CHAR Technologies receives C$6.6m investment from ArcelorMittal
With a presence in 60 countries and primary steelmaking facilities in 16 countries, including ArcelorMittal Dofasco in Hamilton, Ontario, ArcelorMittal generated revenues of USD$79.8 billion (€72 billion) in 2022.
CHAR has also signed a Memorandum of Understanding (MoU) under which ArcelorMittal Dofasco will purchase biocarbon produced at CHAR’s cutting-edge facility in Thorold, Ontario starting in 2023.
CHAR’s proven technology transforms wood waste into renewable natural gas and biocarbon through a proprietary high-temperature pyrolysis cracking process.
This marks a milestone achievement for the collaborative efforts of CHAR and ArcelorMittal Dofasco to develop a drop-in replacement biocarbon to reduce ArcelorMittal Dofasco’s consumption of fossil-based carbon sources.
Under the agreement, CHAR’s biocarbon, the first in Canada for steelmaking, is targeted for trial in the Electric Arc Furnace (EAF) with the aim of reducing GHG emissions by 35,000 tonnes over four years.
Biocarbon produced by CHAR Technologies has been tested in the Blast Furnace at ArcelorMittal Dofasco since 2021 and this agreement will enable larger scale trials in the EAF process.
The XCarb® Innovation Fund’s global mandate is to invest in companies developing breakthrough technologies that will accelerate the steel industry’s transition to carbon neutral steelmaking.
ArcelorMittal’s investment in CHAR marks the Fund’s seventh global investment and first ever in a Canadian company.
In accordance with a subscription agreement entered into between CHAR and ArcelorMittal on 4 July, the Company issued 11,000,000 units (each, a Unit) to ArcelorMittal by way of private placement at a price of CAD$0.60 (€0.40) per Unit, for aggregate cash consideration of CAD$6,600,000 (€4.5m), with each Unit comprised of one common share in the capital of the Company (each, a Common Share) and one-quarter of one non-transferrable Common Share purchase warrant (each whole warrant, a Warrant) (collectively, the Offering).
Each Warrant is exercisable for one Common Share at an exercise price of CAD$0.70 (€0.47) per share for a period of 24 months. Prior to the Offering, ArcelorMittal did not own or have control over any securities of CHAR, and following completion of the Offering, ArcelorMittal holds approximately 12.48% of the Company’s Common Shares on a non-diluted basis.
ArcelorMittal is acquiring the Units for investment purposes.
In the future, ArcelorMittal may, from time to time, increase or decrease its investment in CHAR through market transactions, private arrangements, treasury issuances or otherwise.
In connection with the Offering, CHAR entered into an investor rights agreement with ArcelorMittal on 4 July 2023 (the Investor Rights Agreement), which grants certain rights to ArcelorMittal for so long as ArcelorMittal maintains certain percentage ownership of CHAR, including (a) the right to appoint a director to the Company’s board of directors, and, until such time as an appointment is made, the right to appoint an observer to the Company’s board of directors; (b) a right to participate in future equity offerings; (c) a top‑up right upon conversion or exercise of outstanding convertible securities; and (d) information rights in respect of financial or other information in relation to CHAR and its business, all subject to the terms of the Investor Rights Agreement.
The foregoing rights shall continue until such time as ArcelorMittal ceases to hold at least 5% of the outstanding Common Shares for a period of 12 consecutive months.
Under the Investor Rights Agreement, ArcelorMittal is subject to certain customary transfer and standstill restrictions.
CHAR said it intends to use the net proceeds of the Offering for general working capital needs, including to advance the development of both contracted and earlier stage projects.
All securities issued under this Offering are subject to a statutory hold period ending four months and one day from the closing date of the Offering.
No bonuses, finders’ fees or commissions were paid in connection with the Offering. The Offering is subject to final acceptance by the TSX Venture Exchange.
Andrew White, CEO of CHAR Technologies Ltd., said: “The governments of Canada and Ontario called for innovative solutions to decarbonise the steel industry and I’m extremely proud to say that CHAR and ArcelorMittal S.A. have answered that call. Today’s announcement validates years of collaborative research & development with ArcelorMittal S.A., as we strive towards replacing metallurgical coal completely. Our strategic partnership lays the foundation to drive shareholder value as we continue to deliver on our commitment to reduce carbon emissions and promote a greener future.”
Irina Gorbounova, head of ArcelorMittal’s XCarb® Innovation Fund, said: “I am especially pleased that not only are we investing in them, but we are already working alongside them, testing their product at one of our Canadian steel plants. This is one of the advantages of our Innovation Fund and our unique approach. We provide seed capital of course, but we also provide the industrial infrastructure and R&D collaboration that breakthrough technology companies need to bring their product to market.”