Magnesium plant plans evolve

LONG-held plans by a Sydney-based company to build a magnesium plant in the Latrobe Valley continue to evolve, though production would not commence until mid-2015, according to project proponents.

Late last month news organisation Proactive Investors reported Chinese company Beijing Tieforce Engineering had conducted recent site visits in the Latrobe Valley, at the behest of Latrobe Magnesium, to assess its suitability for accommodating an initial LM-run 5000 tonne plant, and future 40,000 tonne plant expansion.

LM chairman David Paterson told The Express BTE had concluded all three sites were suitable and that LM should be able to apply for an export incentive debt facility from a Chinese bank to help bankroll the plant.

BTE is understood to be the only company in the past 15 years to have built a magnesium smelter in the western world and Mr Paterson confirmed reports LM had signed a follow-up agreement with the company to help progress plans for a Latrobe Valley plant.

Mr Paterson said he was reluctant to reveal where the proposed local brownfield sites were, given negotiations were still underway, and he hoped they would be finalised shortly.

He said, however, the proposal was no longer reliant on co-location with a power generator.

He explained the proposal entailed converting brown coal fly ash to magnesium, cement material and char.

Mr Paterson said LM hoped to secure Federal Government backing for about 50 per cent of the estimated $45 million it would cost to build an initial plant, given the technology satisfied “green” criteria, in addition to further Chinese investment dollars.

A remaining sum would need to be raised through equity or deposits against forward selling magnesium contracts, he added.

Mr Paterson said the proposed hydromet technology-based process of extracting magnesium from brown coal ash was now proven and a pre-feasibility study into the proposal was completed last October.

When asked why it had taken LM so long to put its plans into action, despite being listed on the Australian Stock Exchange 10 years ago and locals had been hearing about the potential for a local magnesium plant ever since, Mr Paterson said LM had “a breakthrough” with its technology two and half years ago which indicated it was now commercially realistic.

“This is a really feasible proposition and we have not hit any road blocks so we are moving forward,” he said.

Magnesium is used for steel desulphurisation, alloy in aluminium cans and for motor car parts and its global use has grown at a rate of about six to seven per cent, Mr Paterson said.

Currently most of the metal is sourced from China.

Existing infrastructure and personnel required for a magnesium plant was already in the Latrobe Valley while local and overseas markets were both accessible, according to Mr Paterson.

He said initial production from the Valley could meet Australia’s demand of about 10,000 tonnes per annum but longer term LM hoped to export to Europe and the United States.

Timelines outlined for the project include finalising agreements for flyash and land this month, completing a bankable feasibility study by November 2013, starting installation by September 2014, production of a 5000 tonne plant by July 2015 and expanding to 40,000 tonne capacity by December 2016.