A unit of Perth-based Clean Energy Fuels Australia, the developer of the Mount Magnet LNG production hub, has signed a 15-year supply deal with WA Kaolin.
Under the deal, Mid-West LNG will supply liquefied natural gas to WA Kaolin’s Wickepin Kaolin project, located 220km south-east of Perth, which contains high-grade premium kaolinised granite.
Moreover, WA Kaolin will use LNG to “fire the rotary kiln at Wickepin that dries the kaolin ore, which is the first step in the company’s proprietary K99 dry processing method,” the firms said on Wednesday.
The contract, which includes the supply of commissioning gas from September 1 to the end of 2021, will start on January 1, 2022.
In addition, the deal will run for 15 years with reviews at year 5 and year 10, and provides
for two options to extend for a further five years respectively.
It has a price tag of about A$22 million ($17.1 million) over the 15-year period and provides for the storage and regasification infrastructure, including delivery of LNG by a virtual pipeline, WA Kaolin said.
CEFA, through Mid-West LNG, is in the process of building the new LNG plant in Mount Magnet, located about 600km north of Wickepin.
WA Kaolin will be the second customer supplied from this new facility.
The hub will supply LNG as fuel to generate electricity for mines and remote communities across the region, providing an alternative to diesel with reduced energy costs and lower emissions, CEFA previously said.
CEFA plans to build the hub in stages including the first liquefaction train, customer storage, but also regasification facilities. It will have a production capacity of more than 500 tonnes per day of LNG, with first production scheduled for the third quarter of this year.