Latrobe Magnesium – Extracting magnesium from Australia's brown coal waste

Company Profile

Company: Latrobe Magnesium Limited

Sector: Mineral processing

Location: Latrobe Valley

Profile: Latrobe Magnesium is establishing a magnesium production plant in Victoria's Latrobe Valley. Using a patented extraction process, the plant will get valuable metal from brown coal waste.

Why R&D is needed

The USA and many European countries are tightening their restrictions on vehicle emissions. This is creating a demand for fuel-efficient and environmentally sustainable cars. Cars made from aluminium are lighter and stronger than cars made from steel. Magnesium is an essential part of these aluminium alloys, and is an increasingly sought-after mineral world-wide.

Latrobe Magnesium CEO, David Paterson, said that China dominates the magnesium market. China produces more than 85% of the global magnesium supply. Through R&D, Latrobe Magnesium hopes to position Australia as an alternative magnesium supplier, especially to US and Japanese markets.

Latrobe Magnesium will get magnesium metal from fly ash, a waste product of brown coal power generation. The company has successfully completed pre-feasibility studies. It is now developing a pilot plant that will cost about $40 million.

Mr Paterson said that Latrobe Magnesium is the only company conducting this type of R&D. The company has patented its technology in all countries containing brown coal deposits. In the future, it could licence the intellectual property in markets across the globe, including the USA, Europe, China, India and Indonesia.

How the Research and Development Tax Incentive Helps

Latrobe Magnesium has been participating in the R&DTI since 2008. It gained access to the program through its tax accountant. This allowed the company to start testing its processes in Australia.

Mr Paterson said the R&DTI has helped get projects up and running. Being part of the program has lent the company credibility, which encouraged investors to come on board. He said that without the program, the company would not have been able to build its pilot plant.

“The R&D tax incentive has helped us achieve our objectives, otherwise we wouldn't have been able to get there,” Mr Paterson said.

Mr Paterson said that the R&DTI has not affected how much the company invests into its R&D yet has helped that money go further. For example, the company increased the number of engineers working on the project. The benefit of the R&DTI to the company’s cash flow has helped fund extra lab time at Curtin University, Monash University and the CSIRO.

Since accessing the R&DTI, Mr Paterson said Latrobe Magnesium has spent about $9 million on getting the project to where it is today.

Wider impacts of involvement in the R&DTI

The Latrobe Valley processing plant will employ around 300 people in the community. Related industries, such as rail infrastructure, will also benefit from the increased business. They will create new jobs in the Latrobe Valley.

The project is also a positive for the Latrobe Valley from an environmental perspective. Recycling the brown coal fly ash reduces the risk of soil contamination.

The R&DTI also benefits Latrobe Magnesium’s R&D partners. Latrobe Magnesium hopes to expand its operations in the future, creating even more benefits for the Australian economy.

R&DTI Impact Facts

• More opportunities for research partners, for example $9 million spent on the project to date
• Helps economic growth in the Latrobe Valley
• Plans to build a $40 million pilot plant that will employ approximately 50 people in the short term and 300 in the long term
• Benefits the rail infrastructure industry which will transport the finished product
• Recycles hazardous brown coal waste into a useable product
• Develops patented technology that can be licensed in overseas markets
• Helps Australia to break into the international magnesium market
• Makes Australia a world-leader in magnesium R&D