Magnetite Mines Ltd (ASX:MGT) has inked non-binding heads of agreement with JFE Shoji Australia Pty Ltd (JFE), a subsidiary of JFE Shoji Corporation and part of JFE Holdings, drawing the attention of the South Australian Government.
Magnetite has prioritised engagement with strategic partners to meet the growing global demand for ‘green iron’ produced from premium-grade magnetite concentrates.
High-quality concentrate at scale
The company’s Razorback Project is one of the few global projects capable of producing such high-quality concentrate at scale.
The agreement with the Japanese company outlines the framework for negotiating a binding transaction to support the completion of the definitive feasibility study (DFS) for Magnetite Mines' Razorback Iron Ore Project in South Australia.
There are several key planks to the deal:
Funding - JFE will provide financial support for the DFS and related working capital requirements.
Offtake rights - In return, JFE will receive offtake rights for up to 10% of the planned production from Stage 1 of the project over a 15-year term.
Conversion option - JFE has the option to convert its offtake rights into equity or joint venture participation in the project.
This agreement represents the culmination of extensive due diligence by JFE, which kicked off in April 2023 and included site visits to the Razorback site and has the backing of the state government.
“The South Australian Government last week released our Green Iron and Steel Strategy and today’s announcement by Magnetite Mines aligns with the fundamental objectives of that strategy,” South Australian Minister for Energy and Mining Tom Koutsantonis said.
“South Australia has a key advantage with abundant magnetite resources, which presents the opportunity for the state to be at the vanguard of efforts to meet the world’s increasing demand for green iron.
“I congratulate Magnetite Mines and JFE Shoji Australia Pty Ltd on this significant agreement, which will help facilitate the development of the Razorback Iron Ore Project.”
Focus on steel supply chain
JFE Shoji Corporation, the core trading company of JFE Holdings, operates a broad range of businesses globally, with a focus on steel products and a comprehensive supply chain.
Both companies have developed a mutual understanding and respect, fostering a collaborative approach to the project's development.
Magnetite Mines and JFE aim to finalise a definitive agreement by January 31, 2025.
“Over the past year, Magnetite Mines has established a strong relationship with JFE Shoji Australia Pty Ltd, which is a part of Japan’s JFE Group,” said Magnetite CEO and managing director Tim Dobson.
“We are delighted to formalise our collaborative efforts today, the culmination of a comprehensive due diligence effort and the first stage of what we envisage will be a long and prosperous relationship for both parties.”
JFE Shoji Australia managing director Koichi Sawada echoed Dobson's sentiments: “We are very pleased to secure this agreement to work with Magnetite Mines towards the development of the Razorback Iron ore Project.
"Through our due diligence we have gained a good understanding of the Razorback deposit and we see tremendous opportunity in this project that is highly aligned with our strategic priorities, including supporting global efforts to decarbonise steelmaking.”
Pending the DFS findings, Magnetite Mines and JFE will negotiate the terms and mechanics for potential joint venture participation or other investment structures to advance the project's development.