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									                                                             MAGNESIUM MONTHLY REVIEW
                                                                   Comprehensive Report for Busy People
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                                               David C. Brown, Editor                                    Robert E. Brown Publisher
 Magnesium Covers the World

                                                                                              ISSN 0047-5491

Volume 32, No. 5                                                                   Covering News for May-June 2003
                                                                                              http://www.magnesium.com
                                                                                          -   Breaking magnesium news
                                                                                          -   @magnesium.com email accounts
                                                                                          -   New mg developments and applications
                                                                                          -   Magnesium professionals’ forum
ROBERT E. (Bob) BROWN TO WRITE FOR MAGNESIUM WEB SITE
Robert E. Brown, Publisher of Magnesium Monthly Review, and well-known magnesium trivia buff will be featured in the Magnesium.com web
site that is sponsored by Solikamsk Magnesium and the web master is Sam Gerrans.

AUSTRALIAN MAGNESIUM CORPORATION STRUGGLES TO STAY AFLOAT

Each day the news from Australia concerning the Australian Magnesium Corporation (AMC) project
seems to get worse. The last official announcement says that they may write off A$800 million of the
project. This is a very sad day for many who have followed and promoted the idea of using an Australian
natural resource (Kunwarara Magnesite) as the basis for a great new magnesium metal industry. In swift
decisive moves, the AMC management has halved the number of directors and the CEO and Stanwell
General manager, have resigned. On June 13th Dr. Chris Rawlings was appointed as Acting Chief
Executive Officer and he has proceeded to quickly address many of the problems that the project has
encountered. Rawlings has put out an eight-page letter, dated June 23, 2003, to the shareholders outlining
the situation and the steps that are being taken to solve the problem.

AMC has signed a Heads of Agreement (HOA) with the State of Queensland and the Commonwealth of
Australia, Newmont Australia Ltd, and Leighton Contractors Pty Ltd to restructure the company and its
Stanwell Magnesium Project. AMC also signed an agreement with Stanwell Corporation Ltd to terminate
the agreements for the supply of steam, electricity and water to the project, terminate its associated
financing plan and place the project on a care and maintenance basis.

It is expected that these moves will give AMC the opportunity to: 1) Develop a revised magnesium
business plan. 2) Identify and develop new opportunities for design, construction and financing of a
magnesium facility; 3) Engage in a search for a corporate partner; 4) Preserve AMC‟s technology and
intellectual property 5) Maintain Queensland Magnesia (QMAG) as a going concern.

The new business plan will take into account the work that AMC has done to date and the large sales and
marketing progress it has achieved in the international magnesium industry, the technologies owned by
the company and contracting strategies for Stanwell. The Fluor review of the project situation and their
estimate indicates the need for additional funding of approximately A$200 to $250 million—on top of the
previously arranged funding package of A$1.5 billion—and the need for contingent balance sheet

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support. Rawlings went on to say “to redevelop Stanwell will require a new finance plan, new project
contracting strategy and new capital estimates.”

The AMC agreement with Ford Motor Company of the USA to supply 45,000 mtpy has not been
terminated. However, Rawlings says it is likely that the terms will have to be substantially renegotiated.
AMC will hold discussions with Ford on the status of the agreement and these discussions and
negotiations could take some time. If the contract is terminated as a result of these discussions, and if the
US$30 million deposit is refundable upon termination, Newmont will cover any refund. AMC will also
review its contract to sell 15,000 mt of pure magnesium between 2005-2007 to a European metals group.

A key focus of AMC is to maintain its technical assistance and magnesium development alliances with
the international automotive and die casting communities. AMC has a number of magnesium component
development programs in Europe and North America with groups such as Wagon Plc and Johnson
Controls.

AMC will assist the Australian Stock Exchange and the Australian Securities and Investment
Commission in any further inquiries that may be raised.

For the six months to Dec 31, 2002, AMC reported an interim loss of $8.63 million on revenue of $36
million. AMC expects a similar performance for the next six month period which is the second half of the
AMC fiscal year. With the Stanwell project placed on care and maintenance, AMC will undertake a
review of the carrying value of the Company‟s assets. This review will occur over the Sept 2003 quarter
in consultation with the company‟s auditors. AMC anticipates that this will lead to a significant write
down in carrying values and that as a consequence the Company will report a significant loss for the year
to June 30, 2003. Stanwell and its associated activities had a carrying value at Dec 31, 2002 of A$494
million and expenditure since this time is of the order of A$300 million. For the June 30, 2003 accounts
due for release in August it is possible that the entire carrying value of the project and associated
expenditure could be written off.

AMC will also review the carrying value of QMAG, currently held at approximately A$495 million,
which may be impacted by the loss or delay of future magnesite sales to Stanwell. As of June 13, 2003,
AMC‟s cash position was estimated at around $100 million of which $70 million will be used over the
next 12 months and $30 million held in escrow. QMAG is a standalone business and is not expected to
require any additional capital at this time. QMAG has a full order book for 2003-2004 of approximately
190,000 tons of magnesia products and revenue continues to track at around A$80 million per year.

AUSTRALIAN MAGNESIUM CORP TO BE INVESTIGATED

The Australian Securities and Investments Commission (ASIC) said on June 25 that it has commenced an
investigation into disclosure by Australian Magnesium Corp. ASIC said that since the outset, it has been clear that
the Australian Magnesium Corp venture carried significant risk. The existence and extent of this risk was the
subject of substantial disclosure in the company's prospectus. “In the risk section of the October 2001 prospectus,
Australian Magnesium Corp stated that 'there can be no assurance that construction will be completed and the
Stanwell plant commissioned on time and within the capital cost estimate'," it noted. ASIC said that both it and the
Australian Stock Exchange (ASX) have secured the disclosure of additional information to the market.
"Nevertheless, ASIC considers that it is appropriate to fully investigate the adequacy of the initial prospectus
disclosure and of the company's recent market disclosures," he said. ASIC said it did not propose to comment further
on its investigation at this stage.
MAGNESIUM ADDITIVE BUSINESS DECLARES BANKRUPTCY
Rossborough-Remacor, LLC announced that it has accepted an offer from Magnesium Technologies
Corporation to acquire the company's reagent and magnesium processing operations located in

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                                    MAGNESIUM MONTHLY REVIEW


Walkerton, IN. The purchaser intends to operate the business as a going concern. To facilitate the
seamless transition in ownership and to consummate the sale, Rossborough-Remacor also announced that
the company filed a voluntary petition for protection from creditors under Chapter 11 of the U.S.
Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Ohio and is
requesting authority from the Bankruptcy Court to utilize cash collateral for the purpose of funding
employee salaries and benefits, materials and services from vendors, ongoing operating expenses and
other working-capital requirements necessary to fund the company's operations. The sale is a “Section
363” type, which indicates that there is an offer ahead of the actual legal filing.

"For the reassurance of our customers and our employees, we are pleased to announce that we have
accepted an offer from Magnesium Technologies Corporation to purchase our reagent and magnesium
processing operations and look forward to a smooth and swift conclusion to the sale process," said Jerry
Zebrowski, president and chief executive officer of Rossborough-Remacor. "The chapter 11 filing
together with the use of available cash should allow Rossborough-Remacor to operate without
interruption of business and to satisfy our ongoing obligations to customers while we finalize the sale
process."

The reagent business of Rossborough-Remacor accounted for over 80% of Rossborough- Remacor's 2002
revenues. It is the second largest supplier of magnesium-based reagents used as a desulfurization agent in
the steel-making process, with approximately 35% of the domestic market share. Zebrowski said that an
infusion of low-priced Chinese-sourced magnesium into the North American market, together with the
unprecedented number of bankruptcy filings by domestic steel manufacturers, severely impacted the
company's revenues, operating margins and cash flow and resulted in the decision to file for protection
under Chapter 11. Mr. Zebrowski told MMR that they had tried long and hard to find another solution,
but could not come up with one.

Rossborough-Remacor's manufacturing facility in Avon Lake, OH will not be included in the proposed
sale arrangements. The company is in the process of an orderly shut down of that facility. Rossborough-
Remacor will continue to provide its steel side additives to the market, which will be produced at another
facility. Under the terms of Magnesium Technology Corporation's offer, the sale of the reagent and
magnesium processing operations will require the approval of the bankruptcy court and the Rossborough-
Remacor board. Filings will be made in the near future with the bankruptcy court seeking court approval
of the terms of the sale and related competitive bidding process. Magnesium Technologies Corporation is
a private investment group based out of Birmingham, MI.
Rossborough founded in 1953 and headquartered in Avon Lake, OH, is a leading manufacturer and
supplier of magnesium-based reagents used in the desulfurization of molten iron. Neil Rossborough was
key developer of the magnesium steel injection business in the US. The business was an art for many
years with the control of the final sulfur levels always being rather loose. Today, the desulfurization is a
science with elaborate computer controlled programs that can control the end sulfur limits required to
within ½ of one point. Rossborough became Rossborough-Remacor when they acquired the assets and
equipment of Remacor in a Chapter 11 acquisition in February 2001. Joe Jackman, the founder and
principal owner of Remacor, became an officer (VP & COO) of the new company.

AS I SEE THE LIGHTER SIDE by Bob Regan, Dean of Light Metal Journalists, Direct to MMR.

 A few road bumps have popped up in the race for the number one spot in the broadening ranks of global
primary aluminum producers. Alcoa Inc., current titleholder in terms of capacity and output is under
challenge from Russian Aluminium (Rusal)), current titleholder in terms of ingot exports and the finish line
is 2012.
Against a backround of stymies in Quebec, where Alcoa has announced ambitious ($2 billion-plus) plans
for expansion at its Baie Comeau and Deschambault smelters, the new Quebec government lately has

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                                    MAGNESIUM MONTHLY REVIEW


demonstrated a change of heart about promised financial aid and concessions in the industrial sector.
Meanwhile, half-way around the globe, export market-dependent Aluminium Bahrain (ALBA) fired off a
statement in mid-June saying it intends to bump its primary capacity up to 850,000 tonnes a year. Alba's
current capacity is about 520,000 tonnes a year but it already had plans on the books to take its smelter
50 percent higher by 2005, which would bring it to 780,000 tonnes a year. Absent from Alba's latest report
was any mention of Alba's earlier plan - involving Alcoa, its main alumina supplier - to go up to a million
tonnes a year.
It was perhaps against this simmering background that Alcoa CEO Alain Belda abruptly fired off a
statement in Rio de Janeiro, as June got under way about plans to spend $2.7 billion on expansion in
Brazil. There was no press release and it was difficult to determine at the outset what Alcoa had in mind.
One international wire service mentioned a new smelter able to produce 500,000 tonnes a year by 2010 -
- plus financing for energy expansion. Another wire service, also called it a $2.7 billion project but, citing
New York-based spokesman Jake Siewert, mentioned only a 30,000-tonne expansion that would bump
the Alumar smelter up to 400,000 tonnes a year.
  Belda was in Brazil for reasons that included a World Environment Day press conference announcing a
new Alcoa-backed tree-planting program in Brazil that targets 10 million trees by 2020. However, he
provided no details about any 500,000-tonne greensite smelter Siewert subsequently told MMR that "the
multi-billion-dollar project includes some other proposed projects but the only thing actively on the table is
the third (30,000-tonne) potline at Alumar and all the hydroelectric facilities." Siewert also noted that "any
deal to expand Alumar will hinge on securing long-term power - both self-generation and contracted
power. The actual size of any expansion at Alumar will depend entirely on the ability to secure power --
and its price." He also noted that any greensite 500,000-tonne smelter project "would come along only
well after the (30,000-tonne) Alumar project is completed - and there are many obstacles to that."
  Meanwhile, Alcoa challenger Rusal, appears to be concentrating its main expansion efforts on the raw
materials department. The company, which continues to put more ingot into the U.S. market this year
while Alcoa pares smelter output a home, over the past year has talked up smelter projects in Iceland
(where Alcoa has its 322,000 tonnes a year smelter project on the books), Australia, Venezuela and
Siberia.

  The scorecard at this time shows Alcoa with 3,948,000 tonnes of annual capacity in place at year-end
2003 (Prudential Financial estimate) and 3,506,000 tonnes produced in 2002. Rusal appears to be
breathing down Alcoa's ankles with 2,500,000 tonnes of capacity on its books and 2,482,000 tonnes
produced in 2002.
  The latest tally from the U.S. Geological Survey's Minerals Information Team showed the U.S. aluminum
industry bumping its intake of Russian ingot (most of it Rusal's) up to 194,043 tonnes in the first quarter of
this year for gains of 38 percent on the previous three-month period and 30 percent on the initial 2002
period.
  The word from Moscow in mid-June was that Russian primary aluminum production coming into June
was 3.5 percent higher than the year-ago pace at 1,425,000 tonnes. The gain for all of 2002 was about
2.8 percent.
   China, which also is building itself a reputation on the international aluminum market these days,
jumped its primary aluminum production in the first five months of the year by 463,000 tonnes, or 28.8
percent, to 2,069,000 tonnes, according to a late June tally by the International Aluminium Institute. The
London-based IAI also reported that China's alumina output rose to 1,409,000 tonnes (all but 99,000
tonnes metal grade material) from 1,280,000 tonnes in the initial 2002 period.
  In another corner of the light metals business, China is said to be planning to jump its magnesium
capacity by half to about 700,000 tonnes a year, according to Antaike, a firm with a tight grip on China's
government-sourced nonferrous production, exports and other data. The peek-aboo, now you see it; now
you don't website of the China Magnesium Association (CMA) has dropped its English version and the
word from an Antaike source was that the CMA has no plans to restore it. Chinese sources said the
country's magnesium exports were up 54 percent in the first four months of the year (a mid-May CMA
tally had put the first quarter gain for ingot and products at 60 percent) with some of the kick assigned to
the exit of antidumping duties in Europe.
  The International Magnesium Association (IMA) finally got its first quarter shipment and production tally
out -- and not without some surprises.
  . It showed first quarter production (excluding operations of the export-dedicated Chinese and Russians

April 2003                                     MMR 4
                                    MAGNESIUM MONTHLY REVIEW


) at 42,905 tonnes, up sharply from 37,960 tonnes in the previous quarter -- and even more sharply from
the 33,510 tonnes poured in the first quarter of 2002.
   The IMA tally also showed the global magnesium producer inventory tally (again sans any input on
Chinese and/or Russian producer stocks) unchanged in the first quarter at 18,834 tonnes. With non-
Chinese and non-Russian production for the period at 42,905 tonnes, contributions from the Russians
and Chinese at 56,690 tonnes and total shipments at 97,707 tonnes, this suggests the inventory in the
hard-cash sector nosed up to 20,722 tonnes in the period.
  As for shipments, it came as no surprise that the Chinese and Russians tightened their grip on key hard-
cash markets. In the diecasting sector (on which backers and stockholders of faltering magnesium
smelter projects were counting) the ardent exporters had 17 percent of the market in North and South
America and 35.3 percent of Europe's.
Finally, IMA's report showed no growth to speak of in the die casting sector in either market compared
with the first quarter of 2002.


BRITISH MAGNESIUM COMPANY MAY BUY SPECTRULITE                               Belleville-News Democrat
A magnesium company in England has signed a purchase agreement with Spectrulite Consortium Inc. to
buy the bankrupt foundry's remaining magnesium-casting assets for $3 million. But attorney David
Warfield said Magnesium Elektron in Swinton, Manchester, may be vying with three other parties for
Spectrulite's magnesium-casting assets.

Warfield, of Husch & Eppenberger LLC in St. Louis, is representing Spectrulite owner Chris Barnes in
the bankruptcy and said a bankruptcy judge ultimately will name the buyer in a hearing July 16 in federal
court in East St. Louis. "Spectrulite has talked to a number of bidders other than Magnesium Elektron,
and Spectrulite believes that some of them will participate in the auction," Warfield said. "I have hopes
for three others that are very real possibilities." Other interested buyers must sign a contract and make a
$150,000 deposit by July 11, and an auction would be held July 15 at Warfield's law office in Clayton,
Mo. Note:The auction date has been extended to July 30th as we go to press.

Warfield said Magnesium Elektron is one of the world's largest magnesium foundries. Its purchase
agreement includes Spectrulite's plant in Findley, Ohio, but not the real estate in Madison. Cherokee
Properties Inc. leases the property to Spectrulite, and Warfield said Magnesium Elektron also would lease
the property. "We expect they would make substantial improvements to the real estate as part of their
transactions," Warfield said.

He speculated the new owner might rehire some workers. The workers, from the United Steelworkers of
America Local 4804, have been on strike since last August outside the plant, which is located in Madison
and neighboring Venice. "I don't know for certain about any of the buyers, but my guess is that some of
those people will be offered employment, or none of them will be offered employment," he said.

Spectrulite filed for Chapter 11 bankruptcy protection on January 2003. The magnesium and aluminum
foundry sold its aluminum-casting assets to Universal Alloy, a Houston-based valve and fitting company,
in April.

LATROBE MAGNESIUM IS ALSO PLANNING ON RAISING MONEY

Latrobe Magnesium Limited (ASX Code: LMG) has opened a $500,000 share offer to raise working
capital to begin a bankable feasibility study (BFS) into the development of a $984 million magnesium
extraction and production facility in Victoria‟s Latrobe Valley. A successful raising will also allow the
company to draw on a further $2.8 million committed by the State and Federal Governments towards the
Project. The capital raising will also provide the necessary working capital to satisfy the requirements of
the ASX to have the company‟s shares relisted on the Australian Stock Exchange following their

April 2003                                    MMR 5
                                    MAGNESIUM MONTHLY REVIEW


suspension last November. A major rights issue will take place in November/December of 2003 in order
to raise the remaining funds for the BFS.

Many of its fundamentals are in place for the project: Latrobe Magnesium has secured government
financial support for the BFS to begin, has commercialisation agreements in place for processing
procedures that will deliver significant efficiency benefits, and has secured agreements for the supply of
over half the fly ash necessary to produce 100,000 tonnes of magnesium metal once the plant becomes
fully operational. Latrobe Magnesium will start within the next weeks the detailed planning of its pilot
plant in cooperation with Alcan Inc. as Latrobe Magnesium is using the dehydration technology
developed by Alcan and the Alcan cell.

The company has been encouraged by the results of the pre-feasibility study (PFS), and is ready to
embark on a comprehensive BFS that will confirm the project‟s operating and capital costs to higher
degree than the previous study, and ensure that key environmental issues, including greenhouse gas
emissions, are appropriately factored into decision-making. The project has significantly lower capital
and operating costs in comparison to other Australian magnesium production projects, due largely to the
absence of mining and other costs, faster leaching processes and a smaller leach plant, lower dehydration
costs and other substantial cost reductions.

Latrobe feels that the capital raising will be successful and that the BFS will proceed as planned from July
2003, with expected completion by July 2005. Design and construction of the plant is expected to begin in
the last quarter of 2005 and to be completed towards the end of September 2007. The plant will be wet
commissioned by January 2008 and magnesium will be produced and sold from that date.

MMR also noted that the Latrobe announcement carried the almost standard clause in the new world
magnesium projects. The project has significantly lower capital and operating costs in comparison to
other Australian magnesium production projects, due largely to the absence of mining and other costs,
faster leaching processes and a smaller leach plant, lower dehydration costs and other substantial cost
reductions. Bob Brown says, “The price is never cheaper than before the plant starts up.”

MARCEL RIGNY OF MAGNESIUM ALLOY DEAD
Magnesium Alloy Corporation regretfully announces the sudden passing on May 26, 2003 of Marcel
Rigny, Chief Executive Officer and director of MagAlloy. Marcel was tireless in his efforts to advance
the development of the Company‟s Kouilou Project and always strived for the improvement of the
peoples of the Republic of Congo for whom he served as Honorary Consul in Canada for almost 20 years.
He was a true believer in the Project and knew of the great benefits it could bring to the people of Congo-
Brazzaville. His family, friends, and associates in Canada, Africa, and Europe will sincerely miss him.

Gary German, President, Falcon Strategy and Management Co. and Senior Advisory Board member of
Kingsdale Capital Corporation has been appointed a director of MagAlloy until the next annual meeting
of shareholders scheduled for September 2003. W. Burton, President and director of the Company, will
assume the duties of CEO as the Company continues with the development of the Kouilou project

The Republique of Congo Ministry of Mines, Energy and Water issued a formal press release indicating
the profound regrets on the announcement of the death of Mr. Rigny.

Publisher says: I had the opportunity to spend some time with Marcel Rigny during a trip to the Mag
Alloy magnesium project site near Pointe Noire. He was a rather short, chunky man who had a twinkle in
his eye and radiated energy. He had many close contacts in the Republic and had worked on numerous
projects in Africa. I am very sorry to hear of his passing. He will be a big loss to the company and to the
project. Bob Brown

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                                        MAGNESIUM MONTHLY REVIEW


MAGNESIUM INTERNATIONAL CONTINUES TO PERSIST

Magnesium International is fighting to keep the SAMAG project on track. We mentioned that they have changed the
strategy and are now going to divide the smelter project into two separate phases. The first phase would be a 41,000
mtpy production plant. MIL is now working to raise A$8.3 million for operating capital. The close date had been
extended until June 30.

The company has made two additional moves, 1) changed the classification of its shares from mining and to a larger
„Industrial” class. The move will become effective on May 23, 2003. 2) Offered the power plant site at Port Pirie
to potential power station developers.

The company also has the road to magnesium production further complicated by the AMC problems. In the middle
of the flurry of announcements from AMC, the total MIL project came under closer scrutiny from the

MIL is in a joint venture with CSIRO to help develop the casting of magnesium sheet and getting on the market.
The new stock classification will more closely identify the actual activities rather than just concentrating on mining
and exploration. It is also hoped that the new classification will assist in the world wide fund raising activities.

The SAMAG magnesium project is going to be built in South Australia at Port Pirie. The project is going to
undergo a full review by the South Australian government. Robert Champion de Crespigny, the chairman of the
South Australian Economic Development Board, made the recommendation. De Crespigny said that it is important
that the Sought Australian government reexamine the business case for the MIL smelter before it commits the A$25
million that it has budgeted for the project. His remarks and the subsequent decision to review the project have
come at a very bad time for MIL since they are in the middle of a rights issue. De Crespigny highlights the closure
of Noranda‟s magnesium plant in Quebec and the associated write down of approximately C$700 million of the
investment as a reason for caution. One Australian consultant told Metal Bulletin that the point taken is that small
mining companies, such as Magnesium International don‟t have a lot of experience in executing small projects.

The directors of Magnesium International Limited (MIL) wish to respond to recent enquiries from shareholders and
other interested parties, about the effects on MIL of recent announcements by Australian Magnesium Corporation
(AMC) regarding their Stanwell magnesium smelter. Questions have been asked as to whether MIL's SAMAG
project may suffer from the same problems that have befallen the Stanwell project.

Gordon Galt, Managing Director of MIL did the following questions and answers concerning the project:
Why is Stanwell not proceeding? No one at MIL is privy to any information regarding AMC or its Stanwell
project other than what has been made publicly available. Fundamentally, the Stanwell project is currently unable
to proceed because AMC and its contractors identified significant construction cost pressures that could not be met
within the funding package available. AMC was unable to raise additional funds to bridge the shortfall.

AMC did not secure an Engineering, Procurement and Construction (EPC) contract at a price low enough to enable
the conditions precedent for senior debt lending facilities to be met and could not therefore draw down any senior
debt. Development work stopped as the equity and other sources of funding were nearing exhaustion. The reasons
for the price increase are as yet unclear, but they are likely to be related to the fact that a new technology was being
implemented at Stanwell.

Why should this not happen at SAMAG? SAMAG will secure a fixed price EPC contract from Thiess Ltd. The
value of this contract will be publicly stated. MIL will not raise equity for the construction phase of the SAMAG
project until it has obtained a fixed price contract that demonstrates the economic viability of the SAMAG project.
Investors will know the fixed value of the contract for building the SAMAG smelter before they invest Unless
there is a significant change in the project scope or there are extremely unusual events or unprecedented and
unexpected increases in labor rates, taxes or the like, the "fixed" price cannot rise significantly.

The potential for scope change after completion of the SAMAG equity raising will be very limited. The SAMAG
plant will be based on the design of the Dow plant in Texas that was, until 1998, the largest magnesium production
facility in the world.




April 2003                                          MMR 7
                                       MAGNESIUM MONTHLY REVIEW


The SAMAG project utilizes a conservative two-stage construction strategy, designed to reduce the time taken to get
into production and generate positive cash flow. Accordingly, the project has been changed from a big project to a
"medium"-sized project, with considerable reduction in completion risk.

SAMAG will have a fixed EPC price with very limited potential for cost over run. This gives comfort to the lending
banks that SAMAG will meet the conditions precedent necessary to draw down senior project debt.

Why will Thiess be willing to give a fixed price EPC contract for SAMAG? Thiess has already offered a fixed
price contract for the SAMAG project. Thiess and MIL negotiated and published a fixed price for the SAMAG
project in late 2002, when the project concept was to build the smelter in one stage rather than the current two stage,
lower risk, strategy. The current estimate for the EPC contract for the first module of the SAMAG plant is around
$500 million. This was derived by Thiess and MIL working together using the agreed fixed price contract data from
last year and making the modifications needed to scale the plant down. The new fixed price will be set after
completion of some more detailed engineering.

Thiess has been able to deliver a fixed price due to the established Dow technology. The Dow technology is well
proven, robust and relatively simple. It has been in existence for over 60 years, with about 7 generations of
technological improvements. It has produced over 3.5 million tons of magnesium metal, which is more than any
other method ever used. MIL has been working with Thiess on this plant design for three years and both parties'
understanding of the plant design is well advanced. Both MIL and Thiess see the plant construction as low risk.

Are contingencies in place for unforeseen events?        The financing package proposed for SAMAG includes
senior debt lenders contingencies of $76 million and a further $60 million of other overrun facilities. As a
percentage of the base EPC estimate, these two amounts total 25%, which is generous given that the technology risk
and scope are known and understood.

What other differences are there between SAMAG and AMC? The other major difference is the marketing
agreement. SAMAG has an agreement with a major German company ThyssenKrupp (TK) for 100% of the plant's
output. The agreement lasts for 15 years. In contrast, AMC's marketing agreement covered 50% of output for 10
years.

The agreement with TK provides for payment of a minimum price that covers MIL's senior debt costs (principal and
interest), plus all cash costs of production. This agreement is designed to underwrite senior debt and was not a
feature of AMC's agreement. The payment terms are also favorable as they require TK to pay early, take the
customer credit risk and provide a substantial portion of the marketing and logistics support.

Why is the overall market opportunity better The latest estimate by commodity usage forecaster Commodities
Research Unit (CRU) indicates a need for an additional 160,000 tons of new magnesium production in the western
world in the next decade. The potential for new projects anywhere in the western world - greenfields or brownfields
- is now extremely limited. No other new project in the western world is as advanced as SAMAG in terms of time to
implementation. Any other mooted projects are at least three years behind SAMAG, which now has the capability
and opportunity to address this greater market potential.

SOUTH AUSTRALIAN GOVERNMENT TO REVIEW MAG INTERNATIONAL PROJECT

The South Australian Government has defended its review of Magnesium International's controversial Port Pirie
SAMAG project, saying it is necessary to secure Federal Government support. The multi-million dollar proposal is
the subject of a State Government review, which is due to be handed to Cabinet by the end of next month.

At a public meeting in Port Pirie last night, Mineral Resources Minister Paul Holloway said the review would not be
necessary if the Commonwealth had offered financial support to the project. "The Commonwealth have had a
number of years now to get behind this project," he said. "State Government support has [been] forthcoming by
both the previous government and this Government, so it's been there for a number of years now.

"The Commonwealth have not got behind this project at any stage and I suspect that they're using any excuse. I
would hope that as a result of the business case study that the Commonwealth will get behind the project." But


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                                       MAGNESIUM MONTHLY REVIEW


state Opposition leader Rob Kerin says the Federal Government has been forced to delay making a decision on its
support of the SAMAG project because the review is underway. "In Canberra, the feedback over the couple of
weeks leading up to this review was extremely positive, and it's just a pity to see the timing of the review being
called and how long it's taking," he said.

NEW CHINESE MAGNESIUM VENTURE

Whilst the Australians are suffering severe trauma with their developing Magnesium industry, China knows no
bounds. A new company, Yuxing Wenxi Magnesium is looking at setting up a production capacity of 50,000 mt of
magnesium in Shanxi province. The company is a joint venture between Yuxing Science and Technology Co from
Hong Kong and Shanxi based Wenxi Hongfu Magnesium. The initial stage of the project will be the construction of
a 10,000-mt primary magnesium metal production plant, which scheduled for completion by October 2003. This
will then be followed by a further capacity increase to 30,000 mt in August 2004 and within a three year the
capacity will be increased to allow the company to produce a total of 50,000 mt of magnesium alloys. Once the
project is completed the company hopes to be the largest producer of magnesium and magnesium alloys in Shanxi.

ABSTRACTS ARE NEEDED FOR TMS MAGNESIUM SESSIONS
Bob Powell included us on a message that he sent out recently. Bob said, “The number of abstracts that has been
submitted for MgTech 2004 is very, very small, and the deadline for abstracts is coming up very quickly. Please
look at your own research, knowledge base, and interest and consider giving a presentation in 2004.”

”Please also look at the work your colleagues are doing and encourage them to put in an abstract. We have a track
record of three excellent, high quality symposia under our belt and neither Alan (LUO) nor I would like to see 2004
break that win streak. We need your help” concluded Bob. Contact Bob at bob.r.powell@gm.com, 586-986-1293

MAGNESIUM PRODUCT DEVELOPMENT IN CHINA

Magtech Co. Ltd., a magnesium alloy producer, based in eastern China's port city of Qingdao, has received an
injection of US$ 28 million from Singapore-based MMI Holdings Ltd. for a joint venture magnesium alloy project it
was reported in April 2003. Because of the investment, MMI now holds a 25% share in Magtech. Under the
agreement signed between the two companies in December 2002, the joint venture project will have an annual
design capacity of 20 million magnesium castings in the initial phase, which is expected to generate RMB 300 mln
(US$ 36.23 million) in sales a year.

Magtech expects to receive an additional investment of US$ 20 million from MMI in the second phase of the joint
venture project, which should enable the supply of magnesium alloy-made components to manufacturers of mobile
phones, laptop PCs, digital cameras and hard disk storage components. Co-founded by Beijing-based Qinghua
University, Shanghai-based Jiaotong University and three companies in Qingdao and Hong Kong, with a registered
capital of RMB 4 million (US$ 483,000), Magtech mainly engages in the development of magnesium resources,
developing magnesium alloy smelting technology and processing equipment, commissioning magnesium alloy
production, and the domestic and international trade of magnesium alloy products. The company has been selected
by the Chinese government to be the state industrial base for the research and applications of magnesium alloys. It is
now capable of producing 200,000 aluminum alloy castings on a monthly basis.

Established in 1989 and listed on the Main Board of the Singapore Exchange in 1997, MMI is an electro-mechanical
systems contract manufacturer with capabilities in precision machining components, turnkey contract assembly,
factory automation and systems integration. In addition to China, it has manufacturing facilities in Singapore,
Malaysia, Indonesia and Thailand.

NEW REPORT ON ALTERNATE FUEL VEHICLES

The North American Die Casting Association (NADCA) has just released a new downloadable report on Alternative
Fuel Vehicles.



April 2003                                        MMR 9
                                            MAGNESIUM MONTHLY REVIEW


The automotive industry is the largest consumer of die castings in North America, with nearly 70% of the industry
output provided to automotive companies and their supplier companies. There is a great deal of research taking
place into propulsion systems that are not so dependent on petroleum-based fuels and those that provide more
efficiency in its use.

The objective of this report is to document the efforts that are being made to find alternate fuels for automobiles and
to develop vehicles that utilize these new fuels that will be accepted by the consumer. This report includes:

  *An executive summary of automotive trends.
  *An overview of global automotive issues.
  *A review of the many alternative fuel concepts.
  *Summaries of the laws, regulations and incentives for alternative fuel vehicles.
  *Future vehicle concepts.
  *Details on the challenges and opportunities for Die Casting in North America with respect to alternative fuel
vehicles.

The information included in this report is intended to be concise and understandable for members of the die casting
industry. It provides an overview of what impact alternative fuel vehicles will have on the automotive industry in the
future. It is not an exhaustive technical summary of each of the many alternatives being considered.

This report on Alternative Fuel Vehicles may be purchased through the NADCA website:
www.diecasting.org/publications. It is available for download only.


SOME COMMENTS BY THE PUBLISHER…

When we look at that messes that we see in the new magnesium projects around the world over the past 20 years, we see cost
overruns and projects that run late. Much of this can be attributed to new technologies that are not fully developed on a
production scale and the lack of understanding of the complexity of the engineering, design and construction phases. The
engineering must have a fully developed flow sheet and process flow diagrams at the least to move into detail design. On a
project with old and proven technologies there are always many questions raised when developing the design details. On a
project with new technology there are obviously thousands of questions that must be answered. Many of the smaller groups just
do not have a large enough group of fully informed and aware technical people to have timely meetings to fully answer design
questions. This situation could be made a little easier if the engineering group has a large number of design professionals with
experience in similar magnesium projects. Unfortunately, there are not enough of these type of design professionals available for
most of the projects, so the design people learn as they go. Not always the fastest and most efficient way to get the project
completed on time.

Equipment procurement schedules have to be developed based on the construction logic and the backlogs of the equipment
industries. Thus, the design group must develop bid packages with complete specifications far in advance of the need for the
equipment on the job site. Once these bids are completed they must be reviewed and one supplier accepted. The drawings of the
equipment are used for the final design. These drawings only come after the vendor is picked and his work is started. So on a
large project, the detailed and final design that can then be released to the construction group has to be started a long time before
construction starts.

The main problems that arise sometimes come from the production engineers who, many times, believe that if the equipment is
not on the job site, it can be modified. Basically, it cannot be modified without a large interruption to the design and
procurement and construction schedule. Every change order involves much extra cost and affects many separate process areas.
That seems to have been some of the problem of the AMC project and could also affect any other projects that go ahead.

The major key area that requires everything to be ready to go is the start up of the commercial operation. Even after
detailed cold and hot commissioning, the day-to-day continuous operation must be constantly supervised and
watched. The scale up factors on the size and number of equipment units on these projects are quite large and
require diligent informed attention on a constant and continuing basis. This was on of the problems with the
Noranda Magnola project. On a totally new process, it takes even the company‟s trained and experienced technical
people an extended time to learn how the large and integrated process systems works. Bob Brown




April 2003                                              MMR 10

								
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