Champion Iron (TSX:CIA) - Quebec Miner Targets Green Steel Market with High-Purity Iron Ore Push

Interview with David Cataford, CEO of Champion Iron Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/champion-iron-tsxcia-targets-even-much-higher-grade-iron-ore-in-a-decarbonizing-steel-industry-5913

Recording date: 11th February 2025

Champion Iron, operating from Quebec, Canada, is advancing its position as a leading producer of premium iron ore with its flagship Bloom Lake Mine currently producing 15 million tons annually. The company is undertaking a significant strategic initiative, investing C$470 million in a new flotation plant to upgrade half of its production to 69% purity iron ore by late 2025, targeting the growing direct reduction (DR) steel market.

The company has navigated recent challenges, particularly in rail transportation, which led to a stockpile of 2.7 million tons at the mine in late 2024. However, these logistical issues are being resolved with new locomotives and trained personnel, setting the stage for increased sales volumes in 2025. The ability to clear this inventory is expected to drive margin expansion without raising costs.

Since 2018, Champion has invested C$1.7 billion in expanding mining operations, upgrading products, and improving transportation infrastructure. Significantly, 2026 will mark the first year without major growth capital expenditure, allowing the company to demonstrate its full earnings potential and focus on shareholder returns.

Market diversification is a key strategic priority. Currently, over 50% of production goes to China, but the company is actively expanding its customer base in Europe, the Middle East, and North Africa. The new 69% purity product will facilitate this diversification while offering improved margins and reduced shipping costs to these markets.

Beyond Bloom Lake, Champion is developing the Kami project in partnership with Nippon Steel (the world's fourth-largest steelmaker) and Sojitz. This partnership includes a commitment from the partners to fund the first $500 million of investment, minimizing Champion's near-term capital requirements. Over the next two years, the company will advance feasibility studies and permitting activities for Kami.

The company's growth strategy aligns with the global steel industry's decarbonization trends. DR plants paired with electric arc furnaces produce significantly lower carbon emissions than traditional blast furnaces, driving increasing demand for high-purity iron ore. As steel producers worldwide face pressure to reduce carbon emissions, Champion's high-grade products position it to benefit from this structural shift in the market.

With its conservative balance sheet, Champion Iron appears well-positioned to capitalize on these opportunities while maintaining financial flexibility. The combination of resolving logistical challenges, completing major capital investments, and increasing production of premium products sets the stage for potentially significant cash flow generation from 2026 onward.

View Champion Iron's company profile: https://www.cruxinvestor.com/companies/champion-iron-limited

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