Latrobe Magnesium moves closer to construction of demonstration plant

Latrobe Magnesium ASX LMG Valley engineering
In the coming weeks, Latrobe will focus on finalising the layout for its proposed magnesium production plant and updating the 3D model along with completing other essential works and issuing tenders.

Clean metals producer Latrobe Magnesium (ASX: LMG) is moving closer towards construction of a demonstration magnesium processing plant located in Victoria’s Latrobe Valley.

The company said some of the early siteworks have progressed significantly in the past month and outcomes from “value engineering” reviews are being incorporated into engineering and design work.

Repair works to existing fencing around the project site, as well as new fencing around the administration building, have been completed.

Fencing has also been installed around a 20,000 square metre subdivision to be leased by local contractor RTL Mining and Earthworks.

It will become a new base for RTL’s transport operations after Energy Australia’s announcement in March that the Yallourn West brown coal power plant will close in 2028.

RTL is the plant’s contract miner, providing up to 2,500 tonnes of coal per hour for up to 17.5 million tonnes per year of reliable power for the region.

Drawings and approvals

Preliminary drawings for the administration building refurbishment at the demonstration plant site have been completed and reviewed and an application for a building permit is being prepared for submission.

A contract package is also being prepared for site clean-up works and is expected to be awarded to a local company before year end.

Project engineering, procurement, construction and management (EPCM) contractor Mincore will be working with local providers JBI Engineering and Kingy’s Electrical to complete the electrical restoration and restore power to the site.

Mincore’s focus since securing the EPCM contract in August has been to provide testwork support for the plant’s patented hydrometallurgy ore extraction techniques, undertaking process engineering and pursuing trade-off studies to improve and refine the process.

Engineering

The plant’s engineering stage is now ramping up as the process flowsheet is refined, heat and mass balance work finalised and piping and instrumentation diagrams drafted.

Structural engineering is commencing on steelwork for the briquette trolley support structure and bunker designs for char and silica products.

Mechanical engineering comprising plant layout planning and optimisation has also started with a focus on 3D modelling, equipment datasheets and technical specifications for the ash loading, hydromet and briquetting areas.

Detailed design and modelling of the plant’s reduction furnace area including briquette loading and unloading is being supported by CSIRO (Commonwealth Scientific and Industrial Research Organisation) test work to improve existing processes, build prototypes and complete plant trial runs using various operating parameters and conditions.

Supplier interest

Latrobe said more than 72 suppliers had registered their interest in being a part of the Latrobe Valley demonstration plant project via its online supplier portal.

Approximately 32% of registrations are local to the Latrobe Valley-Gippsland area.

Pre-qualification of potential construction contractors has commenced and will be followed by a formal tender process.

Magnesium plant

Latrobe is building its magnesium demonstration plant using a world-first patented hydrometallurgy / thermal reduction process to convert industrial fly ash (currently a waste stream from the Yallourn power plant) to magnesium metal, supplementary cementitious material, amorphous silica, char and iron oxide.

Construction is estimated to start on an initial 1,000 tonnes per annum plant in the new year at a capital expenditure of $45 million, with first production scheduled for end 2022.

Earlier this month, Latrobe confirmed the plant would be expanded to 10,000tpa for a further $123 million capex to meet expected growth in world demand following restrictions on China’s magnesium production.

Offtake agreements

It is expected that approximately $75 million of the expansion costs will be financed through magnesium offtake agreements.

Latrobe already has 8,000tpa allocated via current long-term agreements to customers in the US and Japan and has received enquiries for more than 2,000tpa from new customers.

Japan consumes approximately 40,000tpa magnesium, most of which is currently imported from China.

Its appetite is projected to increase with greater use of the metal by the motor vehicle industry.

The Japanese Magnesium Association has previously stated an objective to diversify its magnesium supply chain.

Latrobe hopes to eventually scale up the capacity of its demonstration plant to 40,000tpa.

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