Genmin locks in long-term power agreement for Baniaka iron ore development
The 20-year deal enables Genmin to build, own and operate an overhead power line to its Baniaka project in Gabon.
Iron ore explorer and developer Genmin (ASX: GEN) has signed a long-term purchase agreement with a state-owned power utility in Gabon for the supply of renewable hydroelectricity to its wholly-owned Baniaka project in central Africa.
The 20-year agreement with Société de Patrimoine du Service Public de l’Eau Potable, de l’Énergie Électrique et de l’Assainissement (or SdP) will provide power to the project from the Grand Poubara station along the Ogooué River, approximately 35km north-east of Baniaka.
Under the terms of the agreement, Genmin will build, own and operate an overhead transmission line from Grand Poubara to Baniaka, ensuring a dedicated supply of renewable electricity during the life of mine.
Pricing under the agreement has been set at less than $0.14 per kilowatt hour and reflects the generally lower cost of hydroelectricity generation compared to conventional power.
The new agreement follows a deal with SdP in April for the supply of 30 megawatts, which is expected to satisfy Baniaka’s initial electricity requirements and will negate the need to fund, construct and maintain an onsite power station.
Supply can be increased to 50MW to accommodate future project expansions.
Project economics
Genmin managing director Joe Ariti said powering Baniaka with clean, renewable hydroelectricity will positively impact project economics.
“This long-term agreement completes another important project development milestone as we target first iron ore production in mid-2024,” he said.
“It also satisfies one of our key ESG (environmental social and governance) objectives of delivering high value, greener iron ore products to global markets.”
Initial supply term
The initial supply term under the new agreement will not commence until certain conditions have been satisfied including the receipt of financing and permitting approvals relating to the development of Baniaka and operation of the overhead transmission line.
Genmin will supply and install a step-down transformer at the Grand Poubara transmission yard, and construct, own and maintain the line between Grand Poubara and Baniaka, taking control of the build-time to guarantee a dedicated electricity supply.
Reserved capacity may be increased from 30MW to 50MW after the sixth year of the agreement and will be subject to an expansion of Baniaka and water flow capacities at Grand Poubara.
Standard termination rights exist, including the right for either party to exit in the event of extended force majeure and the right for SdP to exit in the event that Genmin fails to pay any invoices.