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Date : 17/08/2022

Magnesium demand could double in upcoming years, and these 3 ASX-listed Magnesium Stocks are poised to soar

Magnesium has the best strength-to-weight ratio of any conventional structural metal. It is 75% lighter than steel and 33% lighter than aluminium.

It has key uses in industries such as the automotive industry, steelmaking making as a desulphurising agent, titanium sponge production, and aluminium alloying.

China is the leading producer globally, producing over 85% of the world’s supply, which is 1 million tonnes annually. Last year, low-cost Chinese producers slashed their output by 50%, and as a result, the magnesium supply chain was disrupted and caused a spike in magnesium prices.

Where is driving growth in Magnesium?

Experts say magnesium has a high chance of growth in the automotive sector. The automobile producers are in search of producing more eco-friendly cars and vehicles. In the previous four years, these automobile manufacturers used aluminium sheets that contained more or less 6% of Mg to make lighter and more carbon dioxide-efficient vehicles.

China, the world’s largest automaker, aims to raise Mg in automobiles from 8.6kg in 2017 to 45kg in 2030. One million metric tonnes of additional annual demand will result from this.

It is expected this demand will double in the next 8 years. This forecast may be bullish, but one can’t ignore the fact that the automobile industry is currently under tremendous pressure to lower the weight of vehicles. To break China’s monopoly in magnesium, the development of new magnesium projects is rising globally.

Here are the top 3 ASX-Listed Magnesium stocks that sparked the interest of investors:

  1. Latrobe Magnesium Limited (ASX: LMG)
  2. Korab Resources Limited (ASX: KOR)
  3. Magontec Limited (ASX: MGL)

Latrobe Magnesium Limited (ASX: LMG)

Latrobe Magnesium Limited (ASX: LMG) is an ASX-listed resource company developing the world’s first magnesium extraction production. The company was founded in 1986 and is headquartered in New South Wales, Australia.

For over 20 years, Latrobe has perfected its low-cost, low-emissions system for processing fly ash from the Yallourn coal mines in the Latrobe Valley into magnesium and other industrial goods.

The business is constructing a 1,000tpa demonstration facility to put the concept to the test in 2022-23. With the successful operation of the demonstration plant, a commercial facility with a capacity of 10,000tpa will be created, projecting revenues of around $110m and an EBITDA of $42m annually.

Over the following years, LMG hopes to increase output to 100,000 tpa, or around 10% of the world’s current total.

LMG shares are trading at $0.091 apiece and have gained more than 355% in the previous year. The current market cap of the company is approximately 143.31 Million AUD.

Latrobe Magnesium Limited

Korab Resources Limited (ASX: KOR)

Korab Resources Limited (ASX: KOR) is an ASX-listed company engaged in diversified battery and precious metals mining and exploration. This Australian resource company was founded in Australia.

Korab has taken swift action to capitalise on rising stock prices. Since its Winchester magnesium mine in the Northern Territory was becoming more lucrative, the company decided to shelve plans to sell the property in November.

Two automakers (Fiat and Daimler) approached the company interested in creating “Winchester.”

An informal agreement between KOR and Speira (which is a world leader in producing high-tech aluminium and magnesium rolls) was signed in May of 2022.

KOR shares currently trade at $0.035 apiece and have gained more than 75% in the previous year. The current market cap of the company is approximately $10.71 million.

korab resources limited asx

Magontec Limited (ASX: MGL)

Magontec Limited (ASX: MGL) is an ASX-listed resource company engaged in the research, development, and manufacture of generic and special magnesium alloys. The company was founded in 1953 and is headquartered in NSW, Australia.

MGL’s main mag alloy factory is in China, and it also operates a recycling facility for magnesium scrap and an anode manufacturing facility. A significant turning point for the business might come from the primary alloy facility, which is now under care and maintenance.

For the first half of 2022, MGL’s NPAT of $13m knocked the socks off of everyone. Magontec Limited states it has no net debt as of June 30, 2022, thanks to its first-half FY2022 record performance and a solid financial foundation.

MGL shares currently trade at $0.40 apiece and have gained more than 48% in the previous year. The current market cap of the company is approximately $30.69 million.

Magontec Limited ASX

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