Latrobe Magnesium (ASX:LMG) has unveiled plans for a 50,000-tonne-per-annum primary magnesium plant in South Carolina, and the market reaction was immediate.
Shares surged around 60% on huge volume in early trade as investors digested a US growth plan backed by customer interest, committed feedstock and state support.
The proposal would target North America’s strategic magnesium supply gap, with capacity to eventually expand to 100ktpa.
America wants magnesium
The strategic backdrop is hard to ignore.
North America currently has no operating commercial-scale primary magnesium producer, while China accounts for around 90% of global primary supply.
The US also classifies magnesium among its highest-supply-risk critical minerals, with demand spanning defence, aerospace, automotive and aluminium markets.
That gives LMG a much bigger macro story than simply building another plant.
It is positioning itself directly inside America’s push for domestic critical-mineral supply.
Customers are already circling
LMG has received non-binding Letters of Intent covering 32ktpa, equivalent to around 64% of the proposed first-stage capacity.
That includes 25ktpa from Metal Exchange, 5ktpa from Meridian Lightweight Technologies and 2ktpa from Twin City Die Castings.
North American customer enquiries have reached as much as 110ktpa, while global enquiries total 285ktpa.
For a proposed 50ktpa plant, that is plenty of demand signalling.
Feedstock is already covered
LMG also has one of the harder pieces of the puzzle lined up.
Its binding 20-year MOU with Société Le Nickel is designed to cover the entire feedstock requirement for the US plant using ferronickel slag.
That supply is underpinned by an estimated 28Mt existing slag stockpile.
The economics are ambitious too.
The preliminary assessment points to US$1.1-1.5B in capital costs, potential EBITDA of US$320-615M a year and an indicative NPV10 of US$1.4-2.7B under the company’s stated assumptions.
The market did not wait
A 60% move on heavy volume tells you one thing.
Investors immediately understood the size of the swing.
But this is still an early-stage development proposal.
LMG needs to secure the site, complete funding arrangements, progress feasibility work and convert non-binding customer interest into binding offtake.
What comes next
The company is targeting completion of the South Carolina site acquisition, final logistics and utilities agreements, additional funding and commencement of a Feasibility Study.
It will also look to turn those customer LOIs into binding contracts.
The market has already voted on the ambition, now Latrobe Magnesium has to prove it can build the plant.
