By David Winning
SYDNEY–An Australian company that wants to repurpose two abandoned gold pits in eastern Australia as a renewable-energy generator has become a takeover target for one of Japan’s largest electricity producers.
Genex Power said on Monday that it has a received a indicative bid proposal from Japan’s Electric Power Development, known as J-Power, that values its equity at some 380.9 million Australian dollars (US$248.6 million). Genex said it has agreed to let J-Power scrutinize its books to determine whether it will formalize its offer of A$0.275 a share in cash.
J-Power has also pitched a back-up offer to gain control of the company in the event that not enough of Genex’s shareholders vote in favor of the bid. It is offering a slightly lower amount of A$0.270 in cash that is conditional on support from Genex shareholders owning at least 50.1% of stock.
Genex is one of several companies around the world betting that they can revive interest in a century-old technology known as pumped-storage hydropower as a way for countries to reduce their reliance on coal.
The technology works like a giant battery, with water and gravity as the energy source. Water is pumped uphill to a reservoir when energy supply is plentiful. It is released and flows downhill through turbines generating hydroelectric power when electricity demand is high or there are shortages of other types of power. Finally, the water is captured to be pumped uphill again in a repeated cycle.
Surface and underground mines hold potential as reservoirs for the water, and could be developed with a lower environmental impact and upfront costs than building such plants from scratch, experts say.
Genex’s effort involves linking two abandoned gold pits near Kidston in Queensland, which would be the first pumped-storage project to become operational in Australia in nearly 40 years.
Genex hopes to plug the 250-megawatt facility, which aims to create enough energy to power roughly 143,000 homes for eight hours, into the grid in late 2024 to operate for 80 years. The total construction cost of the plant is expected to be about US$500 million.
J-Power, which owns 7.72% of Genex’s shares, was rebuffed in its approach to the company last month. J-Power made a headline offer of A$0.240-a-share in cash, but this was rejected by Genex as too low.
The Japanese company is a joint development partner of Genex in its Kidston Stage 3 wind project and Bulli Creek solar and battery projects in Australia. It has also lent some A$35 million to Genex in the past to advance its pipeline of projects.
Write to David Winning at [email protected]
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