Genmin Limited, an African iron ore company, has entered into a non-binding MoU with China's Baosteel Resources for a potential offtake agreement. The final agreement, expected by the end of 2024, will have Genmin supplying various iron ore products to Baosteel for two years.
Genmin Limited, a company specializing in iron ore exploration in Africa, has inked a non-binding memorandum of understanding (MoU) with Baosteel Resources, a Chinese company. The parties are expected to finalize a legally binding offtake agreement by December 31, 2024.
Under the terms of the future binding agreement, Genmin will supply 1.2 million metric tons per year of Fines, 0.5 million metric tons of Lumps, and 0.4 million metric tons of Pellet Feed products. These supplies will be sourced from Baniaka and are planned for a duration of two years.
This MoU marks Genmin's fourth such non-binding agreement. Earlier, the company signed a three-year agreement with international trading firm Minmetals and a two-year MoU with three other steel manufacturers, Jianlong, Hunan Valin, and Baowu.
The move is significant for both parties. For Genmin, it offers a secure customer and opens the doors to the Chinese market, one of the largest consumers of iron ore globally. For Baosteel, this agreement assures a consistent and diverse source of high-quality iron ore, crucial for their operations.
Securing long-term supply agreements like this one is becoming increasingly important for steel manufacturers, given the volatile nature of the commodities market. The agreement with Genmin helps Baosteel mitigate some of this volatility by locking in supplies for the future.
It also demonstrates the growing trade relationships between African suppliers and Chinese manufacturers, pointing to a broader trend of China seeking raw materials from diverse global sources to fuel its industrial growth.
The MoU between Genmin and Baosteel Resources is a strategic move for both companies. It assures Genmin a dedicated buyer while providing Baosteel with a reliable source of quality iron ore for the next two years. This agreement reflects the increasing interconnectivity of global supply chains, particularly between Africa and China.