Champion Iron harbors new hopes for the revival of the Pointe-Noire iron ore pellet plant located in Sept-Îles, almost a decade after its closure.
The company announced on Tuesday the signing of a purchase agreement to acquire the plant, which has been closed since 2013, from the Pointe-Noire Railway and Port Company for $2.5 million. It will also conduct a feasibility study in order to relaunch the project in partnership with “a major steelmaker of international stature”.
Once the feasibility study is completed, the plant renovation could represent an investment of “several hundred million dollars”, Champion CEO David Cataford told a press conference at Sept-Iles. He mentioned an opening around 2024 or 2025, if the project goes ahead. The plant could process 6 million tonnes of iron ore. “The pellet plant needs a little love,” says Cataford. On the other hand, there are nevertheless infrastructures inside this factory which are still good. We think of the grinder. We think of certain installations. We think of the floor. These are things which, today, are still quite expensive and this factory has them. »
The announcement fuels hopes of a revival for the plant, built in 1965, which was closed in 2013 by Cliffs Natural Resources due to falling iron prices. In 2016, the government bought the assets that are held through the Pointe-Noire Railway and Port Company. In 2019, the American company Bedrock Industries had been approached as a potential buyer, but the hoped-for transaction did not see the light of day.
Participation of Quebec
The outlets for the production of the factory are not in doubt, judges the manager. If built, the plant will process high-grade iron ore produced at the Lac Bloom mining complex in Fermont, also operated by Champion. The fact that the company operates its own mine differentiates the project from other stimulus attempts, he said. “It’s the dumpling that will be the most requested in the future. If we look at the market studies, the direct reduction pellet is going to be as much in demand as lithium over the next twenty years, and the growth is going to be just as great. It is the material of the future. »
The feasibility study aims above all to understand the costs of the works necessary for the plant. The fact that the company is already investing $2.5 million to acquire the plant and that it intends to carry out some work demonstrates Champion’s strong intention to carry out the project, replied Mr. Cataford.
However, this approach is necessary to ensure that the project is viable in the long term, taking into account the costs of the project. “We want to make sure that the project is profitable in the future because the last thing we want is to start a project and repeat what happened in the past, or have to shut down the plant. »
The location of the plant, close to rail and port infrastructure, is a great asset for the project, believes Craig Hutchison of TD Securities. The analyst sees the $2.5 million acquisition price as a sign of government support. “We believe the plant’s infrastructure and strategic location is worth much more than $2.5 million. We therefore see this announcement as strong support from the Government of Quebec. »
Through Investissement Québec, the government holds 8.4% of the outstanding shares of Champion, according to the firm Refinitiv.
Present at the announcement, the Minister of Economy and Innovation, Pierre Fitzgibbon, said he was open to contributing financially to the realization of the project, but stressed that the company was now on the right track, which could mean that financial support would not be necessary this time around. “When the capital market is able to finance a project, the government must take a step back from that. »