luni, martie 4, 2024

Interview with Dr. Bernd Martens, Chairman of the Board of Directors, Verde Magnesium: We aim to start mining operations in 3-4 years

Evenimente Club Antreprenor

Interview with Dr. Bernd Martens, Chairman of the Board of Directors, Verde Magnesium

We aim to start mining operations in 3-4 years

Production of electric vehicles, windmills, solar panels, mobile phones is essential for the European Union’s green and digital transition, but this requires critical raw materials (CRM). The EU imports 98% of rare earth resources and 93% of magnesium from China, 97% of lithium comes from the same source. The European Parliament recently approved (Tuesday, December 12, 2023) Critical Raw Materials Act. Why was it necessary to adopt this law and what change it will bring to European industry?

Unfortunately, supply chains of EU industry became dependent on single or very few sources for too many CRMs. For decades, big OEMs only looked for the cheapest prices and unfortunately neglected where these materials were coming from and how they were produced.

Now a perfect storm of related factors is changing the game – the Covid pandemic, Ukraine war, the transition to a green economy, and overall tectonic shifts in global geopolitical landscape. This new reality means that supply chain disruptions are “business as usual”. On top of this, ESG criteria must be fulfilled and emissions in the industrial production reduced throughout the entire supply chain – not just at the point of end-products manufacturing.

The EU already has the toughest environmental and social regulatory frame for its industry – but this has also triggered the unfortunate side effect of its mines and processing industries’ disappearance, accelerating the dependence on non-ESG-compliant imports which increase the carbon footprint of supply chains. The increasing climate crisis and the avalanche of supply chain disruptions in the last 3-4 years have finally revealed this situation to be unstainable.

The European Commission initiated CRM Act in response to this situation. The European Parliament has recently approved the Act, confirming a broad consensus and the political will to restart abandoned industries and strengthen the competitiveness of the EU economy in its transition towards de-carbonization and digitalisation.

Successful implementation of these new policies should incentivize EU industrial players to source more locally, to trigger more investments in EU’s mining, primary and secondary metals production, and determine EU’s trading partners to adhere to the same set of ESG standards.

The President of the European Commission, Ursula von der Leyen, pointed out that the demand for critical raw materials will increase dramatically over the coming years and the EU will have to adapt its strategy and invest a lot in research and production for these CRMs. Are you aware of any support schemes / subsidies for European producers?

Certainly, part of the EU Grants and state aid will now be channeled in this direction, but the most important aspect is the prioritization and recognition of the economic and social importance of these projects, which will enable private investments. EU companies will need to invest hundreds of billions of EURO in order to meet the goals set through CRM Act:

  • at least 10% of the EU’s annual consumption for extraction
  • at least 40% of the EU’s annual consumption for processing
  • at least 15% of the EU’s annual consumption for recycling
  • no more than 65% of the EU’s annual consumption from a single third country

The  European Raw Materials Alliance (ERMA) has already built an investment pipeline and selected the most promising CRM projects in the EU (including ours, Verde Magnesium). 

Geologic exploration works carried out before 1989 indicated that Romania might have important reserves of Critical Raw Materials. But the mines have been closed one by one, and their reopening today requires a lot of capital and advanced technologies that the Romanian state no longer has. Why did Verde Magnesium (VerdeMg) decide to invest in Romania and other European countries? Where will the operation in Romania be located?

Romania has small to medium size deposits of CRMs, but they represent a proper base to re-start an entire industry and fuel economic growth and social prosperity. The Romanian state should create the proper environment to i) incentivize serious mining and industrial developers to invest and ii) ensure that projects are implemented in line with the highest ESG standards.

Investors who bring capital and know-how into such a friendly investment environment will allow for the re-opening mines, and in time the generation of a pool of ores and concentrates for an emerging metals and advanced processing industry. This will enable automotive, aerospace, battery, electronics, defense, etc OEM’s to invest further in integrated production facilities.

Our flagship project in Romania aims to bring to fruition six years of work to develop a fully integrated and sustainable platform for both mining and metallic Magnesium production. Specifically, we aim to bring back to life the exploitation of brucite deposit in Budureasa, Bihor county – with the goal of producing our first ton of metallic Magnesium in Romania by 2027 on an existing industrial platform that belongs to an important local company with whom we have already signed an MOU with, then reaching up to 90kt/year by 2032-2034.

We are also actively investigating investments in various projects in the global Magnesium industry (North America, Europe, Asia) at all the levels of the supply chain: primary and secondary production, technology, mining, and trading.

How was the licensing and concession process from the National Agency for Mineral Resources (ANRM)?

It is encouraging to see the Romanian Government have recently opened the public tender process for mining licenses, with bids due by January 17, 2024. Projects like ours – designed according to the highest environmental and social standards – should support the implementation of multi-billion-dollar investment plans, generating solid tax revenues, creating jobs and prosperity. This means reliable and sustainable development of new economic growth pillars for the Romanian economy.

We understand and sympathize with the Romanian Govenrment’s vision to use its natural resources for the best interests of the country – aiming not only to mine but also to process ores inside Romania.

To make it happen, mining activity has to be restarted and tender rounds should be organized on a regular basis. NAMR’s institutional capacity should be strengthened via professional management, top salaries for the staff, digitalisation, and international partnerships.

That said – given current global competition – keeping legal provisions that consider the resources and reserves as ’classified information’ are a bottleneck for the revival of the industry. The practice in western industrialized countries makes the resources reports public info to prove the value of the assets, being posted on the websites of the companies, stock-exchanges, national mineral’s offices, etc.

What potential does the brucite (magnesium hydroxide) mine in Budureasa, Bihor county have? When do you estimate mining will start and how many years do you estimate ore will be mined here?

 We aim to start mining operations in 3-4 years for a min 20-25 years life of the mine. Although we proved the metallic Magnesium production at laboratory and pilot plant scale, to fully confirm Budureasa brucite potential we need to requalify the existing resources and reserves for Mg production. This will involve further geological works and industrial scale tests.

Will the ore be processed locally or will it be exported?

The processing will be done in Romania via an integrated and sustainable mining and advanced processing project.

Where does the technology and know-how needed to implement the project come from?

This project needs to comply with the highest ESG standards and become a sustainable supply solution for EU industry. In order to reach these goals we spent years and millions of USD in researching the best technologies and partners. We identified and precontracted partners in Romania, various EU countries, Turkey, the US and China.

In addition, we succeeded in developing a great team of Romanian and international professionals with unique skills in geology, mining, development and operation of Mg smelters, project management, international trade, banking and diplomacy.

What stage are you at with local workforce training? How many jobs will be created?

As we will start with the exploration, it is premature to discuss work force training for the moment.

Depending on the production capacity’ evolution the project will create 200 – 1,000 direct jobs and up to 10,000 indirect jobs.

You are going to produce green metallic Magnesium with very low or zero carbon footprint. What are its advantages and where can it be used, in which industries?

Magnesium is very important due to its low weight and high damping stability. It is used in the production of aluminium alloys, die casted spare parts in mobility applications (scooters, bikes, cars, trains, drones, planes, helicopters, rockets, etc), healthcare, electronics, steel production, etc. 

We have built commercial partnerships with global automotive and aluminium industrial sectors that are actively looking for sustainable supply. Groups with combined revenues of over $500 billion – together with blue-chip international investors – have expressed interest supporting our project.

We tested metallic Mg production with our technological partners in the US and China and we succeeded in demonstrating we are able to produce metallic Mg with a carbon footprint of 0 – 5 t CO2 / 1 t of Mg.

The approx 200 thousand tons of Mg that the EU is importing on an yearly basis comes with an average carbon footprint of 28 t CO2 / 1 t of Mg. We have provided the results of our tests to NAMR since January 2023.

The advantages of our solution for the EU’s Green Deal strategy are obvious, but we will also support EU’s OEMs to reach their sustainability targets in terms of both reliable supply and carbon footprint of their end-products.

What investments have to be made for environmental protection and to ensure the sustainable development of the local community?

More than 50% of the total investment will be represented by infrastructure and sustainability (green electricity, forestation, local community protection, land remediation, etc). The entire business model is designed according with circular economy principles: implementation of a clean technology, which will not only produce a green metallic Magnesium, but will use Aluminium waste generated by various industries as an agent in the Mg reduction process, while also generating green by-products that will represent feedstock for other industries: cement, refractory materials, animal feed, soil amendments, flame retardants, etc.  

VerdeMg established the company VerdeMg Energy which has already carried out a pre-feasibility study for a solar plant with a capacity of over 220 MWh. When will this investment materialize?

This will materialize after we execute the Definitive Feasibility Study for the mine and Mg smelter and take Final Investment Decision (FID).

Bio Dr. Bernd Martens

  • Audi AG, Board of Management, Head of Procurement and IT 2012-2020
  • Volkswagen AG, SVP of New Product Management (within Procurement), 2005-2012
  • Volkswagen do Brasil, Director of  procurement, 2002-2005
    Director of Product Planning and Product Management, 1997-2002
  • Roland Berger, Project Manager in Automotive, 1995-1997
  • Mercedes-Benz AG, PhD student
  • University of Kaiserslautern Studies in Industrial Engineering

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