Latrobe Magnesium wins big in Washington critical minerals talks

• US Export-Import Bank issues letter of interest advising that it’s prepared to finance up to US$122m (A$200m) to support Latrobe Magnesium’s Stage 2 Commercial Plant
• The US does not have a local primary magnesium producer, with LMG ideally placed to fill the supply gap
• 100% of LMG’s Stage 2 commercial plant magnesium metal production is already allocated to the US market under an offtake agreement

Special Report: Latrobe Magnesium has secured a letter of interest from the US Export-Import Bank (EXIM) stating it would be prepared to finance up to US$122 million (A$200m) for the company’s Stage 2 commercial plant in the Latrobe Valley.

The show of support positions Latrobe Magnesium (ASX:LGM) as a key link in the western supply chain for a critical mineral facing surging demand but whose output is dominated by China.

The US no longer has any domestic primary magnesium metal producers and Latrobe is a leading candidate to supply this vital metal into that key market.

Magnesium has the best strength-to-weight ratio of all common structural metals and is increasingly used to lighten alloys used in cars, planes and drones. It’s also used in a wide-ranging list of other products from defence hardware to cans, clean energy and electronics.

The global magnesium metal market is expected to grow from US$5.4 billion in 2024 to around US$10.7 billion by 2034 – a CAGR of 7.1 per cent, according to Market.us analysis.

Special consideration

The LoI comes as the Albanese-Trump meeting underscored the strategic importance of critical minerals cooperation between Australia and the US.

It signals that EXIM stands ready to move to a full financing application, with a repayment term of up to 15 years, subject to its standard due diligence.

EXIM’s support is likely to qualify for special consideration under a mandate directing the bank to counter the impact of Chinese export finance, while advancing US industrial and technological leadership.

LMG’s managing director David Paterson said he was grateful for EXIM’s support of LMG’s project and the company’s ability to supply magnesium to the US.

“The US does not currently have a local primary magnesium producer and LMG is ideally situated to fill this gap in the short and medium term,” he said.

He also thanked the Australian Government and its Washington Embassy for its assistance during the recent Critical Minerals Delegation.

Runway for major build

LMG says it will appoint global engineering firm Bechtel to lead the bankable feasibility study for the Stage 2 commercial operation. The 10,000tpa magnesium plant is expected to cost $250m, comprising $200m in debt and $50m in equity.

Talks are underway with other major funders including the National Reconstruction Fund, Export Finance Australia and Societe Generale.

LMG completed a $6m placement in October, primarily to fund the installation and commissioning of the magnesium section of its demonstration plant. This is being complemented by a $4m fully underwritten rights issue, closing on November 4.

All magnesium from LMG’s Stage 2 commercial plant is already contracted for sale into the US market. Under an offtake agreement it will be distributed by Metal Exchange Corporation of St Louis.

The Missouri city has a strong US Air Force presence and aerospace industry and this link highlights Latrobe’s emerging role in strengthening allied supply chains.

The process

LMG’s patented process extracts primarily magnesium metal from industrial ash waste produced by brown coal power generation in Victoria’s Latrobe Valley.

The demonstration plant has already produced magnesium oxide, with full commissioning expected in Q1 2026.

A Stage 2 commercial plant is targeted for completion in the second half of 2027, while an even larger 100,000tpa “mega plant” is being advanced in Sarawak, Malaysia through subsidiary Latrobe Magnesium Sarawak Sdn Bhd.

By converting waste into valuable metals while emitting significantly less CO2 than conventional smelting, LMG’s projects are on the front foot with ESG best-practice as well as getting set to meet urgent market demand.

This article was developed in collaboration with Latrobe Magnesium, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.