Latrobe Magnesium Ltd. has received a non-dilutive prepayment of US$2 million (AU$2.82 million) from Metal Exchange LLC (MX) for future shipments of magnesium metal from its demonstration plant in the Latrobe Valley, Victoria.
The prepayment provides a vital cash injection for Latrobe without the need to issue new shares.
The funds are earmarked for Phase 1B of Latrobe’s Hazelwood North project, which involves the installation and commissioning of the ‘pyromet’ (metal reduction) equipment required to produce magnesium metal.
This deal reinforces a long-standing relationship between the two firms that dates back to 2019. The prepayment reflects MX’s role as a long-term supply chain partner and its commitment to developing a more resilient, Western-aligned magnesium market.
Latrobe CEO David Peterson said: “MX’s prepayment is a strong endorsement of our strategy and our progress towards first magnesium metal production.
“It reflects both the strength of our relationship and the growing demand in the United States for reliable, Western-aligned magnesium supply.”
The deal comes amid a lack of US domestic magnesium production. The US relies on China for roughly 90 per cent of its supply.
Latrobe has already allocated 100 per cent of the magnesium metal from its 1,000-tonne-per-annum demonstration plant and its future 10,000-tonne-per-annum commercial plant to the US market.
Under the arrangement, MX will recover the prepayment through a margin-sharing structure on future sales. Latrobe confirmed that all sales will remain cash-positive during this recovery period, thanks to a structured pricing framework that includes a floor price to protect against market volatility.
The partnership also benefits from favourable trade conditions, with no US Customs tariffs currently applicable to magnesium produced in Australia.
Metal Exchange President Trevor Hansen said: “The US magnesium market has long been defined by structural supply constraints and heavy reliance on imports, creating ongoing risk for manufacturers.
“At the same time, demand continues to grow as industries push for lighter, more efficient materials.”
First magnesium deliveries under the offtake agreement are expected to commence in the second half of 2026, positioning the Latrobe Valley as a key player in the global critical minerals supply chain.
