STATEMENT
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mobile phones, laptop computers and decoratively finished automotive and motorcycle components. Each sector has different needs for quality, performance and safety, resulting in differing testing regimes and differing lead times to market. The sector with the longest lead times and most challenging acceptance criteria is the automotive industry. This is also the largest potential market. As a general rule, most domestic hardware applications are at the other end of the scale, and are less challenging and have shorter lead times. Nevertheless, these applications require a lot of attention to detail and considerable technical input to achieve results which can be accepted. Manufacturers with well established high volume production lines currently using competing materials, need product quality, manufacturing reliability and liability certainty before changing materials, to lower production costs. This process takes time, technical assistance and product trialling to achieve acceptance. The wide variety of trials that have been conducted to date have provided a wealth of experience about the way that AM-lite performs in various diecasting operations. The trials have identified what may be described as “large scale effects”, but in order to get a given product to market, a whole range of “small scale effects” have to be addressed. Many of these relate to surface finishing and the interaction between diecasting and electroplating. This requires a total system approach and relies on good cooperation between diecaster, and electroplater, the benefit of AMT ’s accumulated technical know-how, and at times, the very sophisticated analytical capabilities of AMT ’s research partner, CAST. The Company is now focusing its technical resources on supporting nine key customers to finalise a number of strategic product development programs, with the aim of bringing these new products to market before the end of calendar year 2006. These customers have been selected because of their technical ability, shared commitment and enthusiasm, and because they are specialists in each of the key market sectors. The Company anticipates that once many of these high profile products are released into the market, it will provide the catalyst for many other companies to accelerate their use of AM-lite, or lose their market share. Manufacturing and Logistics AMT ’s strategy is to have its alloy ingot products manufactured under exclusive licensing agreements with leading manufacturers in AMT ’s main regional markets. When required, AMT can provide R&D and technical support to those manufacturers, and can licence AMT ’s metal handling technologies to those manufacturers to improve quality and reduce costs. The Company has concluded manufacturing agreements with alloy producers in China , Japan and Europe , to manufacture and recycle AM-lite. Recycling capabilities have also been established in Korea , Taiwan and USA . Technical personnel from AMT have worked with the operating teams in all three manufacturing facilities to transfer relevant know-how and establish good working relationships with each facility.
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The ability to electroplate AM-lite at low cost using MacDermid’s new Bondal ® Mg technology has opened up a wide variety of new market opportunities to use AM-lite in substitution for zinc, aluminium and plastic at lower cost. These markets were previously denied to magnesium because of the high cost of applying decorative finishes. As with any new technology, the introduction of this new electroplating technology is being managed carefully, to ensure that any initial teething problems are adequately addressed, and to maintain the very high quality standards the market has come to expect from MacDermid’s technologies. MacDermid has assigned dedicated management to support the introduction of this new technology to two commercial sites in each of China , Europe and North America . The aim is to have these facilities fully operational by the end of December, 2006. A competitive bidding process was conducted and finalised during the 2006 financial period to establish forecast shipping and logistics requirements going forward. The Company has concluded agreements with NYK and Schenker to service most of its international logistics requirements. These activities are managed out of Brisbane and interface with the Company’s regional warehouses. Once delivered into the regional warehouses, customer delivery requirements are managed by the Company’s wholly owned subsidiaries in Europe and North America , or by our agents in Asia. Carbon Trading Joint Venture In June, 2006, AMT and Hyder Consulting Pty Ltd (Hyder) formed a joint venture to provide AMT ’s AM-cover technology and Hyder’s specialist environmental project structuring services to the global magnesium industry, to generate Certified Emission Reduction units (carbon credits) under the Kyoto Protocol and trade these on the global carbon market. Use of cover gas in the magnesium industry is essential. It protects molten magnesium from severe oxidation and allows the metal to be handled safely. Sulphur hexafluoride (SF 6) has been the gas of choice to date, providing a non-toxic, safe and odourless gas protection system. However SF 6 has a global warming potential of 23,000 tonnes equivalent CO 2 per tonne SF 6, and in today’s environment, Governments around the world are moving to phase out the use of SF 6 by 2008. AM-cover offers similar benefits to SF 6, but with the added advantage of lower operating costs, significantly improved melt losses, and a reduction of up to 99.6% in greenhouse gas emissions. Under the Kyoto Protocol, projects that reduce greenhouse gas emissions from a baseline scenario can generate carbon credits which can then be sold. Typical sale prices have been between US$5-10 per tonne CO 2 emissions eliminated. Hyder has specialist skills and expertise in structuring and managing such projects, and in trading the resulting carbon credits. Hyder is a global business with a network of well resourced offices in the United Kingdom , Europe , Middle East , Asia , China and Australia . The size and global reach of Hyder in this specialised field is a perfect complement to AMT. |
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ADVANCED MAGNESIUM LIMITED | ANNUAL REPORT 2006 |
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