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- Latrobe Magnesium has signed a 10 year agreement with EnergyAustralia Yallourn for ash supply to its magnesium plant
- The agreement still requires certain approvals and conditions
- The company also plans to expand its plant to a 40,000 tonne per annum
- On market close, Latrobe is up 6.67 per cent and is selling shares for 1.6 cents apiece
Latrobe Magnesium has signed an agreement with EnergyAustralia Yallourn to secure ash supply to its magnesium plant.
However, the 10 year agreement still requires certain approvals and conditions.
The company deals with the issues relating to Yallour increasing its supply of ash to the company’s 40,000 tonnes per annum planned expanded magnesium plant.
Latrobe says that there is still a number of conditions that need to be addressed before this expansion can occur. The ash supplied to Latrobe’s initial plant represents 12 per cent of Yallourn’s current annual production.
Latrobe has identified other sources of feed stock for its 40,000 tonnes per annum plant should the power station be closed earlier for any reason.
The 3000 tonnes per annum magnesium plant is estimated to generate earnings before interest, tax, depreciation and amortisation of up to $5.6 million per annum when it is operating at its nameplate capacity.
Latrobe’s initial plant is estimated to employ up to 54 on-going direct employees and contractors and create 50 to 75 construction jobs.
The feasibility study estimated a capital cost of $54 million. This estimate includes design, growth and contingencies of $6 million.
The company has estimated that it will require a further $2 million for working capital. Therefore, the total funding required will be $56 million.
“Long lead time items and the major construction will commence after the funding is completed and a final investment decision is made in February 2020,” the company told the market.
Latrobe Magnesium is developing a magnesium production plant in Victoria’s Latrobe Valley using its world-first patented extraction process. It intends to extract and sell magnesium metal and cementitious material from industrial ash, which is currently a waste stream from brown coal power generation.
Its project is environmentally friendly as it recycles power plant waste that is heading to landfill and is a low CO2 emitter.
Production from its magnesium plant is due to start in 2021. The plant is located in the heart of Victoria’s coal power generation precinct, proving access to feedstock.
The company plans to sell refined magnesium under long-term contracts to Australian and overseas users.
Magnesium is used in the manufacture of car parts, laptop computers, mobile phones, and power tools.
In December, Latrobe will organise a community briefing to outline the project to all stakeholders in the Latrobe Valley, so that they have the opportunity to be fully informed and understand the benefits of the project.
On market close, Latrobe is up 6.67 per cent and is selling shares for 1.6¢ apiece.
