Genmin locks in 20 years of renewable power with Gabonese Republic for iron ore mine

Wed 01 Feb 23, 12:41pm (AEST)
Three giraffes ponder the photographer in a goldcoloured savannah in the foreground; in the background, Tanzania's Mount Kilimanjaro is visible underneath a blue sky
Source: iStock

Key Points

  • Genmin has ticked off an agreement to provide its Baniaka Iron Ore Project hydroelectric power for two decades
  • The company is required to build a 35km overhead transmission line and step-down transformer
  • Management says the move allows for feasible ‘green steel’

ASX-listed and Africa-based iron ore miner Genmin (ASX:GEN) executed an agreement with Gabon’s state-owned power utility to supply its Baniaka Iron Ore Project (BIOP) with hydroelectric power for up to 20 years on Wednesday. 

The 160 megawatt (MW) dam, Grand Poubara, is located to the northeast of the BIOP.

The Société de Patrimoine du Service Public de l’Eau Potable, de l’Énergie Électrique et de l’Assainissement (SDP) will supply Genmin’s Baniaka acreage with 30 megawatts (MW) of power for the first six years under the agreement with room for scale-up thereafter.

For context, one megawatt (per hour) is enough to power hundreds of homes depending on appliances used. 

Genmin highlighted on Wednesday it expects to pay about US¢10 per kilowatt.

Infrastructure requirement 

The company will be responsible for the construction and maintenance of a 35km overhead transmission line leading from the hydroelectric dam interchange to the project. 

The company must also build a transformer at the Grand Poubara hydroelectric dam transmission yard. 

The binding deal follows a Memorandum of Understanding (MoU) signed back in April last year. 

“The signing…of a long-term renewable power supply for Baniaka is another important milestone as we target first iron ore production in mid-2024,” Genmin CEO Joe Ariti said. 

“It also satisfies one of our key ESG objectives of delivering high value, greener iron ore products to global markets.”

Other key clauses 

Genmin will not see the power supply agreement trigger until it receives financing and permits and approvals needed to develop its BIOP, as well as the 35km transmission line. 

The company has secured a fixed power tariff with SDP that locks in low-costs under US¢10 per kilowatt hour. 

From the sixth year of the agreement onwards, capacity to BIOP may be increased from 30MW to 50MW, subject to an expansion of Baniaka and “provided water flow rates at [the dam] support supply.” 

Genmin may forfeit the agreement in the event of a force majeure. 

Want to know more? 

Market Index’s free company data provides a number of datapoints to consider regarding Genmin’s performance, including but not limited to: 

  • Share price is 20c* 

  • Market cap of $64.5m* 

  • 322.79m shares on issue 

  • Average 4 week volume of 163,070 

  • Ranked 306 of 946 companies in the materials sector 

  • One year returns down -4.76% 

  • Year to date performance up 2.56% 

  • Company finished December quarter with $7.3m in cash 

  • It spent $1.2m in opex over the same period 

A look at Genmin's six month chart bears the hallmark 'blockiness' of a relatively illiquid stock
A look at Genmin's six month chart bears the hallmark 'blockiness' of a relatively illiquid stock

*As at 1200 AEST Wednesday 1 February 2023 

Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

Get the latest news and insights direct to your inbox

Subscribe free