US-backed Verde to invest $1bn in disused Romanian mine and begin production in 2027.
Europe will restart magnesium mining for the first time in more than a decade, as the EU attempts to reduce its reliance on Chinese imports of critical raw materials.
EU member Romania on Friday awarded a mining concession to Verde Magnesium, a Bucharest-based company backed by US private equity investor Amerocap.
Verde intends to invest $1bn in a disused magnesium mine near the city of Oradea and build processing facilities that would use renewable power and also recycle aluminium.
More than 90 per cent of the bloc’s magnesium — crucial for making lightweight aluminium alloys used in cars and packaging — is imported from China.
Europe’s aluminium industry in 2022 was severely disrupted when Chinese production temporarily shut down because of high energy prices, triggering warnings of plant closures in the bloc.
Bernd Martens, chair of Verde Magnesium and former Audi director, told the Financial Times the mine and plant in Romania would help Brussels fulfil its goal of greater independence for vital metals needed for the green transition.
“The European industrial sector has an acute need for a reliable supply of critical and strategic metals, especially those with a lower carbon footprint than current imports which can support Europe’s transition towards a carbon neutral economy,” Martens said.
Verde will use the site of a magnesium mine that was shut in 2014 — at the time the last one operating in Europe. It intends to start production by late 2027 and reach 90,000 tonnes a year, half of EU supply, and 9 per cent of global production.
The company is likely to apply to EU funding mechanisms, after it was named as a key investment by the European Raw Materials Alliance — an industry network backed by the European Commission.
About 87 per cent of the global supply of magnesium, and 95 per cent of European consumption, comes from China, which has cut output drastically to save power as prices rise.
The EU has set ambitious goals under the Critical Raw Materials Act. It wants to mine 10 per cent of the EU’s critical mineral consumption, process 40 per cent of it and recycle 15 per cent of it by 2030.
The act also makes permitting easier and prioritises strategic projects for funding, but has been criticised for falling behind the US in terms of giving financial support to projects.
Martens expressed confidence that magnesium mining would restart, despite local opposition and environmental challenges that have plagued previous projects.
Last month, Romania won an international arbitration case waged by Canadian-listed mining group Gabriel Resources, which was seeking $4.4bn of compensation over a planned gold mine in the country that was successfully blocked by environmental groups.
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