Market Segment

Vale, Cyclone Metals enter MoU for iron ore project in Canada

Written by Ethan Bernard

November 18, 2024

Brazilian miner Vale has entered into a memorandum of understanding (MoU) with Australia-based Cyclone Metals Ltd. to develop the Iron Bear iron ore project in Eastern Canada.

The non-binding MoU consists of a two-phased investment pathway that would allow Vale to gain a controlling interest in Cyclone’s Iron Bear project.

Iron Bear is an iron ore mineral resource of 16.6 billion metric tons. It’s located 25 kilometers from Schefferville, Quebec.

“Vale is a powerhouse for the production of ultra-clean iron ore products, which includes DR pellets and their proprietary cold briquettes,” Paul Berend, CEO of Cyclone Metals, said in a statement on Friday, Nov. 15.

“They are an ideal partner for us, and we look forward to leveraging Vale’s extensive operational and financial resources to realize the full potential of Iron Bear,” he added.  

Cyclone Metals, an Australian exploration and development company, said the MOU sets out the framework for a formal agreement, which the parties seek to finalize within 90 days.

Phase 1 highlights

Cyclone said Vale will contribute up to USD$18 million in Phase 1.

This will fund the Iron Bear development activities, “including a preliminary feasibility study, mineral resource drilling, and environmental baseline studies.”

The company said that Phase 1 will be considered complete when it has received the entire Phase 1 contribution from Vale “or when the work program has been substantially completed.”

Cyclone noted that Vale could withdraw anytime during Phase 1 but would not earn an interest in the Iron Bear Project.

Phase 2 highlights

Vale can choose to start Phase 2 and form a corporate joint venture with Cyclone, with an initial 30% equity interest in the Iron Bear JV.

That interest can go up to 75% when Vale makes the “Decision to Mine” or when Vale’s total contribution reaches USD$120 million. (That’s even if Vale has not yet made the DTM.)  

One of the other steps includes the possibility of Vale taking the remaining 25% stake at fair market value.

Full terms can be found here.

Cyclone said one of the highlights of the Iron Bear Project is a rapid project development plan with bulk samples of direct-reduced (DR) and blast furnace (BF) concentrates available for steel mill clients in Q4’24 and DR and BF pellets in Q2’25.

Vale SA is one of the world’s largest producers of iron ore and iron ore pellets. It has an annual output
greater than 300 million mt.

Ethan Bernard

Ethan Bernard is managing editor for Steel Market Update. He previously worked for American Metal Market as a copy editor in the New York office for two years, starting in 2008. Later, he copy edited AMM’s monthly magazine on a freelance basis from 2015 until 2017. With experience in financial copywriting and textbook publishing, he holds a BA in Comparative Literature from UC Berkeley, and an MFA. in Creative Writing from New York University. He can be reached at ethan@steelmarketupdate.com or 724-759-7871.

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