China’s European green agenda to stop thousands of businesses in EU

A cross-sectoral group of European metals production and utilization companies issued a warning of the catastrophic consequences of a shortage of Chinese magnesium and called for action against the imminent risk of production shutdown in Europe

China's European green agenda to stop thousands of businesses in EU

With the European Union almost entirely (95 percent) dependent on China for its magnesium needs, European industries producing and using aluminum, iron and steel, as well as their raw material suppliers, are already suffering from a shortage.

Going forward, the problem threatens to spread through value chains to thousands of European businesses and jeopardize millions of jobs, including in key sectors such as automotive and construction. The authors of the appeal call the prices for magnesium in Europe in the amount of 10-14 thousand dollars per ton extortionate against the background of the price of two thousand dollars at the beginning of the year. They predict that by the end of November, magnesium reserves in Europe will finally run out, which will lead, if not to a complete collapse, then to a very serious collapse of European industry.

What actually happened and what are the reasons for this?

For starters, it is worth mentioning that magnesium is widely used in the metallurgical and mechanical engineering industries. Magnesium is the lightest construction material used commercially. Magnesium alloys weigh four times less than steel. Plus, magnesium is excellently processed. Therefore, its main field of application is as a light structural metal in alloys. In particular, it is actively used in the automotive and aviation industries.

China has provided 80-85 percent of the world’s total magnesium production in recent years. By the way, Russia, which possesses the largest reserves of this metal in the world, is at the same time the closest pursuer of China, but produces it in volumes 13-15 times less than the Chinese. Production is concentrated at factories in Berezniki (AVISMA) and Solikamsk (Solikamsk Magnesium Plant). And it is quite indicative that after several years of disputes and proceedings over the transfer of ownership of the shares of the Solikamsk plant, the General Prosecutor’s Office recently demanded that they be withdrawn in favor of the state, citing the illegality of privatization in 1992-1996.

But back to the European magnesium deficiency. Consuming about 17 percent of the world’s magnesium, Europe itself produces minimal amounts of it. Therefore, it is almost entirely dependent on supplies from China. But the PRC government in September decided to close 35 out of 50 smelters and cut production at the rest by half. Actually, this gave rise to such a strong deficit.

And then it’s time to ask a question in the voice of Mikhail Galustyan: “Who did it?” I mean: why has China drastically cut magnesium production?

The answer is simple: because of the energy crisis.

Due to the energy crisis generated by the western green agenda. Because of the very “green transition” to carbon neutrality that the West imposes on itself and the rest of the world.

As part of the fulfillment of these requirements, China not only promised to achieve the aforementioned carbon neutrality by 2060, but also began to actively move in this direction. In July, China introduced a new CO2 quota exchange system. Even before that, China began to actively close coal mines – many hundreds were closed in a few years.

And in September, the country faced a severe energy crisis, which had to be dealt with not only by opening previously mothballed mines, but also through a directive reduction in electricity consumption.

By the way, the problem of magnesium deficiency has already reached North America. Canadian aluminum-magnesium alloy billet company Matalco Inc. told its customers last week that magnesium availability has “dried up” and, if shortages persist, it will have to cut production and shipments next year.

The European Union is currently in talks with China, urging it to increase its magnesium production. But, of course, without offering assistance in the form of additional energy supplies: it is assumed that the Chinese must find additional energy to satisfy European wants themselves.

But is the only problem with magnesium?

Last year, a shortage of microcircuits appeared in the world, due to which the automotive industry (and not only it) has already suffered and continues to suffer losses, since it has not been possible to cope with the shortage of chips. More recently, we wrote about a very different kind of shortage – a shortage of truck drivers, which is especially acute in the UK. An interesting continuation was outlined here: after the forced increase in salaries for truckers, Britain faced a severe shortage of bus drivers. Everyone has heard about the shortage of coal and gas in the same Europe (and in Southeast Asia, by the way). Fertilizer deficit is forecasted in Europe by spring. In addition, the whole world is also on the verge of a copper deficit – its stocks on the London Stock Exchange fell to a record low in half a century of trading, and the price for the year rose one and a half times.

The list goes on. And all these problems are not only related to the COVID-19 pandemic. They are not less, if not more, generated by the actions of the West. First, by specific methods of dealing with the crisis, based on the emission of unthinkable and unsecured volumes of world currencies (primarily the dollar). Second, the West-inspired “green transition”, which in its promoted form is not so much concern for nature as concern for maintaining economic superiority at the expense of other countries.

Against the background of these actions, inflation, situational shortages of various goods and permanent manifestations of the energy crisis all over the world will become more and more commonplace. How are photographs of half-empty shelves in American supermarkets becoming more common today, reminiscent of the counters of Soviet stores at the turn of the 1980s and 90s.

Valery Mikhailov, RIA

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