Australia's  Latrobe  Magnesium  said  Wednesday  it  has  signed an exclusive distribution 

agreement with US-based Metal Exchange Corporation to sell magnesium in North, Central 

and South America and the Caribbean. 

The supply  will come from Latrobe's planned production facility in the Latrobe Valley in the 

southeastern state of Victoria, which is designed to process industrial fly ash from brown co

al  power  generation  into  magnesium, the  company  said  Wednesday  in  a  filing  to  the 

Australian Securities Exchange. 

The agreement follows a memorandum of understanding signed in June 2016 in which Meta

l Exchange committed to offtake at least 2,000 mt/year of Latrobe Valley magnesium for sal

e in the US and the Caribbean. 

North and Central America consume 160,000 mt/year of magnesium, Latrobe said, and this 

was expected to rise with the greater use of the light metal in the motor vehicle industry. Wi

th only one magnesium producer in North and Central America, most of this demand was m

et by imports from China, it noted. 

The US antidumping duty payable on imported Chinese magnesium means the magnesium 

price in the US is around $3,308/mt, more than $1,100/mt higher than the current FOB Chi

na magnesium price of $2,185/mt, Latrobe said. 

However, under a US-Australia trade agreement, magnesium produced in Australia is exem

pt from this import duty, the company noted. 

Latrobe  is  preparing to build a plant with an initial production capacity of 3,000 mt/year of 

magnesium, with plans to expand to 40,000 mt/year. 

It expects to begin plant development in September, with first magnesium production due 1

2 months later. 

Latrobe is targeting its future magnesium production at both domestic and overseas marke

ts. The company has also lined up Japan's Advanced Material Corporation to offtake up to 

4,000 mt/year of the Latrobe Valley magnesium under a memorandum of understanding in

ked in March 2016. 

Australia currently imports all of the 8,000 mt/year of magnesium it consumes, Latrobe not

ed.