Latrobe Magnesium Limited has received a non-binding Letter of Interest from the U.S. Export Import Bank to finance up to A$200 million for its Stage 2 Commercial Magnesium Plant, aiming to strengthen critical mineral supply chains for the U.S.
- EXIM issues non-binding Letter of Interest for US$122 million financing
- Stage 2 plant targets 10,000 tonnes per annum magnesium production by late 2027
- 100% of production allocated to U.S. market under long-term offtake agreement
- LMG progressing equity raises and feasibility study with Bechtel
- Project supports ESG goals by recycling industrial waste and reducing reliance on China
Strategic Financing Boost from EXIM
Latrobe Magnesium Limited (ASX – LMG) has taken a significant step forward in its ambition to become a key supplier of magnesium metal to the United States. The company announced that the U.S. Export Import Bank (EXIM) has issued a Letter of Interest (LOI) indicating readiness to finance up to US$122 million (approximately A$200 million) for LMG’s Stage 2 Commercial Magnesium Plant. This non-binding LOI signals strong U.S. government support for projects that enhance national security and supply chain resilience, particularly in critical minerals.
EXIM’s Chairman John Jovanovic emphasized the strategic importance of this partnership, highlighting the bank’s role in fostering collaboration between American industry and Australian mining initiatives. The financing aligns with broader U.S. policy goals to reduce dependency on China and Russia, which currently dominate global magnesium production.
Project Details and Market Focus
The Stage 2 Commercial Plant is designed to produce 10,000 tonnes of refined magnesium metal annually, with completion targeted for the second half of 2027. Notably, 100% of this production is already allocated to the U.S. market under a long-term offtake agreement, with distribution managed by Metal Exchange Corporation based in St Louis, Missouri.
Magnesium is a critical mineral used extensively in automotive, aerospace, and defense industries due to its exceptional strength-to-weight ratio. The metal’s applications range from aluminium alloys to munitions and drones, underscoring its strategic value. LMG’s project is positioned to fill a significant supply gap, as the U.S. currently lacks a domestic primary magnesium producer.
Advancing Feasibility and Funding
LMG is actively progressing its financing and development plans. The company recently completed a A$6 million placement and is conducting a fully underwritten rights issue to raise an additional A$4 million, primarily to support the commissioning of its demonstration plant. Furthermore, LMG has appointed engineering giant Bechtel to undertake a Bankable Feasibility Study for the Stage 2 plant, expected to take around nine months.
The total estimated capital expenditure for the Stage 2 plant stands at approximately A$250 million, with A$200 million expected from debt financing and A$50 million from equity. Discussions continue with strategic investors and institutions including the National Reconstruction Fund, Export Finance Australia, Societe Generale, and now EXIM.
Sustainability and Innovation at the Core
Beyond its commercial ambitions, LMG’s projects are notable for their environmental credentials. The company’s patented hydrometallurgical and thermal reduction process extracts magnesium from industrial ash, a waste product from brown coal power generation, thereby promoting a circular economy and reducing landfill. This low carbon footprint approach aligns with growing ESG expectations in the mining and metals sector.
LMG is also advancing plans for a much larger ‘Mega’ plant in Sarawak, Malaysia, which would produce 100,000 tonnes per annum, further underscoring its long-term growth strategy.
Bottom Line?
With EXIM’s backing and a clear U.S. market focus, LMG is poised to reshape the magnesium supply chain; but financing and execution risks remain ahead.
Questions in the middle?
- Will EXIM convert its Letter of Interest into a binding financing commitment?
- How will LMG manage potential cost overruns or delays in the Stage 2 plant construction?
- What impact will LMG’s U.S.-focused supply have on global magnesium market dynamics?