Ukrainian iron ore developer Black Iron Inc. selected Cargill Metals for offtake rights on the initial 4 million metric tons per year (mt/y) of production from its Shymanivske iron ore project and Cargill will extend a $75 million finance facility to be used for project construction. Drawdown on the funding will be subject to certain conditions being met, mainly related to the project being fully permitted and financed for construction. Black Iron and Cargill will now start work on definitive binding offtake and financing agreements.
Based on the proposal, the offtake agreement will be for an initial term of 10 years and will include a profit-sharing component. On the profit share, Black Iron will receive 100% of the 65% iron content fines benchmark price, currently selling for approximately $230/mt, and share with Cargill a portion of the incremental sale price of its 3% higher (68%) iron content and low-impurity magnetite product.
Headquartered in Singapore, Cargill Metals focuses on iron ore and steel trading. Connecting iron ore miners around the world with steel mills and steel end users in key markets, Cargill Metals trades more than 50 million mt/y of iron ore and is also an investor of a number of mining operations in North America and Northern Europe.
Black Iron’s planned 68% iron-content magnetite pellet feed is in the top 4% of global production by iron content and is anticipated to reduce emissions generated in the production of steel by an estimated 30% as compared to the more commonly consumed 62% iron-content hematite fines. The company said the high-quality product from the Shymanivske iron ore project will attract a premium price in a variety of markets.
“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,” Black Iron CEO Matt Simpson said. “Cargill brings tremendous value not only in strengthening the project funding with a $75 million financing facility but, more importantly, its global network and local footprints, unique industry insight and successful experience in the technical marketing of high-grade ore to customers around the world.”
“We are very pleased to help finance Black Iron’s Shymanivske Project,” Lee Kirk, managing director, Cargill Metals, said. “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.”
Cargill has operated in Ukraine since 1991 with offices in several cities to support its more than 500 in-country employees. Cargill’s main Ukraine businesses are in the agricultural sector and include a deep-sea vessel terminal at Port Yuzhny close to the terminal Black Iron plans to use to ship its iron ore.
