Champion Iron (ASX:CIA) Posts Record 3.9M Tonne Quarter as Green Steel Plant Enters Commissioning- Time to Buy?

Champion Iron’s Record Quarter Sets Up a Green Steel Catalyst

Champion Iron (ASX: CIA) delivered record quarterly sales of 3.9 million dry metric tonnes in Q3 FY2026, generating C$472.3 million (approximately A$515 million) in revenue. For investors watching the premium iron ore space, this quarter marks a potential turning point. The company’s DRPF plant is now in commissioning, costs came in below expectations, and the seven-year growth investment cycle is wrapping up. With first shipments of 69% Fe direct reduction quality iron ore expected by mid-2026, the question is whether the stock’s recent run towards A$6 is justified or already priced in.

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Champion Iron Nears Green Steel Inflection as DRPF Commissioning Begins

What makes Champion Iron stand out is its focus on high-purity material essential for green steel production. The company’s DRPF project will upgrade half of Bloom Lake’s capacity to DR-quality pellet feed, grading up to 69% Fe, among the highest grades available globally.

Mechanical commissioning has started, with first commercial shipments expected by mid-2026. This is significant because DR-quality iron ore commands premium pricing and opens access to new markets in the Middle East, North Africa, and Europe. Steelmakers in these regions are actively seeking low-carbon feedstock as they work to decarbonise their operations.

CEO David Cataford highlighted that 2026 will be the first year without major growth capital expenditure. The DRPF project remains on track, with spending towards the inflation-adjusted budget of approximately C$500 million (roughly A$545 million), and C$440.5 million already invested. For shareholders, this transition from heavy capital investment to cash generation could meaningfully improve returns in the coming quarters.

Record Quarter Driven by Inventory Drawdown and Stronger Operations

The operational story is equally compelling. Champion successfully cleared a logistics backlog, reducing stockpiles at its Bloom Lake mine by 1.1 million tonnes. This inventory conversion drove the record sales volume and demonstrates that the company is now moving material more efficiently through its supply chain.

Cost performance was strong, with cash costs remaining competitive at US$53 per tonne. This positions Champion to maintain healthy margins even if iron ore prices soften. The balance sheet looks solid too, with C$245.1 million (approximately A$268 million) in cash and C$751.4 million (approximately A$820 million) in total liquidity available.

Champion is also pursuing the acquisition of Norwegian iron ore producer Rana Gruber in a deal valued at approximately US$289 million (roughly A$415 million). This would add 1.8 million tonnes of annual capacity and direct access to European customers. While strategically sensible, the acquisition does add some debt to the balance sheet, something investors should monitor as the deal progresses towards an expected Q2 2026 close.

The Investor’s Takeaway for Champion Iron

Analyst sentiment remains positive, with seven buy ratings against just two holds and no sells. The average price target sits near A$6.35, suggesting approximately 7-10% upside from current levels, though some analysts see more significant re-rating potential once DRPF cash flows begin.

We believe Champion Iron presents a compelling long-term investment opportunity for investors who are comfortable with commodity exposure. Record sales, improving operations, and the upcoming DRPF production create genuine momentum heading into 2026.

However, key risks deserve attention. Iron ore prices remain tied to Chinese steel demand, which can shift quickly. The Rana Gruber acquisition adds balance sheet complexity. And ramping up the DRPF plant to full capacity will take around 12 months, creating some near-term uncertainty.

At current prices, the stock appears fairly valued. Patient investors may find better entry points on pullbacks, while existing holders have good reason to stay the course as the green steel story unfolds.