Fused Magnesia Trends &

Global Outlook

Asım Bilge

MagForum 2016, Vienna

Kümaş Manyezit San. A.Ş.

Contents

• Fused Magnesia

• Global FM Market, Demand and Prices

• Effects of Global Economy Issues

• Kümaş FM Production

• Kümaş FM Products • Refractory Grade

• Electrical Grade

• Conclusions and Outlook

May 2016, Vienna 2

Fused Magnesia

• Fused magnesia (FM) is produced by electric arc melting of magnesite, CCM or DBM in a traditional Higgins furnace or in tilt-type furnace at >2850°C.

• Furnaces can be operated on both one-step or two-step processes depending on energy costs and supply. Magnesite is used in the one-step and CCM in the two-step process.

• FM is characterized by very large periclase crystals of more than 1,000μm (compared to 40-120μm for DBM) and a density approaching the 3.52 g/cm3.

May 2016, Vienna 3

Product Process Temperature

(°C)

Crystal Size

(µm)

Density

(g/cm3)

CCM 700 – 1000 <0,5 -

DBM 1500 – 2000 40 - 120 3,15 – 3,42

FM >2850 >800 > 3,48

May 2016, Vienna 4

84.00%

2.40%

13.60%

2015 Global Production of FM

China KÜMAŞ Others

Estimated global FM production was around 1,2 million tonnes in 2015.

Cost of Fused Magnesia Production

May 2016, Vienna 5

Raw

Materials

Graphite

Electrodes

Energy

Labor

Costs

May 2016, Vienna 6

400

500

600

700

800

900

1000

1100

1200

1300

2010 2011 2012 2013 2014 2015 2016

Average FM 97 - 98 Prices (USD/ton FOB China)

FM 97 FM 98

490500510520530540550560570580590600

Average FM Prices 2015 (USD/ton FOB China)

FM Prices

Source: Asian Metal

Prices down by 40% in 5 years

Capacity utilization ratio and exports

May 2016, Vienna 7

0

10000

20000

30000

40000

50000

60000

70000

80000

January February March Q1 Total

China FM Export Q1 Comparison (tonnes)

2015 2016

Q1 2016 exports up by 14%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Capacity Utilization of China FM Production (%)

Source: Asian Metal

Capacity usage 23%

May 2016, Vienna 8

10000

14000

18000

22000

26000

30000

34000

38000

China FM Exports 2015

Russia 16%

Japan 16%

USA 15%

Netherlands 11%

South Korea 11%

Brazil 6%

Italy 6%

Turkey 3%

India 3%

Other Countries 13%

FM Exports by Destination 2015

0

100

200

300

400

500

2008 2009 2010 2011 2012 2013 2014 2015

China FM Exports (000t)

Source: Asian Metal

2015 exports down by 18% y-o-y

Steel Production and China’s Growth

May 2016, Vienna 9

900

1000

1100

1200

1300

1400

1500

1600

1700

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

World Crude Steel Production (million tonnes)

4

6

8

10

12

14

16

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

China GDP Growth (annual %)

Source: World Steel Association Source: World Bank Statistics

Q1 2016 steel output down by 3,6% y-o-y

May 2016, Vienna 10

1500

1600

1700

1800

1900

2000

2100

2200

2300

2400

2500

300

350

400

450

500

550

600

650

700

750

Ap

ril

May

Jun

e

July

Au

gust

Sep

tem

be

r

Oct

ob

er

No

vem

be

r

De

cem

be

r

Jan

uar

y

Feb

ruar

y

Mar

ch

Ap

ril

2015 2016

Inve

nto

ry (

00

0t)

Pri

ces

($/t

)

Rebar Prices and Inventories (China)

prices Inventories

Source: Bloomberg

?

FM Trends

May 2016, Vienna 11

FM producers are trying to

find new methods like

fluxing

Higher quality FM

demand increased

Increasing use of fused minerals in

cement&lime kiln

refractories

Special fused

products for niche

applications

Companies purchases low priced

FM and reducing its

capacity

Magnezit Group plans to increase

FM production

capacity

May 2016, Vienna 12

KÜMAŞ Fused Magnesia

Kümaş FM Plant

May 2016, Vienna 13

40.000 t/y FM

Production

Capacity

4 Arc Furnace

with Power of 8

MVA

Fused Oxychrome

and Spinel

Products

Two-step

Production

Process

Process Flow

May 2016, Vienna 14

CCM Arc Fusion Slow Cooling FM

Fusion Process

• State-of-the-art production facility

• CCM is smelted by arc furnaces with full automated system

• Energy intensive process

• Specific energy consumption is around 3000 – 4000 kWh/ton

• Safety issues must be considered

May 2016, Vienna 15

Optical Sorting

May 2016, Vienna 16

• Fused ingots contain different grades of fused magnesia.

• It should be separated before using it.

• Optical sorters help to separate the materials with high capacity after crushing.

• With this technology Kümaş guarantees highest quality.

Refractory Grade FM

• Kümaş refractory grade FM has low silica content, high lime/silica ratio, with high density.

• Kümaş FM is essential for high performance magnesia-carbon bricks .

• These MgO-C bricks are specially used at basic oxygen furnace (BOF) vessels, ladles and electric arc furnace (EAF) slag liners.

May 2016, Vienna 17

May 2016, Vienna 18

SiO2 CaO Fe2O3 Al2O3 MgO

KM FM 97,5 0,65 1,35 0,40 0,10 97,50 3,50 800 - 2000

KM FM 97 0,75 1,65 0,50 0,10 97,00 3,50 700 - 1700

KM FM 96,5 1,00 2,00 0,50 0,10 96,50 3,49 600 - 1500

KM FM 96 1,10 2,20 0,60 0,10 96,00 3,48 600 - 1500

KM FM 95C 2,00 2,50 0,70 0,10 94,70 3,30 300 - 500

SiO2 CaO Fe2O3 Al2O3 MgO Cr2O3 Density (g/cm3)

KM Oxychrome 1,00 1,00 12,00 8,00 58,00 20,00 3,70

Chemical Composition (% wt) Density

(g/cm3)

Crystal Size

(µm)Grades

Electrical Grade FM

• Kümaş fused magnesia is also used as an electrical insulating material in heating elements (brand name KuRes).

• Carbon, sulphur and iron oxide are particularly undesirable.

• Kümaş has the perfect raw magnesite for the production of electrical grade FM with very low iron oxide content for high temperature applications.

May 2016, Vienna 19

May 2016, Vienna 20

MgO Fe2O3 Carbon Temp. Tap Density Surface Load

% wt % wt ppm °C g/cm3 W/cm2

KuRes H 11 97,00 0,20 50 900 2,42 9

KuRes H 01 96,50 0,20 50 850 2,42 7

KuRes M 21 96,00 0,30 80 750 2,42 6

KuRes M 02 95,65 0,30 80 650 2,42 5

KuRes L 31 95,30 0,40 100 500 2,42 4

KuRes L 03 95,00 0,40 100 450 2,42 1

Grades

Advantages of Kümaş Fused Magnesia

• High purity cryptocrystalline magnesite for CCM,

• Two-step process,

• Larger crystal size,

• Low iron oxide and impurities,

• No fluxing agents,

• Higher quality provides higher performance for refractory applications.

May 2016, Vienna 21

• Fierce price competition of Chinese FM products

• No expectations of a recovery in near future

• Demand will continue to increase for higher quality

• The future of FM is connected to the future of global steel industry

May 2016, Vienna 22

Conclusions & Outlook

Thank You

May 2016, Vienna 23