Latrobe Magnesium’s Victorian plant site ready for construction as Chinese magnesium price stabilises

Latrobe Magnesium ASX LMG Spray Roaster Town Hall Demonstration Plant March 2022
Latrobe Magnesium will initially produce 1,000tpa of magnesium metal from industrial fly ash, with output to expand to 10,000tpa.

Latrobe Magnesium (ASX: LMG) has completed 40% of the engineering and early works required for its Victorian site, with the site now ready for construction.

This comes as the company reports that, after a recent fall in Chinese magnesium prices, the prices have stabilised at about US$6,500 per tonne – well above Latrobe’s original estimate.

Latrobe plans to produce magnesium metal from fly ash, a waste by-product of the giant, 1,480 megawatt Yallourn power station in Victoria which burns brown coal. 

Longest lead time equipment now out for tender 

The longest lead time items — the spray roaster and reduction furnace — have been issued for tender with early May being targeted for a decision. 

LMG says, after beginning on the administration building, gatehouse and car park, it is now able to focus on the construction of the plant.

While continuing to put out tender requests for equipment for the demonstration plant, the main activity will deal with the main construction phase.

The company expects to within the next few weeks draw down A$10 million of its A$23 million research and development grant.

China magnesium price steadying after 2021 turbulence

In 2021, the magnesium metal price hit $US10,200/t and then dropped to a low of US$5,400/t as markets were roiled by production interruptions in China.

At that time, Latrobe said its revenue estimates were based on US$3,250/t.

In the first quarter of 2022, the Chinese price fell from US$7,800/t and then stabilised around US$6,500 by the end of March.

Chinese production has been affected by supply chain interruptions. 

Latrobe is expecting to begin producing at the rate of 1,000 tonnes per annum of magnesium with construction starting in this quarter and with production beginning 12 months later.

The plant will be expanded over time to 10,000tpa. 

The company plans to sell refined magnesium under long-term contracts to US and Japanese customers.

At present Australia imports all its magnesium supply, with that amounting to about 8,000tpa.

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