To: Ma Jun
From: Eric H. Williams
Date: October 4,2001
Re: Bauxite and Magnesite
Dear Ma Jun,
North American Refractory is a subsidiary company of Harbinson Walker, the largest refractory line of products for the US Steel Co. and North American Steel. 65percent of the refractory products purchased comes from North American Minerals who imports about 800,000 Mtof both the bauxite and the magnesite from all over the world.
So far I don’t see any possibility of switching from the extant supply to you unless some blue moom happens. The following is the widely held view from the local refractory users over China. I emailed them to you for you reference.
Although China has installed, sometimes with foreign joint venture capital, efficient modern equipment and systems in major mined materials such as coal, refractory raw materials in China are often mined and processed in a relative rudimentary fashion. Other than broadly outlining probable substantial reserve areas, there is minimum formal esploration that would provide the proper technology based for planning and implementing a meaningful mining program. This particularly impedes the large-scale selective mining of specific grades of Chinese refractory grade bauxite, such as those with high density and low alkalis. Nevertheless, and as noted above, the magnesite producing systems in China are relatively advanced and significantly both quality and cost effective. Much of the mining of refractory grade materials is performed by residents of the local community, who frequently also tend farms and mine with little direct supervision and often with little mechanical equipment. This situation directly affects uniformity of refractory raw material shipments, in general, and specifically, for bauxite.
The rudimentary natriral-draft shaft kilns, which have traditionally produced the bulk of Chinese refractory grade bauxite and magnesite, continue to do a reasonably satisfactory job. A general lack of temperature controls and properly separated feed grades, makes the uniform supply of suitable material more difficult. The proliferation of old and new antique “round kilns” confuses and complicates the supply picture on bauxite.
A more predicable supply of uniformly burned bauxite and magnesite is produced from a limited number of small rotary kilns. Rotary kilns presently produce an estimated thirty percent of the total China’s refractory graduce and twenty percent of the dead-burned magnesite.
Despite the existence of a considerable amount of road and railroad, the timely and proper shipment of materials in China from the provincial plants to the ocean shipping ports is frequently comised by the lack of sufficient facilities. Although China has an on-going program to implement expansion projects in transportation systems in specific areas, the situation will probably get worse before it gets better.
A primary consequence of the transportation inadequacies is the difficulty in obtaining not just covered railcars, but any railcars at all. This makes it difficult to then meet ship-loading schedule. Arbitrary material priorities are informally established by local shippers and railroad officials, with refractory raw materials not always being handled with high priority.
All refractory raw materials need to be kept contamination and moisture free. After burning, most materials in China are usually processed with local shipment under open conditions, exposed to the elements. Even if bulk shipments of calcined bauxite and dead-burned magnesite do arrive dry at the Chinese shipping port, there are limited roofed storage facilities to protect the materials prior to vessel loading.
Given the size of China, it is obvious that seasonal changes can be very different between the Northen and the Southern areas. There are essentially two “rainy seasons” in each area: January-March (heavy snow in 2001) and June-August for the North, and April-October for the South. Any attempts to program vessel loading during the “dry season” are often ineffective.
Proper outsourcing of a mineral raw material requires suitable testing at specfic stages of the process. Minimum testing facilities exist in China at the mine or burning centers. Sampling and testing are done at the ports by the ofrficial Chinese government laboratory, China Commodities Research Board, which is deemee as a corrupting government agency, but there is no formal recourse to independent surveyors. Prior to formal testing at foreign discharge ports, questions frequently arise concerning the true chemical and physical characteristics of a shipment.
Ocean freight from China has been generally competitive and relatively easy to obtain during the past ten years, particularly to the US and Europe.
Please comment the above.
Eric H. WilliamsPurchasing Manager