Zen inks deal to supply firmed renewables for iron ore mine with load “bigger than Olympic Dam”

Zen Energy has made a tentative deal to supply firmed renewables to a massive new iron ore project that is expected to have a load bigger than Olympic Dam – BHP’s huge copper, gold and uranium deposit that accounts for around 7% of South Australia’s electricity consumption.

The deal, part of a non-binding memorandum of understanding between Zen and ASX-listed Magnetite Mines, will see the two companies collaborate on the development and provision of energy for the miner’s Razorback Project, which is being developed in South Australia.

In an ASX statement issued on Thursday by Magnetite Mines, the companies say they have “shared interests” in the developing a green iron industry in South Australia, for which the two key inputs are premium-grade magnetite concentrates and abundant renewable energy.

As the release notes, the main green iron processes currently being pursued involve the reduction of very high-grade, low-impurity iron ore (magnetite concentrates) to iron using green hydrogen gas, followed by the conversion of iron into steel using renewables powered electric arc furnace (EAF) – thus taking coal out of the equation.

South Australia, with its world-leading renewable energy supply, is considered to be in a unique position to facilitate this process. And the state government has called for Expression of Interest process to get Australia’s first green iron production facility up and running by 2030 – Magnetite Mines and Zen are participating in the EoI.

The MoU between the two companies sets out a framework for negotiations to supply firmed renewables for Magnetite’s Razorback mine, including through potential energy offtake agreements between Magnetite Mines and Zen assets, leasing agreements, or co-venturing or partnering projects.

The agreement also flags the potential for collaboration on a green iron project at Port Pire, with the potential to address various parts of the supply chain ranging from pellet plant development, to hydrogen plant development and rail, port and logistics development.

Magnetite Mines’ Razorback project, located around 240km northeast of Adelaide, has probable ore reserves of 2 billion tonnes and mineral resources of 3.2 billion tonnes, according to the company’s website.

“Zen’s South Australian renewable energy projects are located near our Razorback Project,” Magnetite Mines chief Tim Dobson said on Thursday.

“Our companies share a common vision for the development of a green iron industry in South Australia, underpinned by Razorback’s magnetite concentrates and ZEN’s renewable energy.”

The Adelaide headquartered Zen, started its journey to supply cheap “basload renewables” to Australian businesses back in late 2017, when it obtained a licence to retail electricity, with a focus on users with demand of more than 160MWh per annum.

The company started out specialising in supply renewable energy to industry sourced from other companies’ solar and wind energy projects, through power purchase agreements, but has more recently turned its hand to developing its own projects.

In May, Zen broke ground on its first big battery development, the 138MW/330MWh Templers BESS near Gawler in South Australia, which it bought from RES Australia in March of 2023.

And in April this year it revealed ambitious plans to develop a 1GW pumped hydro project on New South Wales coal territory that will supply up to eight hours of “firmed” renewable energy.

On green hydrogen, Zen signed an MoU with a subsidiary of Japan’s Mitsubishi Corporation in May, to explore the idea of collaborating in Australia.

“Zen’s collaboration with Magnetite Mines represents a new load bigger than Olympic Dam to connect to the grid before the end of the decade,” says Zen CEO Anthony Garnaut.

“Zen seeks to play a leadership role in bringing together the needed firmed renewable generations to enable this significant development as well as the corresponding value chain in enabling green iron production in South Australia, particularly around Port Pirie.

“The collaboration … in enabling new value chains to realise green iron production … demonstrates that the Superpower vision for Australia can become a reality, and at a market competitive cost,” Garnaut says.