What's Happening?
Zeotech, an emerging mineral processing technology firm, has finalized a five-year agreement valued at nearly $200 million with Jiangsu Mineral Sources International Trading Co (MSI), a major global trader of kaolin. The deal involves the supply of 950,000 tonnes of direct shipping ore (DSO) kaolin products from Zeotech's Toondoon Kaolin Deposit, which boasts ultra-high purity with over 90% kaolinite content. This makes it suitable for various applications, including cosmetic kaolin DSO and AusPozzTM production, a low-carbon concrete alternative. The agreement is the largest offtake deal for kaolin in Australia, promising significant revenue and a margin of 30-35%, with an expected EBITDA of $10-12 million annually starting next year.
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Why It's Important?
This deal marks a significant milestone for Zeotech, positioning the company as a key player in the kaolin industry. The agreement not only secures substantial revenue but also supports the development of the AusPozzTM Project, which aims to reduce carbon emissions in concrete production. The simplicity of dealing with a single customer for such a large volume is unusual in the industry, reducing risks and streamlining operations. This could set a precedent for future agreements in the mineral processing sector, potentially influencing market dynamics and encouraging similar strategic partnerships.
What's Next?
Zeotech plans to commence mining operations in the first half of 2026, with early cash flow expected to support the AusPozzTM Project's development. The company is working with engineering firm GHD on road upgrade designs to facilitate the project. Zeotech aims to secure all necessary permits by the end of Q1 next year, allowing them to begin supply shortly thereafter. The binding offtake agreement is anticipated to be completed by early October, further solidifying the partnership and paving the way for future growth.
