A Study On China’s Magnesia Export

Magnesite is the very precious mineral resource, and it is the important strategic resource given much concern by the countries all over the world. Magnesia is the primary product calcined or fused by magnesite, refined from seawater or lake brine, or refined from brucite. China’s magnesia is mainly produced by magnesite. Magnesia-based refractory products play an indispensable role in high temperature industry. It is widely applied in metallurgy industry, non-ferrous metal industry, construction industry, chemical industry and power industry, etc. China has abundant magnesite resource. Its reserve takes22.5%of the world’s total reserves, which ranks No.1in the world. Meanwhile, there are abundant rare high grade magnesite resources in the southern of Liaoning province. Its reserve is2.166billion tons, which takes61.8%of the total reserves in China. Large reserves, high grade, shallow embedding and easy mining are the characteristics of Liaoning’s magnesite resource. In recent years, with the development of steel industry and construction industry, the countries like United States, European countries and Japan more and more rely on the magnesia exported from China. China opens the door to supply60%of the demand from the world every year. And Liaoning province takes95%of the total export volume. There are hundreds of magnesia plants and export enterprises in Liaoning province, whose export volume has increased nearly a hundred times compared with the early days of China’s foundation. This paper studies on the magnesia export, the problems we encountered during the development of the magnesia industry and solutions to these problems.This paper starts from the extensive use of magnesium in all walks of life, and points out that it is quite important and practical to study on China’s magnesia export. Based on reading and studying lots of the academic papers, I hope that I could bring some inspiration for China’s magnesia export. Meanwhile, this paper quotes Factor-endowment Theory, Scarcity of Resource and Sustainable Development Theory as the theoretical support. The factor-endowment Theory points out that every country has its advantage by using more relative affluent and cheap elements and using less relative scare and expensive elements of the commodity production. Magnesia is the product that China has resource endowment advantage. Other countries can only rely on China for the supply of magnesia because they have small reserves or high production and environment cost. However, we should pay more attention on the protection of magnesia resource when we use the natural advantage brought by resource endowment. And since the resource is scarce, the question that how to allocate and use the resource reasonably come out. Resource scarcity requires that the sustainable development strategy should be carried out. Resource scarcity and sustainable development provide the theoretical support for the implement of magnesia export quota and export license. Along with China’s magnesia output increasing dramatically, China’s high quality magnesite resource reserves declined rapidly.This paper makes analysis on the global magnesite distribution, magnesia manufacturing, magnesia supply and demand, and the category of magnesia. Magnesia is the primary good calcined by magnesite, whose manufacturing process is quite simple. According to the methods and degree of calcining, magnesia could be categorized as dead-burned magnesia, caustic-calcined magnesia and fused magnesia. The dead-burned magnesia is mainly used for manufacturing refractories. And caustic-calcined magnesia is mainly used in the agricultural fertilizer and also used in construction materials.Along with the ups and downs of the history, China’s magnesia-based refractory industry has experienced a long process of development. China’s magnesia industry has made remarkable achievements from the closed and backward refractory industry to the global supplier of magnesia; China’s magnesia industry and export grew rapidly from the only exporter--China Minmetals before1980to a thousand magnesia exporters and2million tons export volume now. China’s government is strengthening the protection of magnesia from the period that lots of magnesia was plundered and invaded by Japanese to the period that our government implemented the policy of export quota bidding and export license. However, magnesia industry and magnesia export face many problems. Magnesia exported from China is always "first-class resource, second-class processing and third-class price". China’s magnesia plants and export enterprises have always been "small scale, multi amount, and loose distribution" and the industrial order and standard is still not mature. More seriously, low export price of magnesia makes China’s magnesia export enterprises meet with severe anti-dumping investigation. Since the first time that the Europe Union raised the anti-dumping lawsuit to the dead-burned magnesia and caustic-calcined magnesia exported from China, China’s magnesia export enterprises have been encountered anti-dumping investigation frequently. Foreign countries take various trade protection measures to magnesia exported from China. The magnesia exported from China is always met with anti-dumping because of the low price. But recently,"monopoly" has become the new charge of China’s export enterprises. That makes magnesia exported from China stranded in dilemma. In2005,17China’s export enterprises including China Minmetals, Sino Steel, China National Machinery Import and Export Corporation and other14magnesia export enterprises in Liaoning was sued by American enterprises. The American enterprises pointed out that China’s magnesia export enterprises cooperated with China National Chemicals Import and Export Chamber of Commerce to establish China’s Magnesia Export Alliance and China Magnesia Forum, who formed a price "Cartel" through negotiating in regular meeting, correspondence and telephone conference, etc. and conspired to control the supply of magnesia to make the international market magnesia prices rise dramatically. The American enterprises thought that China’s magnesia enterprise was against the Anti-trust Law. It was a heavy blow to magnesia enterprises in Liaoning Haicheng because the anti-trust brought more damage than the anti-dumping. China’s magnesia enterprises had to face more complex cases, more time-consuming and more amount of compensation, etc. This paper analyzed the influence, damage and solutions to the anti-dumping and anti-trust cases that China’s magnesia export enterprises encountered. Meanwhile, China’s government implements the policy of magnesia export quota bidding and magnesia export license. Under the strict control of magnesia export, a "new industry" comes out for reselling the export quota license. The privately illegal trade for export quota license makes the price soaring and some even higher than the export price of magnesia itself. And the magnesia producing process is simple but lucrative. So some people do not hesitate to take risks for smuggling this precious resource. What’s more, magnesia plants also face some industrial problems including excessive capacity, low resource utilization and serious pollution, etc.The author proposed some suggestions to China magnesia industry based on the lots of facts and data analysis. First of all, in order to control the illegal smuggling activities, we should re-examine the system of magnesia export license and quota bidding system. At present, the annual export quota is1.4million tons and the annual fees charged amounted to460million yuan. But there is still a lot of magnesia loss through rampant smuggling. That means the export quota license does not work as we expected. Therefore, in the current situation, China could increase export tariffs significantly instead of implementing the export quota bidding system. On the one hand, it can prevent the exporters from smuggling due to the failure of bidding; on the other hand, the government could increase the tax income. And I think China should expand the range of tariff, which can control the export of magnesia and the primary products contained magnesia. And we should advocate exporting the high value-added products. Secondly, being same with rare earth, oil and natural gas, magnesia is also the strategic resource reserve. So magnesia also should be included in the system of national strategic reserves which can protect this valuable resource and fully prepare for the future use in industry. Thirdly, we should regulate the mining order and protect mineral resources from the perspective of sustainable development. Some unqualified mining companies should be shut down immediately and the mining order should be standardized. We should try our best to increase the resource utilization. It is necessary for magnesia plants to develop recycling business, which could ensure the double income of resource saving and environment protecting. This paper illustrates the Zhongxing Mineral Group to introduce the huge economic benefit of developing recycling economy. At last, China’s magnesia enterprises should focus on the research and development of the magnesia-based refractory products to change the situation of "small-scaled, multi amount and loose distribution" to make China magnesia enterprises better, bigger and stronger. It will be the powerful guarantee for increasing the magnesia quality and coping with the trade protectionist measures from foreign countries.In the last part of this paper, the author summarized all the main points that have been stated in the previous Chapter and emphasize the importance of protecting the magnesia resource, coping with the trade protectionist measures actively and improving the magnesia export policy. I hope that this paper could give some inspiration to the further study on magnesia export.