Latrobe Magnesium making progress with three phase development plan
Latrobe Magnesium (ASX: LMG) is confident it can finalise further support for its 100,000 tonnes per annum (tpa) magnesium production plant in Sarawak, Malaysia by year end.
The company says it is aiming to sign non-binding memorandums of understanding (MoUs) with potential international equity partners in the last quarter.
The MoUs will be designed to assist the company to obtain commitments to contribute funding in proportion to any new partners equity holdings in the project.
The Sarawak plant is stage 3 of a carefully structured plan pulled together by Latrobe Magnesium to create international class magnesium production based on its unique, in-house technology, powered by clean energy.
For example, the Sarawak site was selected because of its access to the nearby hydro-electric production.
Stage 1 making strong progress
Boosted by a recent $4.2 million capital raising, Latrobe Magnesium says it continues to make strong progress at its initial magnesium production plant in Victoria’s Latrobe Valley.
The Latrobe Valley project will feature the first use of the company’s patented extraction process, with the company aiming to produce and sell magnesium metal and cementitious material from industrial fly ash, a waste resource from Yallourn brown coal power generation.
Following the successful completion of a recent feasibility study, Latrobe Magnesium has now commenced construction for the Stage 1 magnesium plant. Despite some issues, the company remains confident an initial 1,000 tonne per annum plant is on target to commence production by the end of the year.
If the trial plant is successful, the next phase will see the construction of a +10,000 tonne per annum magnesium commercial plant.
The assessment of further plant capacity expansion will be determined by Latrobe Magnesium.
Project on budget
In its most recent Quarterly report, the company said project activities remain on budget, with all equipment packages fully awarded and a total of $17.5 million contracted to over 35 suppliers around the world.
Latrobe Magnesium has also confirmed that the engineering and design phase for the Phase 1 plant is nearing completion.
With process engineering supporting critical vendor documentation reviews, the company said all process deliverables are substantially complete with final reviews and approvals finalised for construction readiness.
All HAZOP’s have also been completed for the Demonstration Plant, with only a few HAZOP closeout actions left remaining to be actioned during commissioning.
The company said mechanical engineering is nearing completion with a focus on managing vendors during supplier engineering, documentation reviews, fabrication, and equipment close-out.
Potential start-up delays
However, Latrobe Magnesium also noted that there are a number of external issues which may delay initial Phase 1 commissioning.
It said recent changes in construction strategy and contractor negotiations have created a risk to achieving the target of commencement of commissioning the process plant by the end of September.
The company said it is continuously undertaking project schedule review and optimisation, taking into account vendor, supplier, and contractor timelines.
As a result, it is currently undertaking schedule mitigation activities, with the project team still confident the plant will still be commissioned in Q4 2023.
Strong magnesium market growth
Australia currently imports 100% of the 8,000 tonnes of magnesium annually consumed by industry in the country.
The global magnesium market is expected to grow from 1,093.53 kilotons in 2023 to 1,415.70 kilotons by 2028, at a CAGR of 5.30% during the forecast period of 2023 to 2028.
Magnesium has the best strength-to-weight ratio of all common structural metals and is increasingly used in the manufacture of car parts, laptop computers, mobile phones, and power tools.