Iron Bear has successfully produced prized DR pellets. Pic: Getty Images
Cyclone Metals’ production of DR-grade iron pellets sets the stage for Iron Bear offtake discussions
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- Cyclone Metals successfully produces world-class direct reduction grade iron pellets at Iron Bear
- DR pellets have excellent physical and metallisation properties
- Company to ship bulk samples to potential offtake clients by Q2 2025
Special Report: Cyclone Metals has hit a major milestone with the successful production of world-class direct reduction grade iron pellets using concentrates from its Iron Bear magnetite project in Canada.
The successful production of DR quality pellets grading 67.5% iron, 1.6% silica with ultra-low levels of deleterious elements from the pilot pellet production run is hugely encouraging for the company as DR pellets command a significant price premium over standard blast furnace pellets.
DR pellets are the necessary feed for direct reduction-based steel production, which has a lower carbon footprint due to using natural gas or hydrogen as a reductant instead of coal, which is used in traditional blast furnace steel production.
However, DR pellets have very specific and hard-to-replicate metallisation or reduction properties and Cyclone Metals’ (ASX:CLE) ability to produce them is yet another tick in its favour.
“Our DR pellets demonstrated excellent physical and metallisation properties, and we are on track to start shipping bulk samples to potential off take clients as early as Q2 2025,” chief executive officer Paul Berend said.
“Direct Reduction pellets are a key enabler to low carbon steel production and sell at a high premium to the 62% Fe benchmark. This premium is currently ~ US$63.5/t.
“The industry standard pelletising conversion cost is ~US$15/t which implies a typical additional cash profit of ~US$15/t for DR pellets versus benchmark 62% Fe iron ore.”
Meeting industry standards
Tests carried out on the DR pellets produced by the company confirmed that they met industry standards.
First up were physical properties testing to ensure the DR pellets had the strength to withstand rough handling in a direct reduction unit and also have the appropriate size and porosity so the reactive gases can permeate the pellet.
The key test is the CCS compression test, which applies pressure to a pellet until it is crushed.
CCS test results are expressed in kg/pellet with DR pellets typically requiring a minimum CCS of ~230kg/pellet. The Iron Bear DR pellets demonstrated a CCS of 486-438 kg/pellet. That’s class leading.
Likewise, the company’s DR pellets also aced reduction/metallisation tests that ensure the fired pellets will convert to iron in the direct reduction unit with a high metallisation conversion ratio.
These tests are specific to the type of direct reduction unit which have different reduction gases and operating conditions.
Iron Bear project
Iron Bear is less than 25km from an open-access, heavy-haul railway connected to an open-access iron ore export port and 75km from a hydroelectric plant.
It currently hosts a resource of 16.6 billion tonnes grading 29.3% iron with exceptionally low levels of impurities, allowing pilot plant test work to achieve high magnetic iron recovery rates and produce high-quality DR concentrates grading 71.3% iron.
CLE plans to establish a joint venture with a strong operational partner to fund the Iron Bear project development and provide a balance sheet that can support the high capex required to bring a project of this scale into production.
Next steps
CLE is planning to produce DR pellets for shipping to target clients for their own metallurgical test work to validate the quality of the Iron Bear pellets for their specific applications.
This may form the basis of offtake agreements with steel mills and/or trading houses, who require a reliable supply of DR pellets for their existing or future direct reduction units.
The company believes that there will be a shortage of ~148Mtpa of DR pellets by 2030 based on an analysis of the DR steel production units coming online.
This article was developed in collaboration with Cyclone Metals, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
