Latrobe Magnesium (LMG) has secured a non-dilutive prepayment from its US distribution partner Metal Exchange LLC (MX), strengthening its pathway to first magnesium metal production in Victoria’s Latrobe Valley.
MX has provided a $US2 million (approximately $2.82 million) prepayment for future shipments of magnesium metal from LMG’s Stage 1 demonstration plant. The funds will support delivery of the company’s Phase 1B project, which involves installing and commissioning equipment to complete the pyrometallurgical (metal reduction) component of the facility.
The prepayment will be recovered by MX through a margin-sharing arrangement on magnesium sales, with LMG maintaining cash-positive sales during the recovery period.
Phase 1B commenced on March 23 2026, with first magnesium metal deliveries under the LMG–MX offtake agreement targeted for the second half of calendar year 2026.
LMG chief executive officer David Paterson said the prepayment highlighted confidence in the company’s strategy and its progress towards production.
“MX’s prepayment is a strong endorsement of our strategy and our progress towards first magnesium metal production,” Paterson said.
“It reflects both the strength of our relationship and the growing demand in the United States for reliable, Western-aligned magnesium supply.”
Under existing arrangements, LMG and MX have agreed a structured pricing framework, including a floor price mechanism designed to provide downside protection and greater revenue certainty as the company enters production. The framework will be temporarily adjusted to facilitate repayment of the prepayment before reverting to original terms.
All production from LMG’s Stage 1 demonstration plant (1,000 tonnes per annum) and planned Stage 2 commercial plant (10,000tpa) has been allocated to the US market.
The US currently has no domestic primary magnesium production and remains heavily reliant on imports, with around 90 per cent of global supply originating from China and a further 6 per cent from Russia.
This supply imbalance is expected to underpin demand for alternative sources, with LMG positioning itself as a Western-aligned supplier. Magnesium produced in Australia is also not subject to US import tariffs, supporting its competitiveness.
Metal Exchange president Trevor Hansen said the partnership reflects a shared focus on supply chain resilience.
“Our partnership with Latrobe Magnesium reflects a commitment to strengthening supply chain resilience and bringing new production into the US market,” Hansen said.
Read more: Local to global: Latrobe Magnesium’s critical journey
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