Iron ore producer Genmin has signed a non-binding memorandum of understanding (MoU) with Baosteel Resources, a subsidiary of Chinese steel producer Baowu Resources, for Baniaka Green iron ore products.

The MoU is non-binding in nature, and the two companies are expected to sign a legally binding offtake agreement by 31 December 2024.

As per the potential binding offtake agreement, Genmin will deliver 2.1 million tonnes per annum (Mtpa) of Fines, 0.5Mtpa of Lump, and 0.4Mtpa of Pellet Feed from Baniaka for two years.

The price of the iron ore product will be determined by reference to the Platts Iron Ore Index or another agreed price index.

The legally binding agreement will be subject to certain customary conditions, including receipt of all necessary government approvals and the start of commercial production at Baniaka.

Genmin managing director and CEO Joe Ariti said: “We are delighted and honoured to have established a relationship with Baowu, a group of substantial leadership, reputation and influence in our industry.

“The signing of this significant MoU confirms that the market potential for Genmin’s high quality, Baniaka Green iron ore products to contribute to the decarbonisation of our industry has been recognised.”

Baniaka is the company’s 100% owned iron ore project, located in south-east Gabon, and comprises the Baniaka and Baniaka West exploration licences covering 881km2 of area.

The project has defined a cumulative strike length of 85km of iron mineralisation, which has been subdivided into 12 prospect areas.

According to Genmin, the agreement with Baowu, a large steel manufacturer, plays an important role in driving the decarbonisation of the steel manufacturing industry.

Genmin previously signed offtake agreements for around 16.9 million tonnes of Baniaka Green iron ore products for two to three years.

The company signed offtake agreements with Chinese metals and mineral trading company Minmetals, along with global steel manufacturers Jianlong and Hunan Valin.