Champion Iron Holding Talks
Issue 88, June 2014
Iron ore junior Champion Iron is in discussions with steel giant ArcelorMittal over a railway deal that could transform the economics of its flagship deposit, three separate sources have told Global Mining Observer.
Champion owns the 3.4bn tonne Consolidated Fire Lake North deposit in Canada’s iron rich Labrador Trough. The company is led by chairman Michael O’Keeffe, a former Glencore boss who founded coal miner Riversdale Mining, sold to Rio Tinto for $4bn in 2011, following a bidding war involving Brazilian steel group CSN and India’s Tata Steel.
Fire Lake North is provisionally targeting export capacity of 9m tonnes per annum, but currently sits stranded from infrastructure, 60km from the Bloom Lake branch line of the Quebec North Shore railway, running to the Port of Sept-Iles.
Fire Lake North also sits immediately north of ArcelorMittal’s Fire Lake mine however, which is linked to the deepwater port of Port Cartier by the Cartier Railway, one of the largest private railways in Canada. Both Port Cartier and the Cartier Railway are wholly owned subsidiaries of Luxembourg and London-based ArcelorMittal, the world’s biggest steel group, with revenue of $79bn last year.
“O’Keeffe has a good relationship with ArcelorMittal,” one source told Global Mining Observer this week. “If Champion can secure access to Cartier, it unlocks their deposit.”
Last week, Quebec’s Ministry of Finance earmarked up to C$20m ($18m) to scoping a new rail link for miners in the Labrador Trough. Champion publicly welcomed the news, calling it “a defining point in the history of the mining industry in Quebec,” though it remains unclear whether the company is backing the government proposal in part to strengthen its own position in talks over Cartier.
“Champion [Iron] continues to hold discussions with numerous competitors, service providers, and potential partners with interests in the district,” Champion’s chief operating officer Alex Horvath said in a statement emailed to Global Mining Observer following a request for comment.
“It is Champion’s policy not to provide any comment on any discussions or rumours of discussions with any potential partners, competitors or other stakeholders unless the matter has been appropriately disclosed via a news release in accordance with its continued disclosure obligations,” Mr. Horvath said. The company has not made any public statements regarding Cartier or ArcelorMittal.
Part of the Cartier network is already contracted to third parties, handling timber and grain. Sept-Iles and Port Cartier are both roughly 5,000km from Rotterdam, the biggest iron ore import route for Northwest Europe, predominantly from Brazil and Canada. That compares to shipping distances of over 6,000km from Western Australia’s Port Hedland into China, one of the world’s busiest iron shipping passages. O’Keeffe has previously said Champion’s iron output is aimed at European steelmakers.
The company’s position resembles that of Perth-based BC Iron, which was widely criticised in 2009 for striking a surprise deal with iron giant Fortescue, swapping half of BC’s Nullagine deposit for access to Fortescue’s rail network. The deal has come to be recognised as a masterstroke, bringing BC Iron into production within 2 years.
BC and Champion’s forerunner Mamba, folded into Champion by O’Keeffe, were two of the top performing mining stocks on the Australian exchange last year. Shares in Champion last traded at A$0.45, off 25 per cent this year, valuing it at A$88m ($83m).
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