Magnesium hopeful targets NAIF cash

The company behind a magnesium project proposed for the state’s north is seeking government support

The proponents of a Pilbara magnesium project are hoping to secure a $95 million loan from the Northern Australian Infrastructure Fund, which would equal the largest-ever allocation to a development in Western Australia.

Ecomag is planning to invest $150 million to process wastewater from salt production ponds near Dampier into magnesium for export markets.

The Sydney-based business is working on a number of options to finance the project, including debt providers from Europe and a possible initial public offering later this year, according to Ecomag chief executive Tony Crimmins.

But a NAIF loan appears a good option, Mr Crimmins said, because it was over a long term at a low rate.

The company hopes to organise a deal by September, with work to get under way soon after.

An early step was made in 2018 when a strategic assessment of the project was ticked off by NAIF, and the parties went into due diligence.

This year, management consultants Lycopodium completed the project’s bankable feasibility study, while Ecomag received its public cost benefit analysis from Deloitte in late June.

To receive NAIF funding, a project must deliver a public benefit and involve construction or material enhancement of Northern Australian infrastructure.

Deloitte’s analysis found a $163 million public benefit from the project, $155 million of which was through tax and royalties, which are not generally counted as positive externalities.

About $8 million of benefit was generated by conventional externalities such as environmental benefit and co-use infrastructure.

The public cost was $13.9 million, mostly from carbon emissions.

Only 10 projects have so far secured funding through NAIF, which was created in 2015 with a plan to allocated $5 billion to infrastructure in the northern parts of Australia.

Those approvals add up to $628 million.

WA developments to get support included the Onslow Marine Support Base ($16.8 million), Pippingarra Road upgrade ($19.5 million), Sheffield Resources’ Thunderbird mineral sands mine ($95 million) and Kalium Lakes’ Beyondie potash ($74 million).

A further project has been offered a loan of $90 million but is still commercial in confidence.

Waste stream
The price for magnesium, which is used for vitamin supplements, in electronics, and as an alloy for steelmaking, among other industries, starts at $1,250 per tonne, Mr Crimmins said.

He said Ecomag already had a business producing magnesium in small amounts from a commercial plant in Sydney, a test plant in Karratha and with Korean Chemicals in South Korea.

Korean Chemicals is a 50 per cent offtake partner for the project, with Ecomag close to a deal with another buyer.

The company has also secured a 21-year site lease and a mining licence, with further approval work including with the Environmental Protection Authority under way.

Mr Crimmins said securing environmental approval should not be complicated because the project was treating a waste product from the salt evaporation ponds run by businesses such as Dampier Salt.

“It sits just off where the waste stream goes into the ocean … that waste stream is actually a pretty heavy environmental pollutant,” he said.

“We take that magnesium, dilute it and turn it into (a substance) similar to seawater.”

A deal with Dampier Salt is yet to be finalised.