Genmin confirms market pricing for fines and lump product from Baniaka iron ore project

African iron ore explorer and developer Genmin (ASX: GEN) has confirmed that fines product from its wholly-owned Baniaka project in the Republic of Gabon could attract a 17% price premium while lump could be fixed at market prices.

The figures come from value-in-use (VIU) price modelling completed by China’s Central South University (CSU), which is a globally-recognised institution providing insights to Chinese steel mills regarding the VIU of new products entering the market.

The university has provided similar services to major iron ore producers including Fortescue Metals Group (ASX: FMG), Vale, BHP Group (ASX: BHP) and Rio Tinto (ASX: RIO).

VIU work typically follows a process of grade and chemical characterisation, physical testing for strength, and evaluation of metallurgical performance in iron making (lump and fines).

Once the physical characterisation has been determined, an estimate of an expected pricing premium or discount is calculated.

CSU considered the quality of Baniaka’s iron ore and the cost of smelting to estimate the value impact which was then benchmarked to an existing product in the market.

Base price reference

Rio Tinto’s Pilbara Blend fines (PBF) and Pilbara Blend lump (PBL) were selected as the base price reference for CSU’s work, with adjustments for Baniaka fines and lump value impact.

Baniaka fines achieved a 17.4% uplift to benchmarked pricing resulting from what was reported to be superior VIU qualities.

CSU believes the fines could attract a price of $212.57 per dry metric tonne.

For Baniaka lump, CSU applied a premium for chemistry and metallurgical performance and a 7.5% discount relative to PBL, as Baniaka lump has lesser strength qualities.

This resulted in a final price which was approximately the same as PBL at $211.44 per dry metric tonne.

Genmin said mine planning will be refined to remove the proposed discount.

Pleased with the outcomes

Genmin managing director and chief executive officer Joe Ariti was pleased with the outcomes of CSU’s value-in-use work program.

“CSU has independently verified the quality and iron making characteristics of proposed Baniaka fines and lump products has estimated the expected pricing for our iron ore products,” he said.

“Our fines production is expected to be in the order of 60% of total product from Baniaka, and a premium of 17% will boost the revenue line of our project.”

He said the value impacts will inform the financial model for Baniaka’s preliminary feasibility study, which is currently in progress.