · 0,8 · 0,7 · 1 = 2

Open pit mine cost: 5 USD/MT due to blasting limitations ρore = 0,5 ρM = 0,7 ρPB = 0,7 ρB = 1

Logistics + beneficiation: 4 USD/MT, so new kiln feed cost is:

4 MT x 5 USD/MT + 4 USD/MT = 24 USD/MT And raw material cost will be: 57,6 USD/MT

So, cost of raw material has been multiplied by 7. For high grades, MgO>97,5%, the main change is ρB from 1 to 0,6 plus cost of flotation (20 USD/MT).

Kiln feed costs: 6,67 x 5 + 24 = 57 USD/MT. Raw material costs: 171 USD/MT with a total calcination ratio of 3.

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IV – UNDERSTAND THE COSTS: 1.3 Mine benchmarking Chinese 92%MgO CCM, today

Mined material/MgCO3 MT = 1

0,5 · 0,7 · 0,7 · 1 = 4

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IV – UNDERSTAND THE COSTS: 1.4 Mine benchmarking Microcrystalline magnesite

Open pit mine cost: 2 €/MT ρore = 0,8 ρM = 0,2 ρPB = 0,8 ρB = 0,7

Logistics + beneficiation: 15 €/MT, so kiln feed cost is:

11 MT x 2 €/MT + 15 €/MT = 37 €/MT With a calcination ratio of 2,3, the raw material cost will be:

37 €/MT x 2,3 = 85 €/MT of MgO

Mined material/MgCO3 MT = 1

0,8 · 0,2 · 0,8 · 0,7 = 11

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IV – UNDERSTAND THE COSTS: 2. Energy costs. 2.1 Energy consumption

Energy consumption depends on product (CCM, DBM) and type of kiln:

CCM

Type of kiln Energy efficiency

(Kcal/Kg MgO) Type of fuel

Flash kiln 800 Gas

Indirect flash kiln 900 Gas RCE one step 1000 Liquid, gas

MHF with preheater 1200 Liquid, gas Chinese CCM kiln 1500 Liquid, gas

Shaft kiln 1500 Solid rotary kiln preheater 1700 Gas, liquid, solid

MHF 1800 Liquid, gas Rotary kiln 2000 Gas, liquid, solid

DBM

Type of kiln Energy efficiency

(Kcal/Kg MgO) Type of fuel

RCE second step 400 Liquid, gas

RCE one step 1400 Liquid, gas Shaft kiln 1800 Solid

rotary kiln preheater 2100 Gas, liquid, solid Rotary kiln 2500 Gas, liquid, solid

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IV – UNDERSTAND THE COSTS: 2.2 Fuel prices

Fuel prices depend on the kind of fuel, the availability and the region. Generally speaking, the following table could be used for compensations:

Chinese have generated gas from coal until now .

Residues 0,3 Biomass 0,8

Pet coke 1 Natural gas 1,8 Heavy oil 3,5 Diesel 5,5

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IV – UNDERSTAND THE COSTS: 2.3 Benchmarking

CCM: A good energy cost for CCM is around 30 €/MT MgO A bad energy cost for CCM is more than 45 €/MT MgO

DBM: A good energy cost for DBM one step is less than 40 €/MT MgO A bad energy cost for DBM one step more than 55 €/MT MGO

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IV – UNDERSTAND THE COSTS: 2.4 Fundamental costs

VARIABLE COSTS OF MAGNESIA (DBM) PRODUCTION USD/MT (<92% MgO)

Cost of raw

material Total energy

cost FOB cost Total

China 45 45 25 115

Brasil 45 60 50 155

Turkey 100 50 20 175

Australia 115 60 40 215

India 92 60 40 192

Europe 80 50 20 150

Russia 60 25 40 125

Morocco 24 50 25 99

V - REGULATIONS

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V – REGULATIONS:

Every country or region has its own environmental legislation regarding pollutant and CO2 restriction. The key question is how to adapt the production to overcome these difficulties at the lowest cost. The main source of CO2 is the de-carbonization of magnesite and is a real problem in some areas such as Europe, where emission rights can have a high cost or even may be not available. Pollutants such as SOx (depending on fuel used), NOx (depending on calcining temperature) and particles will need investment for implementation of corrective measures and their monitoring, as well as for maintenance of the equipment.

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V – REGULATIONS:

www.ganmag.com ngangutia@gmail.com

THANK YOU!