SARBHANG

Not for export but the manufacture of value-added magnesium

4 December, 2009 - Druk holdings and investment (DHI) is planning to enter the mining sector in a big way. They have applied for two dolomite mines in Pagli and Kalesore in Samtse, with an initial investment estimated at Nu 2 to 3 billion.

DHI, however, will not look at exporting dolomite, but use it as a raw material to make finished magnesium to cater to large markets like India. The annual requirement of magnesium in India is around 12,000 metric tones (MT). The venture, if successful, will be Bhutan’s largest mining operation.

Around 60 percent of the world’s magnesium is currently produced by China, and the current market rate is at around USD 2,500 an MT. Bhutan’s advantage is the availability of electricity, dolomite and ferro silicon, which are needed in large quantities to produce magnesium.

Sources say that DHI would look at getting partners for the technology or marketing component of the project.

Magnesium is the third most commonly used structural metal, following iron and aluminum. It is also used as an alloy and in the agricultural, chemical and construction and car industries. Due to low weight, good mechanical and electrical properties, magnesium is widely used in the manufacture of mobile phones, laptop computers, cameras, and other electronic components.

Magnesium was earlier mainly extracted from seawater by the USA but that changed from 2005 onwards, with China and other countries following the ‘Pidgeon process’ to extract magnesium from dolomite. DHI is looking at using a similar model.

However, the quantity and quality of dolomite available in these mines and how much surplus electricity can be spared for the project to kick start would be a challenge.

Meanwhile, Bhutan carbide and chemical limited (BCCL) has also applied for a captive dolomite mine in Kalesore about two years ago. The feasibility report had been done but, with no further movement for some time, the department of geology and mines had sent a letter last week asking for BCCL’s status.

BCCL said that they are interested and plan to use the dolomite mines to produce silicon manganese, an alloy used in the steel industry. The only problem for BCCL currently is that silicon manganese prices are not very high due to the global recession.

The current and only major player in dolomite is Jigme mining, which won an auction at Nu 395m for the Chunai Khola dolomite mines in Samtse, which is expected to last 37 years. However, the company only exports dolomite as a mineral with no value addition.

DGM geologist says that Bhutan is thought to have substantial reserves of dolomite, much of which is yet to be explored.

DHI’s latest move is an indication of the increasing interesst shown by the holding company in the mining sector. DHI is still in negotiations with American businessman J Matthew Fifield and his associates, who has sought mineral exploration rights for the whole of Bhutan, after which he would get a group of American investors to invest in Bhutan’s mining sector. Oil in the Bangtar area under Samdrupjongkhar dzongkhag, copper, gold and silver in the black mountain area of central Bhutan and tungsten in Sarpang are the potential minerals.

By Tenzing Lamsang in Kuensel

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