Hanam Canada Corporation

MAGNESIUM

Hanam Canada holds the Anzac magnesium carbonate property located close to highway 97 and the CN Rail mainline 130 kilometers north of Prince George, BC as shown in Exhibit 1. The property is about 1 kilometer wide by five kilometers long and is accessed by a forestry road along Anzac Creek. The 483 hectare tenures held by Hanam were extensively explored by Norsk Hydro, Magnesium Division in 1989. Consultants to the project were Minequest Exploration Associates Ltd.  

Exhibit 1. Anzac Magnesium Property Location

Hanam Canada is working with overseas investors to develop a magnesium smelter in Prince George, British Columbia. A package plant built in China is proposed. A capital investment of $168 million is required for 20,000 tonne per year plant.

At a magnesium price of $3,500/t total sales would be $70 million per year. The approximate cost of production is $1,400 per tonne. About half the operating cost is for electricity and natural gas. The before tax cash flow would be $42 million per year. The return on investment would be 25%.

Quality

The Anzac property has an unusually high purity ore that makes it easier to smelt. Chemical analyses by Acme Analytical Laboratory Ltd., Vancouver, BC, of several samples of ore on Hanam’s license area are shown in Exhibit 2.

Exhibit 2. Chemical Analyses of Ore (Fria Zone)

Reserves

The magnesite band is about 5 kilometers long with widths up to 22 meters. Diamond drilling in 1989 confirmed the band to a depth of at least 115 meters with individual bands up to 14.5 meters true width. Three holes totaling 287 meters were drilled in June 1989. The resources on Hanam’s tenure amount to at least 5 million tonnes of magnesium carbonate and 10 million tonnes of dolomite CaCO₃MgCO₃ assuming a reasonable depth for surface mining. The total resource is about 45 million tonnes but exploratory drilling has been relatively limited so far.

Market

Magnesium is lighter than aluminum and has superior casting, machining and dimensional stability making it useful for car parts and as an alloy in beverage containers. The world magnesium metal market is about 550,000 t/y and the growth rate is 6% per year. About two thirds of the magnesium produced is used to make alloys of aluminum for beverage cans, automobile, and other die cast parts. Consumption in the US is: transportation, 35%; cans and containers, 24%; iron and steel desulfurization, 13%; machinery, 12%; nodular iron, other uses, 16%. Aluminum alloys for beverage cans contain 4.5% magnesium in the lid and 1.1% % in the body and are the main use for magnesium metal. Recycled aluminum especially from aluminum cans makes up 42% of the US supply. More than 60% of beverage cans are recycled. Automakers are producing lighter, more fuel-efficient cars using magnesium in die cast components such as wheels, brake and clutch petal brackets, instrument panels, cylindrical head covers, transfer case housings, intake manifolds, and seat components.  Average magnesium content per car is 4.1 kilograms.

Plants using electrolytic technology have recently closed due to the high electricity costs. Two plants in Quebec that were the largest in the world closed in 2007. Plants in Russia, Kazakhstan and the Ukraine still use electrolytic technology but they are also faced with higher electricity costs. The Chinese plants use a lower cost thermal reduction technology that has captured 80% of the world market.

Exhibit 3. Competition

                Excludes recycled magnesium.

The most competitive magnesium suppliers are now based in China. They use thermal reduction of dolomite, CaMg(CO₃)_2,  or magnesite, MgCO₃.  Coke oven and coal gas and electricity is used to heat magnesium oxide and react it with the ferrosilicon to produce magnesium vapor, which is cooled and condensed. 

The largest magnesium plants in the world produce magnesium metal by electrolysis of magnesium chloride produced by reacting magnesium hydroxide with hydrochloric acid or chlorine.  Some other plants obtain magnesium chloride from seawater, containing about 0.13% magnesium, or more concentrated brines.  Lime is added to precipitate magnesium hydroxide. The hydroxide is filtered and treated with acid to form magnesium chloride. The magnesium chloride is purified, dried and then fed to electrolysis cells. It is heated to a molten state and chlorine is separated leaving magnesium metal floating on the spent electrolyte.  Magnesium is cast into ingots or alloys.  VAMI (Russian National Aluminum and Magnesium Institute), and UTI (Ukranian Titanium Institute) are among the leaders in the electrolytic technology. 

Magnesium production in Russia, Ukraine, and Kazakstan uses either natural or manufactured magnesium and potassium chloride, called carnallite, MgCl₂●KCl●6H₂0. Potash and magnesium salt beds are dissolved to form a brine. The brine is evaporated to form potassium chloride and magnesium chloride salts.  Byproducts of solution mining include about 4 t of potash and 3 t of chlorine for each tonne of magnesium.

Bagmag Mines Co. Ltd. produces about 200,000 t/y of magnesium carbonate (magnesite) near Radium Hot Springs, BC. They transport it to Exshaw, AB where it is heated in natural gas fired kilns to convert it to magnesium oxide. The oxide is used to produce refractory and other chemicals. 

Process Description

Magnesium smelting process includes four integrated process units:

Dolomite quarry:

The dolomite quarry will be adjacent to the dolomite kiln. Dolomite, a mineral containing magnesium carbonate and calcium carbonate is mined from the quarry and crushed as shown in Exhibit 4. It is screened to a size of 6 mm by 50 mm to suit the kiln process. Fines are returned to the mine. Oversize from the screens is returned to the crusher. The quarry would include one front end loader and a dump truck.

Exhibit 4.         Dolomite Quarry Process Flow Diagram

Dolomite Kiln

Crushed and sized dolomite from the quarry is conveyed to a rotary kiln. The rock is crushed in a secondary crusher and stored in a silo. It is then conveyed to the kiln preheater where outcoming hot gas from kiln preheats the incoming rock as shown in Exhibit 5. The rock is converted in the kiln to magnesium and calcium oxide. The hot oxide is cooled with incoming combustion air and then lifted into either of two storage silos. The silos are equipped with live bottoms. The vent gases from the kiln are used to preheat the rock and ten pass through a dust collector. Captured dust is returned to the mine. For optimum purity of the magnesium, fuel for the kiln would be natural gas.

Exhibit 5.          Dolomite kiln process flow diagram

Ferro Silicon Plant

Ferro silicon is a material that is used to convert the magnesium oxide to magnesium metal. It is made by reacting iron scrap and high purity silica sand in a melting vessel as shown in Exhibit 6. The liquid is then sprayed into a chamber to produce a powder with a controlled particle size. It is cooled with air and stored in a silo.  Fines are removed from the air in a cyclone and are recycled.

Exhibit 6.          Ferrosilicon Plant

 Magnesium Smelter

The thermal smelter process is shown in Exhibit 7. Magnesium and calcium oxide powder from the kiln is further pulverized in a roller mill. The magnesium and calcium oxide powder and ferrosilicon powder from the ferro silicon plant are mixed in a rotary blender. They are then pressed into briquettes and conveyed to a storage silo.

Exhibit 7. Magnesium Smelter Process Flow Diagram 

The briquettes are charged into tubular furnaces shown in Exhibit 8. These furnaces consist of 0.3m dia X 3m long tubes that are closed on one end and have a plate cover on the charging end. The closed end is heated to 1,180 ^oC. The charging end is cooled to condense the magnesium formed in the furnace. The tube furnaces are arranged in groups of two rows of 10 tubes each. Machines are used to charge the briquettes. The furnaces are maintained at a high vacuum in order to draw magnesium vapor from the reacting mass of magnesium oxide and ferrosilicon. The charge end of the furnace is cooled with a water cooling jacket.  The magnesium metal forms on the cooled end of the tube furnaces in the shape of a crown. The crown is shown shaded at the left side of the furnace diagram in figure 7. These magnesium metal crowns are the product of the smelter. The byproduct of the reaction is calcium silicate and iron are removed from the furnace and returned to the mine. This slag is stable and can be used in road building or cement making.  The water is circulated in a closed loop and is cooled as it passed through finned tubes with large air fans. There is no liquid effluent from the smelting process.

Exhibit 8.  Magnesium furnace

 Site Plan

The smelter complex is about 500 meters by 500 meters as shown in the site plan, Exhibit 9. The dolomite kiln would be located along the base of the quarry hillside as shown. The dolomite raw material is conveyed to the kiln by a conveyor belt directly from the crusher located in the quarry. The magnesium furnace building is a single storey about 20 meters wide by 100 meters long and would be located alongside the kiln as shown. The byproduct calcium silicate slag would be returned to the mine site. It could be used in road construction and some may suitable for manufacturing cement clinker. The ferro silicon plant shown on the site could be located remote from the kiln and magnesium furnaces. Ferro silicon could also be brought to the site from offshore using international shipping containers.

Exhibit 9          Site Plan