Shares in Black Iron Inc (TSE:BKI) advanced this week after the firm brushed off US President Donald Trump's plans to impose import tariffs on steel, saying it does not think it will affect global iron ore prices.
Starting this week, the White House says it will put tariffs of 25% on imported steel and 10% on imported aluminium.
Black Iron notes that the US only consumes around 6% of total global steel produced.
It also does not expect an adverse impact to the value of its Shymanivske Iron Ore project in the Ukraine, given the "very conservative US$62 per tonne benchmark price used in the company’s preliminary economic assessment to estimate the after-tax unlevered 36% internal rate of return on the project as compared to today’s 25% higher benchmark iron ore price of US$78 per tonne".
Black Iron noted that the US produced around 79 mln tonnes per year and is a net importer of 22 mln tonnes per year, which in total is only 6% of global production.
China, meanwhile, which supplies less than 1% of the steel imported into the US, produced 808 mln tonnes in 2016.
There, the company also noted, the demand for high grade iron ore was likely to increase, given the new environmental regulations imposed late last year, which have already resulted in numerous domestic iron ore miners being forced to shut down due to the low quality of iron ore produced.
The new environmental regulations are driving a shift towards higher quality iron ore both in terms of iron content and use of pellets/pellet feed, said Black Iron.
"Black Iron expects to produce an ultra high-grade premium 68% iron ore product from the project. This ultra-high-grade product is within the top 4% of global production based on grade and highly desirable for China’s steel mills given the new Chinese regulations."
Black Iron shares added 5.26% to C$0.10 on Monday and on Tuesday, closed 10.53% ahead at C$0.10.