AbstractAn interpretation of the large 15 μΩcm per at% residual electrical resistivity of Mg in a Gd host is suggested in terms of the formation of bound interband electron—hole states at the Mg site. The theory is developed for a single Mg ion in a Gd host and allows a qualitatively correct interpretation of the experiments. According to an order of magnitude estimate an instability of the paramagnetic ground state in the presence of a single Mg ion seems to be possible when band structure effects on the screening of the Coulomb interaction are taken qualitatively into account.