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Cargill Invests in New Ukraine Iron Ore Plant

May 11, 2021

Cargill Metals and Canadian mining company Black Iron are teaming up to create a new iron ore plant in the Ukraine. The May 10 agreement gives Cargill offtake rights to the first 4 million metric tons of ore produced per year for the next 10 years along with profit sharing. On the profit share, Black Iron will receive 100% of the 65% iron content fines benchmark price, currently ~$230 per MT, and share with Cargill a portion of the incremental sale price of its higher iron content and low impurity magnetite product. In return, Cargill will provide financing of $75 million for the plant, which will produce 68% iron content magnetite pellets.

The higher iron content is expected to reduce steel-producing emissions by approximately 30% and put the proposed Ukraine plant among the top 4% of global production by iron content.

Black Iron’s CEO Matt Simpson stated: “Black Iron received several offtake and investment proposals and chose Cargill based on its proposal striking the optimal balance of investment quantum, structure and shared vision on the increasing demand for high-grade ore as the global ferrous industry is shifting to become greener.”

“We are very pleased to help finance Black Iron’s Shymanivske Project,” said Lee Kirk, Managing Director of Cargill Metals. “A relationship with Black Iron would be an excellent fit with Cargill Metals’ growth strategy to develop a high-grade and CO2-reducing iron ore portfolio to help customers navigate the environmental and carbon challenges and opportunities ahead, and to support the sustainability efforts and low carbon ambitions of the ferrous industry.”

Iron ore prices are at record highs due to strong global steel demand driven by a surge in infrastructure building to boost economies weakened by the pandemic. The Shymanivske iron ore pellets are expected to attract a premium price in a variety of markets.

Final details for the project and financing agreement are in progress. The Shymanivske project in Kryviy Rih, Ukraine, is surrounded by five other operating mines, including ArcelorMittal’s iron ore complex.