Strategic Resources notes “robust economics” for new DR iron pellet plant

Strategic Resources (TSXV: SR) says the economic results are “robust” for a new iron pelletizing plant in the federal Port of Saguenay, Que. The prefeasibility study was prepared by BBA. The plant will produce direct reduction (DR) grade pellet feed to be used in the green steel industry. This is the only advanced greenfield project of its kind in Canada, said Strategic.

The provincial and federal governments are currently building a $111-million multi-user conveyor system at the port, and Strategic will be one of the users.

"Market fundamentals are extremely positive, and the direct reduction grade pellet market premiums have been strong over the last number of years. Management and our large shareholders believe this approach delivers higher returns with less capital. The Port of Saguenay location offers Strategic a significant advantage versus other pelletizing operations in North America, given its access to natural gas and ability to produce greener iron products," said Strategic CEO Sean Cleary.

The project consists of a pelletizer at the port site to process iron ore concentrate into DR grade pellets that will supply the growing global electric arc furnace steel production market. The process flow sheet includes the multi-user conveyor system, iron ore concentrate and pellet receiving, handling and storage areas, and a 4-million t/y Metso pelletizing plant.

The initial capital outlay will be $633.7 million (US$470 million) made up of $512.4 million in direct costs for the plant, handling, and storage, another $66.1 million for indirect costs, and $56.6 million for contingency. Annual sustaining capital for a 4-million t/y facility will be $4 million.

The economic analysis assumed a premium of US$70 per tonne of DR pellets. After taxes the project has a net  present value with an 8% discount of $1.35 billion and an internal rate of return of 25%.

The new pellet plant has already been permitted and has an estimated construction period of about 25 months following the final investment decision. Commissioning would begin in month 27, and commercial production would begin in month 30.

Learn more about the company and its vision for a greener steel future at www.Strategic-Res.com.