RHI Magnesita: major investment in China to strengthen market position and address global supply shortages

2018-06-27

June 26, 2018 - RHI Magnesita, the leading global supplier of high-grade refractory products, systems and services, has today announced that it is to increase investment in the strategically important Chinese market by investing above EUR 20 million in its dolomite plant in Chizhou, Anhui Province in China. This is part of a decisive response to address global pressures in the supply of raw materials to the refractory industry and provide additional volumes to its customers worldwide rapidly. 

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. This overall investment will eventually lead to the creation of up to 250 jobs. 

RHI Magnesita’s level of raw material integration and customer service will further increase 

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 capitalizing 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 €20 million 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." 

Major investment is in response to global raw material shortages 

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. 

With the investment in Chizhou, RHI Magnesita ensures long-term production cost security. 90% of local dolomite producers do not benefit from the significant advantages of owning their own sources of raw material supply. RHI Magnesita will offer fully integrated dolomite production in China. The Chizhou dolomite mine is considered in quality terms one of the best mines in China and the location in the Anhui Province is located very close to RHI Magnesita’s largest key customers and steel producers. 

Marco Olszewsky, President China at RHI Magnesita, stated that customers will benefit from: “The increased availability of our own raw materials is crucial and enables us to guarantee not only the security of supply but also consistently high product quality. We are confident that our Chinese and Asian customers will benefit from even shorter supply routes and better customer service.” 

In the medium term, more than 250 jobs will be created at the brick plant and raw material mine in Chizhou. During the planning and start-up phase, an international, Chinese-lead team of dolomite experts is being assembled to ensure the success of the project. 

China: RHI Magnesita is optimally positioned to tap growth opportunities 

In addition to Chizhou in Anhui Province, RHI Magnesita already operates three other production facilities and several sales offices in China. In total, RHI Magnesita employs around 2,000 people at production sites in Dalian, Bayuquan and one production and raw materials site in Dashiqiao (all in Liaoning Province) as well as at the head sales office in Shanghai. 

Growth opportunities in China arise primarily from the long-term consolidation of the Chinese market, which will lead to a shift towards high-grade refractories. Local supply, with its own raw materials and production sites, grants RHI Magnesita a significant logistical competitive advantage for the development of regional markets and the securing of growth opportunities in China and the Asia/Pacific region. 

In 2017, an ambitious business plan for China was drawn up, which is being executed by a dedicated team of local and international employees, designed around achieving strong organic growth.

About RHI Magnesita

RHI Magnesita is the leading global supplier of high-grade refractory products, systems and services which are indispensable for industrial high-temperature processes exceeding 1,200°C in a wide range of industries, including steel, cement, non-ferrous metals, and glass, among others. With a vertically integrated value chain, from raw materials to refractory products and full performance-based solutions, RHI Magnesita serves more than 10,000 customers in nearly all countries around the world.

With more than 14,000 employees in 35 main production sites and more than 70 sales offices, the company has unmatched geographic diversification. RHI Magnesita intends to use its global leadership in revenue, greater scale, complementary product portfolio and diversified geographic presence to target markets and regions benefitting from more dynamic economic growth prospects.

The combined company generated pro forma €2.7 billion in revenues in the financial year 2017. For further information please visit www.rhimagnesita.com.