What are the biggest magnesium producing companies?

Looking for help catching some z's? If you've asked for sleep aid suggestions, it's possible someone has recommended magnesium. But the mineral's importance -- and the reason why it's appearing on investors' radars -- transcends its health benefits.

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Instrumental in various metal alloys like aluminum and copper, magnesium serves as a crucial element in numerous industrial applications. Additionally, magnesium chloride is commonly utilized for de-icing roads and as an ingredient in fertilizers.

Given its essential role in the aerospace, defense, and steelmaking sectors, magnesium is indispensable to the United States' industrial health. Hence, the U.S. Geological Survey included it in the 2022 Critical Minerals List.

Thus, it’s no surprise that investors aiming to bolster their portfolios with a key material are on the hunt for magnesium stocks.

Best Magnesium-based Stocks to Invest In

Top 3 Magnesium Stocks for 2024

When diving into metal and materials investments, those eager for magnesium exposure will realize there isn’t a perfect one-stop stock. While pure-play magnesium stocks aren’t available, several other options offer viable investment opportunities.

Data source: Yahoo! Finance. Data current as of December 8, 2023 Company Market cap Description Compass Minerals (NYSE:CMP) $1.02 billion Supplies essential minerals including salt, lithium, magnesium, and potassium for fertilizers. Kaiser Aluminum (NASDAQ:KALU) $956 million Produces a broad array of aluminum products. Luxfer (NYSE:LXFR) $236 million A leader in manufacturing high-pressure gas cylinders and other specialty products from aluminum and magnesium alloys.

Compass Minerals: A Rising Star in Magnesium

Compass Minerals

Compass Minerals manufactures various materials, operating chiefly through two segments: salt and plant nutrition. In its salt division, Compass sells sodium chloride and magnesium chloride (both brine and flake) to customers in North America and the UK. Its plant nutrition wing markets potash, a key agricultural fertilizer component.

The salt segment dominates the company’s financials, amounting to 82% of sales in 2022.

Magnesium’s fiscal significance for Compass Minerals appears set to grow. With a $45 million equity investment supplementing an earlier $5 million, the company has garnered a 45% stake in Fortress, an eco-friendly fire retardant developer. Compass will supply Fortress with magnesium chloride from its solar evaporation facility in Ogden, Utah.

During a first-quarter 2021 conference call, CEO Kevin Crutchfield articulated management's excitement about the Fortress partnership, highlighting the product’s efficacy and environmental sensitivity.

The Ogden facility, with its 750,000-ton annual production capacity and 95 million tons of reserves, supports the company's magnesium chloride production.

Compass Minerals also aims to foray into lithium production, another growth avenue. The company plans to produce battery-grade lithium at its Ogden facility, with production anticipated by 2025, already attracting automotive industry interests.

In July 2022, Compass and Ford signed a non-binding agreement for supplying lithium from the facility.

Kaiser Aluminum: Diversifying Through Magnesium

Kaiser Aluminum

Despite its name, magnesium plays a significant role in Kaiser Aluminum’s portfolio. Since its inception in 1946, Kaiser has become a top aluminum manufacturer, operating 13 production facilities across the U.S. Apart from aluminum, Kaiser alloys it with magnesium for end markets like aerospace, automotive, and food & beverage packaging.

Kaiser’s magnesium alloys are used in diversified industrial applications, including air cylinder tubing, electrical conductors, and hydraulic tubes, thanks to their corrosion resistance and weldability.

Magnesium’s importance was underlined in 2021 when the company declared force majeure at its Indiana rolling mill due to a drop in supply from a key provider. This led to reduced output of packaging products.

Having resolved these challenges, Kaiser now boasts a diversified magnesium supply chain. The company lifted the force majeure declaration by securing its magnesium needs through 2023 and beyond.

Moreover, Kaiser appeals to income investors with a consistent dividend growth, boasting an 11.9% CAGR from 2012 to 2022.

Luxfer: Magnesium's Role in High-tech Applications

Luxfer

Luxfer specializes in a wide array of gas cylinders used in numerous applications, branding itself as the largest global manufacturer of aluminum high-pressure gas cylinders. Beyond cylinders, Luxfer’s Elektron segment is focused on magnesium, creating lightweight, corrosion-resilient alloys for sectors such as aerospace, healthcare, and energy. Luxfer also fabricates magnesium powders for military and emergency applications.

Luxfer’s U.S. and UK facilities produce magnesium powders, sheets, and alloys.

Over the past five years, Luxfer has achieved stable growth, with compound annual growth rates (CAGR) of 4% in revenue and 5.7% in adjusted earnings per share (EPS) from 2017 to 2022, demonstrating financial health through prudent leverage -- a net debt-to-adjusted EBITDA ratio of 1.1 by the end of 2022.

Looking to the future, Luxfer projects a 6%-10% rise in revenue from 2022 to 2023, though adjusted EPS growth won't necessarily match. For 2023, management forecasts adjusted EPS between $1.15 and $1.35, predicting it could surpass $2.00 by 2025.

Evaluating Magnesium Stocks for Your Portfolio

The pivotal role magnesium plays across a spectrum of industries makes it a significant focus for materials investors. Those with a long-term horizon might find aligning lithium interests with magnesium investment via Compass Minerals appealing. Alternatively, investors eyeing steady income growth could lean towards Kaiser Aluminum. However, for maximum magnesium-centric exposure, Luxfer stands out.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Compass Minerals International. The Motley Fool has a disclosure policy

Top Magnesium Producing Companies in the Industry

In this article, we will discuss the 12 largest magnesium-producing companies and the best magnesium stocks to buy now. If you want to skip our discussion on the growth prospects of the industry, go to the 5 Largest Magnesium Producing Companies and Best Magnesium Stocks To Buy.

According to a report issued by market intelligence firm SkyQuest Technology, the global magnesium market is set to compound annually at an average rate of 5.3% from a size of $4.8 billion in 2022 to $7.25 billion by the end of this decade. Another report says the production of magnesium is set to increase at a compound annual growth rate (CAGR) of 5.30% from 1.09 million tons in 2023 to 1.42 million tons by 2028. Magnesium is considered one of the lightest metals in the use of mankind today. It is considered 30% lighter than aluminum and is widely used in alloys. Given the benefit of being lightweight and having a high melting point, magnesium is widely used by aircraft and automotive industries. Around 70% of the total global production of magnesium is used to make alloys. Meanwhile, 10% of global magnesium production is used as a raw material in making titanium, which is known for its resistance to corrosion. Another 10% of global magnesium production is diverted towards making steel for the construction industry. The significance of magnesium is further reiterated by the fact that most of the beverage cans in the US are made by forming an alloy with 5% magnesium.

The automotive industry combines aluminum with magnesium to form an alloy for various components. According to the US Automotive Material Partnership, one pound of magnesium can replace two pounds of steel and 1.67 pounds of aluminum. This can result in automobile companies reducing the weight of their vehicles by 15%. Any reduction in weight means an improvement in fuel efficiency, which helps reduce carbon emissions and contribute towards safeguarding the environment. According to Australia-based company Latrobe Magnesium (LMG.AX), automobile manufacturers in China intend to increase the weight of magnesium in cars from 18.95 pounds in 2017 to 99.2 pounds by the end of this decade.

Leading Producers in the Magnesium Industry

Magnesium is typically extracted from natural minerals like dolomite and magnesite in carbonate form. About 0.13% of seawater contains magnesium carbonate. China is the world’s largest magnesite producer, accounting for 63% of the global output, with an annual production of 17 million tons. China has excelled as a top magnesium producer over the last two decades, housing the largest magnesium deposits worldwide. Following China, Australia, Turkey, Brazil, and Russia rank as the second, third, and fourth biggest producers, with annual outputs of 2.6 million tons, 1.8 million tons, 1.5 million tons, and 950,000 tons, respectively.

In North America, US Magnesium stands out with a claimed annual production capacity of 63,500 tons of primary magnesium. Established in 1969, US Magnesium operates an 80,000-acre production facility about 60 miles from Salt Lake City, Utah. Similarly, Dead Sea Magnesium and Shanxi Yinguang Magnesium Industry (Group) Co. are among the top global magnesium producers. Investors interested in the sector also look into magnesium ETFs and leading magnesium stocks such as Martin Marietta Materials, Inc. (NYSE:MLM), Albemarle Corporation (NYSE:ALB), and Jinduicheng Molybdenum Co., Ltd. (601958.SS).

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12 Largest Magnesium Producing Companies and Best Magnesium Stocks To Buy

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Our Methodology

To shortlist the largest magnesium-producing companies and the best magnesium stocks, we analyzed the hedge fund sentiment toward each stock and the market capitalization of the companies. The hedge fund sentiment has been assessed using Insider Monkey’s database of 910 hedge funds as of Q2 2023. The companies have been ranked in ascending order of their market capitalization as of September 1. By considering these two key criteria, we have curated a comprehensive list of the leading publicly listed companies in the magnesium industry and the best magnesium stocks.

Largest Magnesium Producing Companies and Best Magnesium Stocks To Buy

12. Luxfer Holdings PLC (NYSE:LXFR)

Market Capitalization: $323.6 million

Number of Hedge Fund Holders: 14

Value of Hedge Fund Holdings: $88,574,169

Luxfer Holdings PLC (NYSE:LXFR) is a Milwaukee, Wisconsin-based industrial materials manufacturer founded in 1898.

Luxfer MEL Technologies and Luxfer Magtech are two subsidiaries of the company that are involved in the magnesium value chain. Luxfer MEL Technologies makes magnesium alloys for application in the defense, automotive, oil, and gas industries. Meanwhile, Luxfer Magtech is involved in making magnesium chips, granules, and powders for various industries. The company has the distinction of being the founding member of the International Magnesium Association. Click here to read Luxfer Holdings PLC’s (NYSE:LXFR) Q2 2023 earnings call transcript.

11. Intrepid Potash, Inc. (NYSE:IPI)

Market Capitalization: $364.47 million

Number of Hedge Fund Holders: 8

Value of Hedge Fund Holdings: $18,803,848

Intrepid Potash, Inc. (NYSE:IPI), headquartered in Denver, Colorado, specializes in potash production.

Magnesium is one of the key constituents of the potash manufactured by the company. Intrepid Potash, Inc. (NYSE:IPI) obtains magnesium from langbeinite, which contains potassium-magnesium sulfate. The company mines langbeinite from its mine in New Mexico. First Eagle Investment Management was the leading hedge fund investor in Intrepid Potash, Inc. (NYSE:IPI) during Q2 2023. The hedge fund increased its stake in the company by 251% during the second quarter of the year. You can also check out the 10 Best Potash Stocks to Buy here.

10. U.S. Silica Holdings, Inc. (NYSE:SLCA)

Market Capitalization: $1.0 billion

Number of Hedge Fund Holders: 20

Value of Hedge Fund Holdings: $43,531,476

U.S. Silica Holdings, Inc. (NYSE:SLCA) is a Katy, Texas-based miner, processor, and logistics provider of minerals with a portfolio of over 1,500 products.

One of the materials produced by U.S. Silica Holdings, Inc. (NYSE:SLCA) is magnesium silicate. Magnesium silicate is a mineral compound that has numerous applications, such as being used as a filler in products like plastics, rubber, and paints, as well as in the production of ceramics and certain pharmaceuticals.

During its Q2 2023 earnings call transcript, U.S. Silica Holdings, Inc. (NYSE:SLCA) maintained its projection of capital expenditure in the range of $50 to $60 million. The company is also considering the possibility of accelerating its capital investments to support growth initiatives.

9. Ferroglobe PLC (NASDAQ:GSM)

Market Capitalization: $1.01 billion

Number of Hedge Fund Holders: 22

Value of Hedge Fund Holdings: $106,469,550

Ferroglobe PLC (NASDAQ:GSM) is a London, UK-based provider of specialty metal products and alloys. The company is also involved in the production of Magnesium ferrosilicon (FeSiMg) alloy. Magnesium serves as the fundamental raw material to produce any FeSiMg alloy. The magnesium component in the FeSiMg alloy can vary, typically falling within the range of 5% to 10%. This alloy holds significant importance in the iron foundry industry, where it plays a critical role in various applications and processes.

According to data compiled by Insider Monkey, Hosking Partners is the biggest hedge fund holder of Ferroglobe PLC (NASDAQ:GSM), with a stake valued at over $20.7 million as of Q2 2023. The hedge fund increased its holding in the company by 10% on a sequential basis. Click here to read Ferroglobe PLC’s (NASDAQ:GSM) earnings call transcript for Q2 2023.

8. Kaiser Aluminum Corporation (NASDAQ:KALU)

Market Capitalization: $1.25 billion

Number of Hedge Fund Holders: 11

Value of Hedge Fund Holdings: $24,161,338

Kaiser Aluminum Corporation (NASDAQ:KALU) is a Franklin, Tennessee-based aluminum maker founded in 1946.

Kaiser Aluminum Corporation (NASDAQ:KALU) sources magnesium for its Warrick Rolling mill in Indiana, which is used to make aluminum-based beverage and food packaging products. Kaiser Aluminum had to declare force majeure in July last year. This decision was prompted by a force majeure declaration made by their magnesium supplier, US Magnesium LLC, in mid-2021. However, Kaiser Aluminum Corporation (