Metals Royalty Company Expands into U.S. Steel Supply Chain
Metals Royalty Company is making a significant move to support America’s steel supply chain revitalization. They’ve recently finalized a $132.5 million deal to acquire a 1% production royalty related to the Mesabi Metallics iron ore project in Nashwauk, Minnesota. Company executives believe this endeavor could be pivotal for the country’s future of “green steel.”
Trading under the ticker TMCR on Nasdaq, the London-based firm made its announcement on Wednesday. This royalty agreement provides TMCR with a stake in one of the nation’s few iron ore projects. Iron ore is, after all, a crucial component for producing cleaner electric furnace steel.
The total acquisition cost of $132.5 million breaks down into $125 million in cash and $7.5 million in stock. TMCR is planning to finance this purchase through a $75 million PIPE raise priced at $13 per share, along with a proposed credit facility of up to $50 million.
Interestingly, TMCR’s founders and insiders are contributing $15 million toward the PIPE funding.
This royalty arrangement is connected to the project’s production capability, which can reach up to 8.5 million tonnes annually, and includes additional smaller royalties for any overages. Plus, there’s a safety net in place: a revenue floor set at $150 per tonne, which is linked to direct reduction (DR) grade pellet prices, offering TMCR some protection against falling iron ore prices.
As the largest industrial development project currently in progress in Minnesota, Mesabi Metallics covers more than 16,000 acres in the northern part of the state. It’ll primarily produce DR-grade pellets for electric furnace steelmaking, viewed as a cleaner alternative to traditional methods.
TMCR is aiming for first production in the latter half of 2026, with full operations expected to kick off in 2027. The company estimates that its royalties could eventually bring in cash flow exceeding $13 million each year, contingent on production and market prices for iron ore.
Backing this project is the Indian conglomerate Essar Group, which has already invested over $2 billion in equity at the site. Overall, total investments for the project might surpass $2.5 billion.
Further support is flowing in from significant financial institutions and government entities. According to TMCR, Mesabi Metallics has secured a $520 million senior collateral facility from Breakwall Capital and a $150 million liquidity facility from Macquarie Group. In addition, the U.S. Export-Import Bank has pledged up to $10 billion in support, underlining the project’s strategic importance to the nation’s steel supply chain.
Brian Paes Braga, TMCR’s Chairman and CEO, described the acquisition as a “defining milestone” for the company. He expressed confidence in the strategic significance of Mesabi, indicating that it plays a crucial role in the U.S.’s quest to bolster its steel supply chain and reduce reliance on imported materials.
