Latrobe Magnesium Ltd (ASX:LMG) is developing a magnesium production plant in Victoria's Latrobe Valley using its world-first patented extraction process, using up to 50% less CO2 than other magnesium producers.
The company has already completed a feasibility study validating its combined hydromet/thermal reduction process to produce magnesium from the waste products of coal-fired power plants.
LMG intends to extract and sell magnesium metal and supplementary cementitious material (SCM) using brown coal fly ash from the Yallourn Power Station.
10,000 tpa demonstration plant
Initially, LMG planned to construct a demonstration plant that will produce 1,000 tpa (tonnes per annum) magnesium initially and then expand to 3,000 tpa.
But with China’s magnesium production being restricted and the subsequent worldwide shortage pending, the LMG board has decided to investigate increasing the size of the initial plant.
The initial plant of 1,000 tpa, which will cost between $40 million to $45 million, will now be expanded to 10,000 tpa at a total cost of $123 million.
It is expected that the funding for this expansion of some $75 million will be financed through 100% magnesium offtake agreements.
Churning out 10,000 tonnes of magnesium product a year, the demonstration plant is forecast to generate $110 million in revenue and around $42 million in earnings before interest, taxes, depreciation and amortisation (EBITDA).
Magnesium demand set to grow
Magnesium has the best strength-to-weight ratio of all common structural metals and is increasingly used in the manufacture of aluminium sheets in cars, laptop computers, mobile phones and power tools.
In the last four years, aluminium sheets containing up to 6% magnesium was used in cars for the first time, as producers look to produce lighter, more CO2 efficient vehicles.
China, the world's primary supplier of magnesium, has begun a 13-year plan to increase the magnesium in cars from 8.6kg to 45kg by 2030, requiring 1 million tonnes of new magnesium production per annum.
Market growth forecast
Global magnesium demand is set to increase to 2 million tonnes by 2027.
The magnesium metal market is forecast to reach a size of US$5.4 billion by 2025 based on a CAGR of 7.5% from 2020 to 2025, according to an IndustryARC report.
LMG has sufficient brown coal fly ash from the Yallourn Power Station to supply a 40,000 tpa plant for the next 20 years, which would cover less than 3% of the growth in demand for magnesium that will occur over the same period.
Diversifying the magnesium supply chain
In 2020, world magnesium production was ~ 1 million tonnes, with China supplying ~85% of this.
Of this 1 million, about 440,000 tpa is exported mainly to the US, Japan and the EU.
With a need for a diversified supply chain, LMG presents an opportunity through one of only two advanced Magnesium projects outside of Asia.
ESG credentials
With pressure on both producers and purchasers of magnesium globally, LMG’s environmentally efficient and waste recycling hydromet technology gives it a unique advantage over competitors.
LMG is one of the lowest CO2 emitters in the world when it treats fly ash using its acid hydromet technology, producing 53% less CO2 emissions than other magnesium producers.
Using its alkali hydromet process, LMG’s CO2 emissions are even lower.
China has imposed strict regulations to reduce CO2 emissions, putting pressure on the magnesium industry to be more environmentally efficient, with no Chinese producer currently meeting the particulate test and multiple already having been forced to close.
LMG’s project remediates mining sites by recycling 100% of potentially hazardous wastes, like fly ash, into valuable saleable products.
Advantages of magnesium-ion batteries
Magnesium-ion batteries could potentially provide a more suitable alternative to lithium-ion batteries, being safer, longer-lasting, faster to charge, recyclable and due to the relative abundance of magnesium compared to lithium.
Upside from valuable SCM by-products
LMG’s demonstration plant will produce 5.8 tonnes of supplementary cementitious material (SCM) per tonne of magnesium from Yallourn fly ash.
The company’s hydromet process produces SCM from fly ash with zero CO2 emissions which cannot be produced from Chinese feedstock.
Victoria has no local supplier of SCM and traditionally imports 100% of their 250,000 to 300,000 tpa use.
SCM has the same chemistry and mineralogy as portland cement, the most common type of cement used globally, and tests have shown it has the same strength and set times as portland cement over a 2 hour and 7-day period.
Tests have indicated that 30% of portland cement can be substituted with SCM, which could reduce the 0.8 tonnes of CO2 per tonne produced by Portland cement by 30%.
Engineering works
Mincore has been progressing the design and engineering work and the detailed process and flowsheet work for LMG’s demonstration plant site at Hazelwood North in Victoria.
The engineering consultant has also been awarded early site works for fencing, surveying, reinstatement of electrical works and the refurbishment of the administration building at the site.
Mincore has been supporting LMG alongside CSIRO as the company tests new technologies to improve the existing processes, build prototypes and complete plant trial runs in varying operating parameters and conditions.
On October 19, 2021, LMG raised $3 million from a heavily oversubscribed placement of shares.
With these additional funds and those on hand, LMG will be able to fast track the next stage of the design and engineering for its demonstration plant.