How has Champion Iron Limited progressed from its origins to where it is today?
In 2013, there was a merger between the previous entity named Champion Iron Mines, and Mamba minerals, which was led by Michael O'Keeffe, who is our executive chairman today. Michael moved to Canada because he saw the large potential for high-grade iron ore production in the Labrador Trough. I joined the company in 2014, and our team shifted from an exploration company into developing the Fire Lake project. We also started working with the Québec government as part of their Plan Nord initiative to develop significant infrastructure in the region and enable different projects in the north of Québec to eventually see the light of day.
Soon after, the Bloom Lake mine (“Bloom Lake”) became available. We seized the opportunity of buying Bloom Lake in 2016, and it was a great investment for Champion because we were essentially buying US$4 billion worth of infrastructure and assets for about C$10 million. That gave us a great steppingstone to enter the high-grade iron ore market quickly. Our focus turned rapidly to complete a feasibility study to make sure that we could restart Bloom Lake in the most diligent manner. There was a lot of chatter about Bloom Lake being a high grade asset, but being a high cost producer. However, with the feasibility study that we completed, we saw an angle where we could halve the operating costs at the site. We started the project on time and on budget in 2018, and we have now delivered three full years of operations, and we demonstrated that we halved the operating costs compared to the previous operator, while also increasing throughput to new records to about 8 million mt/y.
What led to Champion Iron’s record profitability in fiscal 2021?
We have been extremely disciplined in maintaining our commitment to producing quality high-grade iron ore with low levels of impurities. We also came out with a new product at an even higher-grade iron ore, which is around 68% Fe, qualifying it to go down the electric arc route to produce steel. In the past year, not only has the global iron ore price been high, but the premium for the high-grade has been at all-time highs.
What is driving demand for high grade iron ore?
When the steel margins are elevated, steel mills are usually willing to pay more for high-grade iron ore to maximize output.
Furthermore, one of the shifts that we have seen in recent years is on the environment side. If you want to reduce your CO2 emissions, you need to stop melting contaminants and focus on melting iron ore. The higher-grade material that you use in your blast furnace, the less CO2 emissions you will produce per ton of steel.
Champion Iron is expanding production from 7.4 million mt/y today to 15 million mt/y. What is the roadmap to achieving this target?
We were very fortunate from the onset to have nearly US$4.5 billion invested at site. A large portion of that was invested to be able to bring Bloom Lake to a nameplate capacity of 7.4 million mt/y, but the previous owner had already started working on an expansion to bring Bloom Lake to 15 million mt/y. About 75% of the capex associated with that expansion had already been spent by our predecessor to bring the project online. We sanctioned the completion of that project last November, and our target start date for the expansion is mid 2022. With our balance sheet already in net cash position of over C$330 million after only three years of operations, we are fully funded to complete the project and further position Champion as a global leader in high-grade iron ore. In addition, we also completed the acquisition on April 1, 2021, of the Kami project only a few kilometers away from Bloom Lake. This project is another sizeable opportunity near available infrastructure and quality resources. We already mobilized a team to complete a study on the Kami project as we consider organic growth beyond our Bloom Lake. We expect to complete this study in the near term.