Latrobe Magnesium nears commencement of production with construction labour expanded

Latrobe Magnesium (ASX: LMG) is confident it is on track to commence production through its new magnesium oxide (MgO) strategy in early 2024 despite a labor shortage and weather issues.

The company recently elected to include the MgO strategy to initiate early cash flow and to fast-track assessment of the operability of the unique technology being utilised in its initial magnesium production pilot plant in Victoria’s Latrobe Valley.

The project is currently focused on fast-tracking the construction of the plant areas required to produce one-tonne bulk bags of MgO, an intermediate product for customer sales, prior to the project’s main focus on the production of magnesium metal.

MgO is used extensively in the soil and groundwater remediation, wastewater treatment, drinking water treatment, air emissions treatment and waste treatment industries for its acid buffering capacity and related effectiveness in stabilising dissolved heavy metal species.

It also has medical applications.

Overall program impacted

However, the change in focus to MgO production has impacted the overall program, with construction in non-MgO areas being unavoidably delayed as a result.

In the company’s latest project update, chief executive officer David Paterson revealed that construction labor availability is also having a large impact on the project team’s ability to implement its new strategy.

Inclement weather has also hindered the project schedule, particularly in relation to the construction of the critical spray roaster equipment.

MgO bagging production to commence in March

Despite this, the MgO bagging plant is scheduled to be completely fabricated and ready for delivery to site next month, with production now expected to commence next March.

To assist with ensuring that schedule remains on target, Latrobe’s construction team has realigned its organisational and planning to focus on the plant areas required to produce MgO.

This includes systems common to all areas of the process – such as water, air and LPG – being advanced to the extent required for MgO production.

Latrobe has also re-adjusted its commissioning methodology to allow construction teams to transition to other areas of the plant as subsystems are handed over to the company’s operations personnel.

Workforce building strategy

Mr Paterson reported that Latrobe has commenced discussions with government agencies and employment groups to help identify workforce opportunities for workers from downsizing industries such as paper manufacturing and power generation.

He said the company is looking to add value to the region by providing opportunities for redundant local workers to regain employment and remain in the area.

“This is a key focus of Latrobe Magnesium to ensure we make a lasting impact on the region.”

The company aims to commence the new employment process early next year.

Unique magnesium development

Latrobe is utilising a world-first patented extraction process in its development of the pilot magnesium production plant in the Latrobe Valley.

The project will extract and sell magnesium metal and cementitious material from industrial fly ash—currently a waste resource from the nearby Yallourn brown coal power generation.

Following construction and testing of the pilot plant, the company aims to build a commercial plant with a capacity of more than 10,000 tonnes per annum of magnesium.