Australia's Latrobe Magnesium said Wednesday it has signed an exclusive distribution agreement with US-based Metal Exchange Corporation to sell magnesium in North, Central and South America and the Caribbean.
The supply will come from Latrobe's planned production facility in the Latrobe Valley in the southeastern state of Victoria, which is designed to process industrial fly ash from brown coal power generation into magnesium, the company said Wednesday in a filing to the Australian Securities Exchange.
The agreement follows a memorandum of understanding signed in June 2016 in which Metal Exchange committed to offtake at least 2,000 mt/year of Latrobe Valley magnesium for sale in the US and the Caribbean.
North and Central America consume 160,000 mt/year of magnesium, Latrobe said, and this was expected to rise with the greater use of the light metal in the motor vehicle industry. With only one magnesium producer in North and Central America, most of this demand was met by imports from China, it noted.
The US antidumping duty payable on imported Chinese magnesium means the magnesium price in the US is around $3,308/mt, more than $1,100/mt higher than the current FOB China magnesium price of $2,185/mt, Latrobe said.
However, under a US-Australia trade agreement, magnesium produced in Australia is exempt from this import duty, the company noted.
Latrobe is preparing to build a plant with an initial production capacity of 3,000 mt/year of magnesium, with plans to expand to 40,000 mt/year.
It expects to begin plant development in September, with first magnesium production due 12 months later.
Latrobe is targeting its future magnesium production at both domestic and overseas markets. The company has also lined up Japan's Advanced Material Corporation to offtake up to 4,000 mt/year of the Latrobe Valley magnesium under a memorandum of understanding inked in March 2016.
Australia currently imports all of the 8,000 mt/year of magnesium it consumes, Latrobe noted.
