Latrobe Magnesium successfully commissioned its Demonstration Plant producing magnesium oxide and secured $10 million in funding, while receiving a $200 million financing interest from the U.S. Export Import Bank for its next-stage commercial plant.
- Demonstration Plant commissioned, producing magnesium oxide
- $6M placement and $4M underwritten rights issue secured
- U.S. Export Import Bank issues $200M Letter of Interest for Stage 2 plant
- Legal clearance obtained for ferro-nickel import into Malaysia
- Operational pause due to fan coating failure, repairs underway
Demonstration Plant Milestone
Latrobe Magnesium Limited (ASX – LMG) marked a significant step forward in its commercial journey during the September quarter by successfully commissioning its world-first Demonstration Plant at Hazelwood North, Victoria. The plant produced magnesium oxide (MgO) from brown coal ash, validating the company’s proprietary extraction process and confirming the operability of all key process units. This achievement follows the reissuance of the Environment Protection Authority Victoria’s Pilot Project Licence, which confirmed compliance and operational readiness.
Despite initial supply challenges caused by severe weather and variable ash quality, the operations team adapted screening and drying protocols to maintain feedstock consistency. Over 200 tonnes of screened ash were processed, and approximately seven tonnes of MgO have been produced and stockpiled onsite, with quality assurance testing underway to meet industrial-grade specifications. The plant also generated by-products such as char/silica, iron oxide, and agricultural lime, which are being prepared for validation trials with potential customers.
Operational Challenges and Maintenance
Operations were temporarily paused late in the quarter to address a coating delamination issue on the Spray Roaster’s gas transport fan impeller and casing. Investigations attributed the failure to manufacturing and coating adhesion problems rather than process chemistry. Latrobe Magnesium has engaged multiple specialists to expedite repairs, which are expected to be completed shortly, allowing the plant to resume operations and reach steady-state production before month-end. The downtime is also being used to implement preventive maintenance strategies, refine operating procedures, and enhance operator training.
Funding and Expansion Plans
Financially, Latrobe Magnesium secured a $6 million placement and is progressing a fully underwritten $4 million rights issue to fund the construction and commissioning of Phase 1B of the Demonstration Plant, focusing on magnesium metal production. Notably, the company received a non-binding Letter of Interest from the U.S. Export Import Bank for up to USD $122 million (AUD $200 million) financing over 15 years to support its Stage 2 Commercial Plant, planned to produce 10,000 tonnes of magnesium metal annually. This financing interest aligns with the company’s submission to the U.S. Department of Defense under the Defense Production Act, highlighting magnesium’s critical mineral status in the U.S. and the involvement of Bechtel Australia Pty Ltd in engineering scope.
International Operations and Legal Developments
On the international front, Latrobe Magnesium’s subsidiary in Sarawak, Malaysia, received formal legal confirmation permitting unrestricted importation of ferro-nickel feedstock, a critical input for its planned mega plant producing 100,000 tonnes per annum. Preparations for site surveys are scheduled for early 2026 to support feasibility studies. Meanwhile, the company is engaged in legal proceedings against Mincore Pty Ltd over a $19.39 million counterclaim related to contract breaches and negligence, with mediation ongoing and further evidence phases planned.
Financial Position and Outlook
As of 30 September 2025, Latrobe Magnesium held $323,000 in cash, with liquidity improving post-quarter due to the recent capital raising. The company also anticipates receiving a $6.3 million R&D tax rebate and proceeds from the sale of surplus land, which will be applied to reduce liabilities. With ongoing government funding applications and strategic partnerships, Latrobe Magnesium is positioning itself to advance from demonstration to commercial-scale magnesium production, targeting steady-state operations and long-term offtake agreements.
Bottom Line?
Latrobe Magnesium’s operational progress and substantial financing interest set the stage for its transition to commercial magnesium production, though execution risks remain.
Questions in the middle?
- Will the U.S. Export Import Bank financing proceed beyond the non-binding Letter of Interest?
- How quickly can the Demonstration Plant achieve steady-state magnesium metal production post-repairs?
- What impact will the ongoing legal proceedings have on Latrobe Magnesium’s financial and operational plans?