China Magnesium Corporation (CMC) aims to raise up to Aus$8 million through an initial public offer and will use the funds for an initial upgrade and expansion of the Pinyao Magnesium Project in northern China’s Shanxi province.
CMC also aims to complete its earn-in of a minimum 75% interest in the existing magnesium ingot production plant.
CMC aims to be one of the largest producers in the world of pure magnesium and magnesium alloy, supplying domestic Chinese and international customers with long term, reliable supply. Magnesium is a light-weight structural metal, used in motor vehicles and mobile electronic devices.
CMC’s non-executive chairman William Bass says that the group is backed by a supportive government and guided by a management team with significant experience in China.
“CMC operates in a country that is actively encouraging resources industry and investment – so the project is not exposed to the current uncertainty created by Australia’s proposed resource super profits tax, and the expansion project has been classified by the local provincial government as a ‘preferred project’.”
CMC’s managing director Tom Blackhurst says, “The IPO represents more than five years of planning, negotiation, securing of regulatory approvals and permits and building local relationships. 
“China is a rapidly developing country, with an abundance of opportunities available to those who know how to operate in China.
“I believe that the really outstanding business opportunities, such as the Pinyao Magnesium Project, are found not only in the major developed cities, but in the less developed areas and provinces in China where foreign companies rarely set foot.”
China dominates world magnesium production using the pidgeon process – a simple, cheap, robust and technically low risk thermal process, compared with the higher cost, capital intensive electrolytic processes used in the few remaining western operations. Most of the Chinese production comes from the Shanxi province of northern China.
Tom Blackhurst says the group has ‘shovel ready’ plans to upgrade and restart the plant as a low-cost producer, targeting practical completion and commissioning of an initial upgrade/expansion to an annual capacity of 20,000 tonnes by the March quarter of 2011.