CHAR Technologies Ltd. (“CHAR” or the “Company”) (TSXV:YES), a leader in sustainable energy solutions, is thrilled to announce that the Company has closed a C$6.6M strategic investment by world’s leading steel and mining company, ArcelorMittal S.A., through ArcelorMittal XCarb S.à r.l. (“ArcelorMittal”) and ArcelorMittal’s XCarb® Innovation Fund (the “Fund”). With a presence in 60 countries and primary steelmaking facilities in 16 countries, including ArcelorMittal Dofasco in Hamilton, Ontario, ArcelorMittal generated revenues of US$79.8 billion in 2022.
CHAR also signed a Memorandum of Understanding 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. This strategic partnership will be instrumental in propelling CHAR’s mission to revolutionize carbon-free solutions within heavy industries.
The XCarb® Innovation Fund investment will be utilized to maximize the impact of the Canadian and Ontario governments’ December 2022 investment of C$12.8M in CHAR. It aims to accelerate the scale up of production as well as research and development initiatives at CHAR’s Thorold, Ontario facility. This investment will also enable CHAR to expedite the development of additional project sites.
In accordance with a subscription agreement (the “Agreement”) entered into between CHAR and ArcelorMittal on July 4, 2023, the Company issued 11,000,000 units (each, a “Unit”) to ArcelorMittal by way of private placement at a price of C$0.60 per Unit, for aggregate cash consideration of C$6,600,000, 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 C$0.70 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 11.09% of the Company’s Common Shares on a non-diluted basis, and 13.87% of the Company’s Common Shares on a partially 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 July 4, 2023 (the “Investor Rights Agreement”), which grants certain rights to ArcelorMittal, including the right to appoint a director to the Company’s board of directors, a right to participate in future equity offerings, a top up right in respect of outstanding convertible securities, and certain information rights subject to the terms of the Investor Rights Agreement. Under the Investor Rights Agreement, ArcelorMittal is also subject to certain customary transfer and standstill restrictions. For full details, please find a copy of the Investor Rights Agreement that will be filed under the Company’s SEDAR profile at www.sedar.com.
CHAR 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.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Commenting, Andrew White, CEO of CHAR Technologies Ltd., said:
“The governments of Canada and Ontario called for innovative solutions to decarbonize the steel industry and I’m extremely proud to say that CHAR and ArcelorMittal have answered that call. Today’s announcement validates years of collaborative research & development with ArcelorMittal, 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.”
Commenting, 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.”
About CHAR Technologies Ltd.
CHAR Technologies Ltd. (TSXV:YES) first-in-kind high temperature pyrolysis (HTP) technology processes unmerchantable wood and organic wastes to simultaneously generate two renewable energy revenue streams, renewable natural gas (RNG) or green hydrogen and a solid biocarbon that is a carbon neutral drop-in replacement for metallurgical steel making coal.
CHAR’s HTP is an ideal waste to energy solution that aligns with the global green energy transition by diverting waste from landfills and generating sustainable clean energy to decarbonize heavy industry.
About ArcelorMittal
ArcelorMittal, incorporated in Luxembourg, is a wholly-owned subsidiary of ArcelorMittal S.A., the world’s leading steel and mining company, with a presence in 60 countries and primary steelmaking facilities in 16 countries. ArcelorMittal’s head office is located at 24-26, boulevard d’Avranches, 1160 Luxembourg, Luxembourg.
In 2022, ArcelorMittal S.A. had revenues of US$79.8 billion and crude steel production of 59.0 million metric tonnes, while iron ore production reached 50.9 million metric tonnes. ArcelorMittal S.A.’s purpose is to produce ever smarter steels that have a positive benefit for people and planet. Steels made using innovative processes which use less energy, emit significantly less carbon and reduce costs. Steels that are cleaner, stronger and reusable. Steels for electric vehicles and renewable energy infrastructure that will support societies as they transform through this century. With steel at their core, their inventive people and an entrepreneurial culture at heart, ArcelorMittal S.A. will support the world in making that change. This is what ArcelorMittal S.A. believes it takes to be the steel company of the future. ArcelorMittal S.A. is listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS). For more information about ArcelorMittal S.A. please visit: http://corporate.arcelormittal.com/.
ArcelorMittal will file an early warning report in accordance with applicable Canadian securities laws, which will be available under the Company’s SEDAR profile at www.sedar.com and may also be obtained by contacting Paul Weigh, Head of Communications, ArcelorMittal S.A., at +44 20 3214 2419 or press@arcelormittal.com.
About ArcelorMittal’s XCarb® Innovation Fund
ArcelorMittal’s XCarb® Innovation Fund launched in March 2021. Since launch it has invested over US$160 million in seven companies that are developing technologies ranging from long-term battery storage to green hydrogen production to CCU, and more. Via the Fund, ArcelorMittal is also an anchor partner in the Bill Gates founded Breakthrough Energy’s Catalyst programme, committing US$100 million over five years. To learn more about the XCarb® Innovation Fund and its investments visit https://corporate.arcelormittal.com/climate-action/xcarb/xcarb-innovation-fund.
For further information, please contact:
| Andrew White Chief Executive Officer CHAR Technologies Ltd. E: andrew.white@chartechnologies.com T: 866 521-3654 | Galen Cranston Director of Stakeholder Relations CHAR Technologies Ltd. E: gcranston@chartechnologies.com T: 647-546-5633 |
Website: www.chartechnologies.com