A bit of general information and some conjecture, for those interested.
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Australia imports between $7,000tpa to 8,000tpa of magnesium alloy. At the current (Jul 12, 2022) $/tonne of AU $5,500/tonne
(Ex-works) has a value of around $40 million Australian.
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'Ex-works' is the cost of the product/commodity at the plant or depot of the supplier. When reading prices for commodities such as the link above, the prices are Ex works, not loading, shipping and delivery.
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The other two main export pricing systems are:
FOB (Free on board), is more expensive and where the supplier charges include delivery to port and loading on the ship, including clearance. FOB is convenient is very common.
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CIF (Cost Insurance Freight) and CFR (Cost Freight) are very similar except CIF includes the cost of insurance and CFR does not. For CIF and CFR freight, the supplier pays all of the costs to get the shipment from their destination to the desired port in the destination country. The puchaser will still pay for any import fees and overland transportation to site.
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CIF/CFR are the most expensive pricing system and often larger companies I have been associated with will only buy FOB. If leaving shipping, insurance, quarantine, custom clearance, etc to the supplier, it is a ripe opportunity for price stacking and errors.
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For regular importers it is more cost effective to organise their own import/freight forwarder to manage the process. Fob is easier as dealing with local transport and clearance with the Chinese without a very good interpreter is a nightmare.
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In addition then, if to be delivered out of the Metro region to the distributor/dealer, depending upon distance transport can be $1000 to $3000 for a flatbed.
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My consideration is for the obvious cost advantage that should draw Australian magnesium users to buy local from LMG.
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The above figures are important for the first 1000tpa plant of LMG due for commission 2nd quarter next year and then the expansion to 10,000tpa + plant soon after. Of course not taking into account demand and price are forecast to increase.
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For the local market LMG are in the hot seat of opportunity.
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A few times I have mentioned the other Australian Magnesium (Magnium) that is competing for a very similar market space as LMG.
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I believe it wise to look for other potential competition and to assess their technicals, timing and target market. The opportunity to seize the local market is definitely in the scope of LMG based upon their technicals, timing and target. (Sorry, I love alliteration)
It would be nice though if LMG could kick a gear on gaining proportional Government support.
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Article below for comparison.
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MAGNIUM RAISES $3.24 MILLION TO PROGRESS GREEN MAGNESIUM TECHNOLOGY
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Magnium Australia has raised $3.24 million as it continues to scale up its CSIRO-developed technology for carbon neutral processing of the lightweight metal magnesium.
The Australian Financial Review’s Street Talk column reports that the raise will support a new plant to prove Magnium’s process can run continuously, with completion planned for December.
According to Magnum’s website, its carbothermal reduction technology is able to produce magnesium ingots, using renewable energy, of 99.8 per cent purity, and it plans to initially make 100 tonnes per annum. This would amount to half of Australia’s annual use of the metal, with almost all of this currently imported from China.
(Someone didn't do their homework, Australia imports 7000 to 8000tpa !).
The process has been under development by the CSIRO since 2003, and came about via a breakthrough in rocket science, “which enabled unprecedented efficiency and low emissions for the production of magnesium through a carbothermic reduction – when carbon is using carbon as a reducing agent in metal oxides,” its website explains.
“Rocket nozzles ensure supersonic shock quenching of magnesium vapour. The application of carbothermal reduction of magnesium combines proven technology with a novel application.”
According to The AFR, Magnum’s pitch to investors involved a future scenario where Australia made 50 per cent of the world’s magnesium, an opportunity worth somewhere between $253 billion to $297 billion based on today’s prices.
A pre-feasibility study for a green magnesium plant by the company at Collie, Western Australia was completed earlier this year.
Funding of “up to $2 million” was announced last month by the WA government for “a further feasibility study into the provision of magnesium hydroxide as a byproduct of desalination” at Collie, and “conducted by Water Corporation in partnership with the South West Development Commission and the state Department of Jobs, Tourism, Science and Innovation.”
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Ends. ...
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From the Magnium website
"Magnium anticipates the production of 100+ tonnes a year of critical minerals from the company’s global operations by 2032."
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LMG have the bull by the horns in comparison imo, so why the disparity in Government Support? WA McGowan v VIC Andrews, say no more haha.
Regards
Ken
