Commodities | 10:45 AM
Analysts see growing value in Champion Iron's beaten down share price as its product mix shifts towards higher-grade direct reduction markets.
- Champion Iron’s Bloom Lake moves up the value chain
- Scope for higher product realisations as production ramps up
- Kami and Rana Gruber projects broaden growth
- Shares down materially, but analysts see valuation upside
By Mark Woodruff
It looks like a far-distant memory today, but shares in Canadian iron ore producer Champion Iron ((CIA)) entered the 2024 calendar year with its shares trading above $8.
By the time calendar year 2026 announced itself, those shares had just enjoyed a six-months rally that peaked out around $6.69 in January.
Today, those shares are changing hands around $2.33 and analysts see growing value in the company's exposure to high-purity iron ore as steelmakers pursue lower-emission production.
While Champion Iron remains exposed to the direction of iron ore prices, analysts suggests even more important is management's ability to capture higher price realisations and premiums from the increasingly high-grade product mix.
Champion's flagship asset is the open-pit Bloom Lake Mining Complex in Quebec’s Labrador Trough, complemented by the recently acquired Rana Gruber operations in Norway.
The next step up the value chain comes from the Direct Reduction Pellet Feed (DRPF) project at Bloom Lake, approved in January 2024.
The facility’s ramp-up, combined with an attractive valuation, underpins Champion Iron’s position as Jarden’s preferred iron ore stock under coverage.
Direct Reduction quality pellet feed is a high-grade iron ore pellet specifically manufactured for use in direct reduction furnaces, such as those found in electric arc furnace (EAF) steelmaking.
The DRPF facility has produced its first saleable material, with Macquarie highlighting the scope for higher product realisations as production ramps up.
UBS shares this optimism, arguing the market underestimates both the value of Champion’s premium product suite and the potential for stronger price premiums as the facility scales.
As a result, this broker expects earnings to move above consensus from FY30.
UBS, which initiated research coverage on Champion last week, believes rising demand for higher-grade steelmaking inputs, declining ore quality and greater blending requirements support attractive long-term economics for premium iron ore products.
The DRPF project is expected to improve value capture by lifting the iron ore grade of up to 50% of Bloom Lake’s production to as high as 69% from around 66.2%, increasing Champion’s exposure to premium pellet feed and direct reduction markets.
Utilising hydroelectric power, two separate concentrator plants (the original Phase I concentrator and the Phase II concentrator) have a combined nameplate production capacity of 15Mtpa of iron ore concentrate.
The concentrators are effectively Champion’s processing mills: they take mined ore and crush, grind and beneficiate it to produce high-grade concentrate.
Commanding a premium to the benchmark 62% iron ore price, this low-contaminant concentrate is transported by rail to the port of Sept-Iles for export.
The company markets its product to China, Japan, the Middle East, Europe, South Korea, India, and domestically in Canada.
It is positioning itself as a supplier of direct reduction grade iron ore for green steelmaking.
Other operations
Champion holds a 51% interest in the Kami Iron Mine Partnership, which owns the Kami Project, located around 21km southeast of Bloom Lake in the Labrador Trough.
In December 2024, Champion agreed to form a partnership with Nippon Steel and Sojitz, which would contribute CA$245m for a combined 49% interest in Kami.
The initial closing occurred in September 2025, leaving Champion with 51%, Nippon Steel with 30% and Sojitz with 19%.
More recently, in April 2026, Champion completed the 100% acquisition of Rana Gruber in Norway for around -US$300m. The long-established producer generates approximately 1.8Mtpa of hematite and magnetite concentrates.
UBS sees Rana Gruber providing greater diversification and access to European markets, while Kami requires limited near-term capital and offers longer-term upside.
Macquarie similarly views Kami as a longer-dated growth option, while Rana Gruber broadens Champion’s high-purity iron ore portfolio.
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