Latrobe Magnesium tracking towards demonstration plant start-up in early 2024

Latrobe Magnesium (ASX: LMG) is heading into 2024 fully confident that it can achieve success on a number of fronts at its unique Latrobe magnesium project.

In releasing its 2023 annual report, the company said it is now back on target to complete the construction phase of its stage 1, 1000 tonnes per annum demonstration plant in Victoria.

After an adjustment to its schedule due to impacts on labour markets and equipment procurement due to external financial market issues, the company is aiming to complete construction by the end of December 2023 with Stage 3 commissioning targeted to commence in January 2024 and first magnesium production to begin in March 2024.

Stage 2 studies

The company confirmed that the outcomes of the stage 1 demonstration plant development will now play a key part in determining the size of its stage 2 commercial plant.

Current thinking is for the development of 10,000 tonnes per annum plant, which is based on the amount of ash supply generated from the nearby Yallourn brown coal power generation facility until its closure in 2028.

The company is confident that the Yallourn ash alone can support the operation of a 10,000 tonnes per annum plant for 20 years.

However, current studies are looking into the fact there is substantially more ash supply available than that which will be generated, and work is now undertaken will determine the amount of ash that can be economically extracted.

This will then determine the optimum size and mine life for the project, potentially beyond 10,000 tonnes per annum.

Latrobe is reviewing a proposal provided by engineering firm GHD for work required on the Yallourn landfill.

The comprehensive scope of work is expected to take approximately 6 months to complete and will commence once terms and conditions and pricing have been agreed between the parties.

Expanded plant studies

Latrobe says that following an assessment of the potential to expand the plant’s size, it will conduct a feasibility study using real data from the demonstration plant.

This bankable feasibility study is planned to be completed by the middle of 2024, with the projected timeline for operating the 10,000 tonnes per annum plant currently set for December 2025.

The company will also assess pricing before determining what direction to head in.

Malaysian plant studies

Latrobe is also studying a proposed stage 3, 100,000 tonnes per annum plant.

In March 2023, Sarawak in Malaysia was selected as a preferred location due to the local production of ferrosilicon, a modern port, workforce capacity and supporting services.

A wholly owned subsidiary, Latrobe Magnesium Sarawak Sdn Bhd was established in May 2023 for the development of the 100,000 tonnes per annum plant.

The company says it is actively engaged in discussions with various international investors regarding potential joint venture participation in the Stage 3 project and the company anticipates signing non-binding memorandum of understanding with potential equity partners within the next quarter.

Supply arrangements upgraded

Subsequent to the reporting period, Latrobe unveiled a strategic decision to supply all of the product from its demonstration and commercial plants to the US market.

The company has also elected to increase its offtake of magnesium from the two plants by 20%.

The move follows on reports of a 203% increase in US imports of magnesium metals in the first quarter of 2023.

The new agreement will see an extra 200 tonnes per annum of production from its Victorian demonstration plant sent to the US market, while the company will ship an extra 2,000 tonnes per annum of magnesium from its commercial plant production there.

Latrobe believes the new arrangements may generate an additional $1 million in sales from the demonstration plant, while an extra $10 million will come from the company’s commercial plant.

The additional 200 and 2,000 tonnes per annum volumes secured by MEC for its US operations were previously allocated to the Japanese market.

Latrobe’s Japanese magnesium exports will now be deferred until the commissioning of the company’s 100,000 tonnes per annum Stage 3 project in Sarawak.