The major challenge to widespread adoption of magnesium as a standard industrial metal is the limited, inconsistent availability of large quantities of high quality magnesium products at predictable prices.
On the current spot dealer market, with many mines, magnesium types and customers, prices fluctuate from week to week. Some mines withhold supplies anticipating higher prices; some mines cannot meet demanding environmental standards and shut down.
Layers of dealers, local and international shippers, brokers, insurers, tariffs and taxes, warehouses and distributors and shifting currency exchange rates add expense and unpredictability to the global magnesium market.
In this shifting landscape, potential magnesium buyers — engineers and production managers from the automotive, aerospace, construction, energy and pharmaceutical industries — often hold back on large, long-term commitments to magnesium. They recognize the many benefits of magnesium, but they cannot take the risk of inconsistent supplies and pricing in their long, complex supply chains and fast-moving assembly lines.
To mitigate these risks, and offer magnesium supplies that are consistently guaranteed, Galaxy Magnesium has formed a new division, Galaxy Finance. Galaxy has started by consolidating access to 20% of the world’s commercially-mineable magnesium.
Galaxy Finance delivers the capital and credit resources needed to deliver the huge reserves that Galaxy Magnesium has developed. Together with the largest magnesium group in the world, the company holds a substantial reserve of thousands of metric tonnes of magnesium, and a network of more than 15 mature, continuously producing mines, along with many refining, alloy and manufacturing facilities.
Galaxy Finance provides magnesium at a reliable, repeatable, consistent quality and price through an alliance with Wisdom Capital, a private equity bank based in New York.
These innovative capital, credit and financial logistics resources serve the customers of all Galaxy Divisions — Motion, Flight, Life, Build, Power and Green — to provide financing vehicles that make the adoption of magnesium a straightforward commercial and fiscal decision.
Galaxy Finance delivers the significant reserves of pure magnesium and alloys that Galaxy Magnesium has developed. We provide magnesium at a reliable, repeatable, consistent quality and price through an alliance with Wisdom Capital, a private equity bank based in New York.
Galaxy Guarantee uses a Forward Trade Agreement to provide guaranteed delivery of specific magnesium commodities at fixed prices over a designated period of time, controlling for variable costs through a system of insurance, hedging and risk mitigation. Galaxy Guarantee serves individual industrial customers in a confidential contract framework, to provide Galaxy magnesium.
On the other side of the coin, Galaxy Exchange will utilize the Multilateral Trade Facility, a real-time magnesium commodities exchange authorized under the financial market regulations of the European Union.
The MTF is a 24/7 electronic exchange that allows many buyers worldwide to simultaneously see magnesium available that day from many sellers. Both buyers and sellers are pre-authorized, so that an accepted bid is immediately documented, with funds transferred and contracts in place.
Galaxy Exchange, set to be operational before the end of 2021, will list all magnesium products offered by registered global mines, refineries, manufacturers and suppliers. This includes Galaxy Magnesium as a key supplier, but is open to all magnesium product suppliers worldwide. With careful cultivation and continuous investor and supplier education, the Exchange will attract many suppliers and buyers to an open, transparent market.
The continuous dynamic of a real-time electronic bid-ask system, akin to the London Metals Exchange, provides for the most efficient price discovery and consistent value establishment, for all members of the global magnesium community.
In addition to the purchase of physical magnesium directly through the Exchange for industrial use, asset managers and individual investors will be able to implement options strategies, to manage risk and opportunity in the metals marketplace, and diversify their market portfolios with magnesium.
The price of magnesium often moves counter-cyclical to other non-ferrous metals like aluminum, silver, copper, lithium, cobalt and zinc. With magnesium as an additional tool, a hedge that can be positioned long or short and indexed for volatility, the tools for magnesium diversification will be available to asset managers of all types — commercial and merchant banks, mutual funds, index funds, institutional investors, trusts and pension funds.
Adding magnesium to the financial market ecology will open up new market strategies for investors, and lead to more stable, long-term commodities markets.
Finance for the magnesium market.