The demise of Lunt Manufacturing isn’t news — it was announced earlier this year; in fact, in April the magnesium diecaster was swept up by a private-equity outfit that plans to consolidate it into its Contech group of light-metal automotive diecasters.

This week I skimmed over the announcement of a “Web-cast equipment auction” involving some of Lunt’s assets: on June 12 you’re invited to bid on 11 HPM magnesium/aluminum diecasting machines (up to 400-ton capacities), hydraulic trim presses, melting furnaces, CNC machining centers, turning centers, vertical tapping centers, testing and inspection equipment, welding equipment, parts-handling robots, forklifts, and pick-up trucks, among other things.

Apparently, Contech’s interest in Lunt doesn’t involve a whole lot of manufacturing. But Lunt hasn't been the only one with a problem. There is a report now that Swedish diecaster Tonsberg Magnesium Group Intl. has filed for bankruptcy. Such developments take me back to my original reaction to the news of Lunt’s demise: there’s something deeply dysfunctional about the magnesium business.

As nearly as I can tell, the magnesium diecasters' problem isn’t on their customer side. Automakers and aircraft manufacturers appreciate magnesium, especially in cast form, because of its lightness and strength-to-weight qualities.

Nor can the problem with magnesium be isolated to the component manufacturers. Magnesium diecastings regularly win design awards for innovation and effectiveness, demonstrated by the efficiencies they impart to manufacturing processes when their products replace heavier assemblies and weldments 

Virtually everything about magnesium is right in line with what we’re told are the prevailing trends in automotive manufacturing: it’s very light, it’s strong, it forms well, it lasts. Unfortunately, those so-called trends are only a small part of what’s prevailing in the auto industry — and the global economy generally: there is not enough money coming in from consumers to justify all the bright ideas and long-range ideals of the designers and strategists.

Meanwhile, at the other end of the supply chain, the costs of doing business are skyrocketing. The greatest cost is the price of the metal itself. The domestic-market price in China for a metric ton of primary magnesium is jumping around the $5,000.00 mark. Transportation, tariffs, and other costs add to that price for metal imported to North America, where some traders foresee prices of $8,800/metric ton.

Most of the primary magnesium in North America comes from overseas — China, mainly — because diecasters and others who buy it can’t source enough metal domestically (or regionally.) Lately, the supply has become very uneven because of high demand globally. And, Chinese smelters are expected to close down to comply with environmental regulations during the Olympics later this year. 

Energy, labor, regulatory, and other costs have reduced North America to one primary magnesium producer.  This week, in fact, there was another auction: the equipment once housed in Hydro Magnesium’s Quebec smelter went on the block, two years after the operation closed because it could not compete against the operating cost advantages of Chinese and Russian smelters.

Alcoa has encouraged reports that it may restart its magnesium smelter in Washington. The Northwest Alloys plant closed in 2001, but an Alcoa spokesman attributes the company’s interest in magnesium to its internal supply needs, ie., for making aluminum alloys.

Even if Alcoa aimed to become a commercial supplier, there would remain a strange and unmanageable imbalance in the magnesium supply chain. It’s hard to see how all the lofty expectations about the light-metal’s prospects stay afloat.