Investing in the Magnesium Market
Wondering how to invest in the magnesium mining market? We’ve put together a brief guide for those interested in this metal.
Magnesium plays an important role in healthcare and industrial applications, making it a commodity worthy of investor consideration.
Not to be confused with manganese, which is also crucial for the development of a healthy body, magnesium is one of three secondary plant nutrients, along with sulfur and calcium, that are found in abundance on land and in water.
Necessary for over 300 biochemical reactions, magnesium is deemed vital for healthy bones and good circulation. Magnesium oxide is produced when magnesium and oxygen combine and is commonly used in heartburn and indigestion remedies.
However, magnesium metal also plays a key role in various industrial applications. The metal is 40 percent lighter than aluminum, but as strong as steel, making it crucial for strengthening aluminum alloys. Magnesium alloy can be found in airplanes, automobile parts and in electronic devices that benefit from being lightweight. Magnesium is also used to remove sulfur when iron and steel are produced, and to inoculate cast iron. Magnesium carbonate salts are primarily used in calcining, as well as in the agricultural and construction sectors.
Magnesium’s wide array of high-tech applications make it a compelling investment, but it is often difficult for investors to find information about the magnesium metal market. Here’s a quick overview of magnesium industry supply and demand dynamics, as well as a brief introduction to investing in magnesium metal.
Magnesium market: Supply and demand
Demand for magnesium has grown steadily in recent years, driven largely by the car parts industry, where magnesium is used for die casting. Specifically, magnesium can be found in car steering wheels and support brackets.
According to Roskill, the compound annual growth rate (CAGR) in the global magnesium metal market is expected to average 5 percent per year over the next decade to 2030, with China experiencing the greatest growth in market share compared to the rest of the world.
In the forecast period, the firm expects magnesium alloys to display stronger market growth over more traditional uses such as steel desulphurization. This is mainly due to environmental pressures as vehicle makers view alloys as a means to reducing vehicle weight and in turn emissions.
China reportedly plans to increase the magnesium content of vehicles from 8.6 kg per vehicle in 2017 to 45kg by 2030.
In terms of supply, magnesium is the eighth most abundant element in the Earth’s crust and the third most abundant element dissolved in ocean water.
Over 80 percent of magnesium production in the world comes from Chinese mineral deposits. Other major high-purity magnesium producing countries include Israel and Russia; Russia also holds the highest magnesium compounds reserves in the world at 2,300,000 metric tons.
While magnesium is naturally occurring, the extraction process does have environmental impacts and can be taxing on the Earth, not unlike other facets of the mining industry.
A number of key players are aiming to bring further magnesium production online in the next few years, including China based Qinghai Salt Lake Potash, Canadian private company Alliance Magnesium, Canadian and Australian based Latrobe Magnesium (ASX:LMG).
Magnesium market: How to invest
As with many other critical metals, there is no formal magnesium market. For that reason, it is difficult to gain exposure to the metal. However, one way to do so is to invest in magnesium resource companies.
A few options are below; all companies are listed on Canadian, US and Australian exchanges, and had market caps above $5 million as of August 12, 2020:
- Karnalyte Resources (TSX:KRN)
- Latrobe Magnesium (ASX:LMG)
- MGX Minerals (CSE:XMG,OTCQB:MGXMF)
- Western Magnesium Corporation (TSXV:WMG)
- West High Yield Resources (TSXV:WHY)
This is an updated version of an article originally published by the Investing News Network in 2011.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: MGX Minerals is a client of the Investing News Network. This article is not paid-for content.