Latrobe Magnesium Ltd. secured a 10-year ash supply for its initial 3,000-tonne-per-annum magnesium plant from EnergyAustralia Yallourn Pty. Ltd., Latrobe said Oct. 24

The agreement also has provisions for increasing supply as the company expands its plant to the planned capacity of 40,000 tonnes per annum.

The ash supplied to Latrobe's initial plant represents about 12% of Yallourn's current annual production.

Latrobe said it has also identified other sources of feedstock for the plant in case the power station is closed earlier.

The initial 3,000-tpa plant is estimated to generate EBITDA of up to A$5.6 million per annum when it is operating at nameplate capacity.

A feasibility study for the plant estimated capital costs at A$54 million, and the company said it will need a further A$2 million for working capital.

Long-lead-time items and major construction will start after funding is completed and a final investment decision is made in February 2020, Latrobe said.