Former Riversdale boss builds iron ore empire in Canada

Market: Metals
17/11/20

Former Riversdale chairman Michael O'Keeffe is building a 30mn t/yr Canadian iron ore concentrate firm capitalising on the strong price environment and focused on providing high-grade concentrate to customers in China, Japan, the Middle East, South Korea and Europe.

O'Keeffe is executive chairman of Australian firm Champion Iron, which is poised for growth through the doubling of capacity at its operating 7.4mn t/yr Bloom Lake iron ore concentrate mine in Canada's Quebec province to 15mn t/yr, development of the nearby soon to be acquired 7.8mn t/yr Kami project and another 9.3mn t/yr project at Fire Lake North.

Champion has grown its Canadian portfolio by acquiring assets from distressed sellers, most recently reaching the final stages of the acquisition of the Kami project from the receivers of former owner Alderon Iron Ore. The Supreme court of Newfoundland and Labrador approved the acquisition yesterday and the deal is now subject to final government approvals. If approved it will give Champion access to an additional 8mn t/yr of export capacity at the port of Sept-Iles, which it currently uses to export Bloom Lake concentrate.

O'Keeffe was behind the sale of Riversdale Mining's Mozambique coking coal assets to UK-Australian firm Rio Tinto for $3.7bn in 2011 and the sale of Riversdale Resources' 4.5mn t/yr Grassy Mountain coking coal project to Australian mining firm Hancock Prospecting for around $500mn in 2019.

Champion produced 7.9mn t of 66.2pc Fe concentrate in the 2019-20 financial year to 31 March at its Bloom Lake facility, which it acquired from US mining group Cliffs Natural Resources for $7.1mn in 2015. Champion spent $124mn restarting the mine, which Cliffs had idled in late 2014. It restarted in early 2018 and ramped up to produce a record 2.27mn t or over 9mn t/yr in July-September.

The firm sells its product through Japanese trader Sojitz and UK-Swiss trader Glencore on an agency basis. It is working to upgrade some of its concentrate to more than 67.8pc Fe to qualify as DR pellet feed material for electric arc furnaces. It also plans to increase the output from Bloom Lake to 15mn t/yr through a phase 2 expansion, which it plans to finance though a credit facility that it expects to secure before the end of this year.

In the longer term, Champion continues to look at plans to develop its 9.3mn t/yr Fire Lake North project in Quebec, but this requires major rail infrastructure and is set to take a back seat to Bloom Lake and Kami.

O'Keefe's history suggests that Champion may be building sufficient scale to find a buyer and capitalise on strong iron ore prices.

Argus assessed the ICX iron ore price at $123.95/t cfr Qingdao on a 62pc Fe basis yesterday, down from a six-year high of $130.55/t on 3 September but up from lows of $38/t in late 2015 when Champion agreed to acquire Bloom Lake.

By Jo Clarke

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