Latrobe Magnesium (ASX:LMG) is on its way to playing a role in global critical mineral supply chains by taking waste from a nickel operation in New Caledonia and turning it into magnesium (Mg) metal produced in the US.
The Victorian company could become the first new commercial-scale primary magnesium producer in North America in decades.
As LMG stays on course to produce magnesium metal crowns (at >98% Mg) from its demonstration plant this year, it is also progressing plans for a proposed 50,000-tonne-per-year magnesium plant in South Carolina.
Under a binding 20-year memorandum of understanding with LMG, Société Le Nickel (SLN) — part of the French multinational Eramet (EPA:ERA) — will provide the US project’s primary feedstock of ferronickel slag.
The slag would be shipped from New Caledonia through the Port of Charleston to the proposed site which LMG has identified and is negotiating to secure, with Bechtel nominated as its engineering partner for feasibility studies.
Latrobe Magnesium would then apply its patented process developed at the Victorian demonstration plant to produce high-purity magnesium metal.
The company has secured non-binding letters of intent covering 32,000 tonnes per annum (tpa) of potential offtake, equivalent to 64% of the proposed plant’s initial capacity.
It has also received a US$15 million ($21.5 million) non-binding letter of support from a US-based counterparty towards equity funding for the project’s Feasibility Study, conditional on securing a further US$15 million from another US-based entity.
Latrobe CEO Robert Stein says the opportunity to build a 50,000-tonne-per-annum plant is significant for the company and the US market.
For context, that represents the entirety of US primary magnesium metal imports — at 40,000 tonnes in 2025 — at an estimated value of US$280 million. The imported alloy and scrap market is larger.
He adds the letters of interest from potential offtakers demonstrate confidence in LMG’s ability to provide that product into the market.
“We have some of the largest magnesium consumers in the US willing to support the project,” he says. “What that does is provide credibility in the eyes of potential project financiers and the US Government.”
The proposed plant comes with an estimated capital cost price tag of US$1.1–1.5 billion.
But LMG estimates potential annual earnings before interest, taxes, depreciation, and amortisation (EBITDA) of US$320–615 million, a net present value with 10% forward discount rate (NPV10) of US$1.4–2.7 billion, and an internal rate of return (IRR) of 18–26%.
Why magnesium matters
Magnesium is the lightest structural metal, making it useful where reducing weight can improve performance in a range of products from EV batteries and drones to missile components.
As these sectors expand, global magnesium demand is forecast to rise from about 1.07 million tonnes (Mt) in 2025 to 1.67Mt by 2032, equivalent to annual growth of roughly 6.6%, according to global commodity research company CM Group.
China accounts for about 91% of global magnesium production, with Russia contributing another roughly 6%. US production ceased in 2021.
Given the intensifying supply chain concerns, the US Defense Industrial Base Consortium last month included magnesium among the metals targeted under its second Request for Project Proposals. LMG has applied for the program via its proposed South Carolina project.
Turning waste into high-value metal
Latrobe Magnesium’s patented process was initially designed to recover magnesium from brown-coal fly ash, using processes involving hydrometallurgical extraction and thermal reduction.
In a major milestone for LMG, it is now targeting first metal at the demonstration plant by the end of 2026.
“The demonstration plant is important because it proves the technology and IP at a scale that can be transferred to a large capital build,” Stein says.
A qualified chemical engineer with experience in finance, Stein says the US project takes that technology and applies it to ferronickel slag at much larger commercial scale.
“The slag is a by-product of the nickel processing that occurs in New Caledonia,” he says.
“That runs at a higher grade than the magnesium oxide content of the brown-coal ash and is similarly an environmental liability that’s sitting there.
“The higher content provides us the opportunity to efficiently extract the magnesium after we’ve shipped it from New Caledonia to South Carolina.
“It’s essentially the same front-end technology in terms of the hydrometallurgical extraction process, with maybe one or two key unit-process changes given that we’re using a different feedstock — ferronickel slag versus ash.”
On the fast track
The proposed South Carolina operation is targeting completion of its Feasibility Study in early 2028, a final investment decision in March 2028, and first production in April 2030, subject to funding and other project conditions being met.
“We’d be looking to potentially accelerate that if we could get funding through the door,” Stein says.
“There’s been a deliberate cadence being set by the current administration to really get these [critical minerals] projects up and going, and our whole value proposition is that we’re the fastest pathway to sovereign magnesium in the US.
“We don’t need to be the only producer, but the solution we could potentially offer would be large enough to help de-risk its domestic supply chain.
“The other advantage is that we don’t carry the same sort of resource risk a mining project does.
“From a permitting point of view, from knowing what’s in the ground, and from a resource delineation point of view, it’s all well-defined. It’s all based on metered data coming out of SLN over years of operation.”
Latrobe is also evaluating a 50,000–100,000tpa Malaysian project, which it says could benefit from competitive energy and labour costs and a strategic location for servicing Asian markets.
Its proposed 10,000tpa Australian commercial project is on hold while the company works through the impact of Victoria’s newly introduced Trailing Liability Scheme on its ability to source fly-ash feedstock. However, LMG remains committed to its home market and is confident the issue can be resolved.
Write to Christina Wagstaff at Mining.com.au
Main image: iStock
