US Magnesium bankruptcy exposes fragility in US primary magnesium supply

US Magnesium

The US Magnesium bankruptcy marks a major blow to US primary magnesium supply. Filed under Chapter 11 in Delaware, the US Magnesium bankruptcy covers an estimated $100mn–500mn in liabilities. The US Magnesium bankruptcy follows legal rulings over failed deliveries to Kaiser Aluminum Warrick. As a result, the collapse threatens domestic supply from America’s only commercial-scale primary magnesium producer.

Court ruling and force majeure set stage for US Magnesium bankruptcy

A recent court ruling played a central role in triggering the US Magnesium bankruptcy. In August, a court ordered US Magnesium to reimburse Kaiser Aluminum Warrick $55mn for higher magnesium costs. The award included an additional $12.9mn in interest linked to missed contractual deliveries. However, the operational stress began earlier, when US Magnesium declared force majeure in September 2021. That decision later forced Kaiser to declare force majeure at its Warrick rolling mill in July 2022.

These cascading disruptions reveal how concentrated the US magnesium supply chain had become. When the sole producer faltered, downstream rolling and alloy operations had few alternative sources. Therefore, contractual penalties and higher replacement costs quickly translated into mounting financial liabilities.

US Magnesium bankruptcy leaves strategic gap in domestic supply

The US Magnesium bankruptcy removes America’s only commercial-scale primary magnesium producer from the market, at least temporarily. US Magnesium produced primary metal, lithium carbonate and other chemical products from Great Salt Lake brines. Its closure risks deeper import dependence for lightweight alloys used in automotive, aerospace and defense. Meanwhile, lithium carbonate and specialty chemical customers must now reassess sourcing and inventory strategies.

US policymakers have highlighted magnesium as a critical input for aluminum rolling and casting. However, domestic primary capacity now effectively sits in Chapter 11 restructuring. As a result, buyers will lean harder on imports, potentially from jurisdictions with higher geopolitical or ESG risk. Price volatility could increase if logistics disruptions or trade measures limit available supply.

The bankruptcy process may ultimately restructure US Magnesium rather than eliminate the asset base entirely. Creditors and potential buyers will evaluate whether operations at the Great Salt Lake remain economically viable. Therefore, the Chapter 11 outcome will shape how quickly any domestic primary magnesium capacity can return.

The Metalnomist Commentary

US Magnesium’s collapse highlights the risks of single-point dependence for metals with specialised production routes. For aluminum producers and alloy users, diversifying supply and investing in recycling now look less optional and more urgent. Investors should also note how legal liabilities from failed deliveries can cascade into full-scale restructuring when markets tighten.