Cross-listed exploration and development company Champion Iron announced in May this year that it had entered into a definitive purchase agreement (DPA) for the acquisition of the Pointe Noire Iron Ore Pelletising Facility (pellet plant), located in Sept-Iles, Québec, through a wholly-owned subsidiary of Champion Iron.
Additionally, Champion also announced that it had entered into a memorandum of understanding (MoU) with a major international steelmaker to complete a feasibility study to evaluate the recommissioning of the pellet plant and produce direct reduction grade pellets.
Located directly adjacent to the port facilities that Champion Iron currently uses, the pellet plant, which was commissioned in 1965 with an original pelletising nameplate capacity of 6-million tonnes a year, was put on care and maintenance in 2013.
The DPA was entered into by a wholly-owned subsidiary of Champion and provides for the acquisition of the pellet plant from private-public partnership Société Ferroviaire et Portuaire de Pointe-Noire S.E.C. (SFPPN) for a cash consideration of C$2.5-million, upon satisfaction of certain conditions precedent.
In addition to the cash consideration, the SFPPN and the region stand to receive additional economic benefits as Champion Iron considers recommissioning the pellet plant.
Benefiting from its industrial site, strategic location adjacent to Pointe Noire’s deep-water berth and train unloading infrastructure, the pellet plant could provide a relatively rapid opportunity for commercial production. The pellet plant is expected to require significant investments prior to recommissioning, including structural work, rehabilitation and enhancement of existing equipment, to maximise productivity and energy efficiencies while minimising its environmental impact.
The MoU sets out a framework for Champion Iron and a partner to collaborate to complete the feasibility study (FS) in 2023.
Subject to positive findings and results of the FS, the MoU outlines a framework for a joint venture to produce direct reduction grade iron-ore pellets for sale to third parties, including the FS partner.
Pursuant to the DPA, Champion Iron is required to comply with various undertakings in connection with the pellet plant, including a commitment to design and operate the project using exclusively green-energy sources including natural gas-, biofuels- or renewables-sourced electricity as main power sources.
The FS will evaluate the investments required to recommission the pellet plant while integrating up-to-date pelletising and processing technologies.
”The proposed acquisition of the pellet plant represents a strategic opportunity for our company to further deploy its vision to contribute to the green steelmaking supply chain. Our local support, high-purity iron-ore products, access to world-class infrastructure and operational track record, enabled us to attract a major international steel producer for a potentially significant large-scale project in Québec,” says Champion Iron CEO David Cataford.
He concludes that the project, together with other opportunities for organic growth, aims to create a positive impact for local communities and represents an additional step to unlock the region’s full potential. This includes additional product processing and transformation, as demand for high-purity iron-ore products rises globally.