PyroGenesis Canada Inc has received an order to supply four high-powered plasma torches together with ancillary equipment to a client (Client B) for about $6 million.
Client B is a multi-billion-dollar international producer of iron ore, whose name will remain confidential for competitive reasons. Client B’s objective is to reduce greenhouse gases (GHGs) by replacing its fossil fuel burners with PyroGenesis’ proprietary plasma torches.
PyroGenesis said Client B has advised it that, upon the successful implementation of the four torches, the subsequent orders are expected to be for about 130 plasma torches.
Pelletization is the process in which iron ore is concentrated before shipment, thus significantly reducing the cost of transportation, and providing a required feedstock for blast furnaces. In conventional technologies, the process heat is provided by fuel oil or natural gas burners (both environmentally damaging).
The combustion of fossil fuels in the burners results in the production of GHG, mainly CO2. Plasma torches, by contrast, utilize renewable electricity and offer an environmentally-attractive alternative to fossil-fuel burners.
PyroGenesis has the process patent to replace fossil fuel burners with its clean plasma torches in the iron ore pelletization industry, thereby reducing GHG emissions.
“We have achieved another major milestone as this is our second commercial plasma torch order with a major iron ore producer,” said PyroGenesis CEO P. Peter Pascali in a statement.
“In addition, Client B has advised that they would likely be ordering approximately 130 torches upon the successful installation of today’s order. This is particularly interesting given that Client B does not have the largest need amongst iron ore pelletizers. For example, we estimate that Client A, who has over 10 plants, each possibly requiring up to 50 plasma torches, has a significantly higher need. The iron ore pelletization industry is under extreme pressure to reduce their carbon footprint and GHG emissions. As the industry is expected to grow at 3.0% pa from 2021 to 2027, iron ore pelletizers are looking for technology solutions to help them meet their carbon footprint and GHG targets."
Pascali added: “As sales of PyroGenesis’ plasma torches increase, PyroGenesis should also benefit from providing proprietary spare parts and services, which would generate significant high-margin, recurring revenue. We cannot overemphasize the opportunity this order presents. Although nothing is certain with respect to success and/or future contracts, and there are always risks as we move forward, we can now say without a doubt that we are on the right path and things are evolving in the right direction.”
Given recent sales and the fact that the torches are expected to last 25-30 years, PyroGenesis said it has revised the estimated net present value (NPV) of each torch sale to be about $7 million.
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