I took your Transient Structural model and cut the geometry into a quarter model and put symmetry boundary conditions on the two cut planes. I changed the bottom solid to a surface and made that a rigid body instead. I also meshed the solids with Linear elements to reduce the computation time. I simulated 5 ms of time.

I applied my EPS20 multilinear isotropic hardening plasticity model (which is significantly different to yours) to the block.  The magnesium block has an initial velocity of -4.34 m/s. Here is the displacement, velocity and kinetic energy graphs of the magnesium block.

Note that the Mg block has returned to the initial zero position at 4.3 ms

Note that the Mg block lost most of its velocity due to the plastic work it did on the EPS20 block. Its upward velocity is only 2.77 m/s but it started with an initial downward velocity of 4.34. Convert these velocities with the mass of the Mg block and plot the kinetic energy of the Mg block. Note that the Mg block started at 11.34 J and ended at 4.33 J so the EPS20 block absorbed 62% of the energy.

These results show that the plasticity material model can dissipate energy in a Transient Structural model. The model you provided is dominated by compressive stress. The maximum value of the Maximum Principal Stress is practically zero and limited to a few elements on the edge. There are no significant tensile loads.

The Capped Isosurface shows the few elements that have gone into tension. All the other elements are in compression.