Toronto, Ontario-based Labrador Iron Ore Royalty Corporation (LIORC) announced its operation and cash flow results for the quarter ended September 30, 2021.
In the third quarter of 2021, LIORC's financial results benefited from higher iron ore prices and pellet premiums, partially offset by lower volumes of concentrate for sale (CFS) sales. Royalty revenue for the third quarter of 2021 amounted to $74.2 million compared to $52.4 million for the third quarter of 2020. Equity earnings from Iron Ore Company of Canada (IOC) were $60.5 million in the third quarter of 2021 compared to $34.9 million in the third quarter of 2020.
Net income per share for the third quarter of 2021 was $1.64 per share, which was an 82 percent increase over the same period in 2020. The adjusted cash flow per share for the third quarter of 2021 was $1.99 per share, which was 333 percent higher than in the same period in 2020, as a result of higher royalty revenues and the decision by IOC to pay a dividend, the corporation said. In the third quarter of 2021, LIORC received a dividend in the amount of $85.8 million from IOC.
In the third quarter of 2021, iron ore prices dropped from the record levels experienced in the second quarter of 2021, as China, which accounts for a majority of the world's steel production and over 70 percent of all seaborne iron ore demand, placed restrictions on its steel production in an effort to curb year-over-year production growth. According to the World Steel Association, global crude steel production in China in the third quarter of 2021 was 14 percent lower than the same quarter of 2020 and 16 percent lower than the second quarter of 2021. In addition, in the quarter ending September 30, iron ore production by the three largest seaborne iron ore producers, Vale, Rio Tinto and BHP, while consistent with the same quarter of 2020, was 9 percent higher than the prior quarter.
Total concentrate production in the third quarter of 2021 was 3.9 million tons. This was 8 percent lower than the third quarter of 2020 and 18 percent lower than the second quarter of 2021 due mainly to labor and equipment availability issues during the quarter which impacted feed availability. As well, the annual maintenance shutdown, which was completed in September, took longer than expected, the corporation said.
The IOC saleable production (CFS plus pellets) of 3.7 million tons in the third quarter of 2021 was 8 percent lower than the same period in 2020 and 20 percent lower than the second quarter of 2021, mainly as a result of lower concentrate production referred to above.
In the third quarter of 2021, CFS production of 1.4 million tons was 20 percent lower than the same quarter last year, mainly due to lower concentrate production, as well as the decision by IOC to produce less pellets and more CFS in 2020. CFS production in the third quarter of 2021 was 28 percent lower than the second quarter of 2021, due to lower concentrate production.
Pellet production in the third quarter of 2021 of 2.3 million tons was 3 percent higher than the corresponding quarter in 2020 due to IOC's decision to reduce the focus on the production of pellets in 2020, and 15 percent lower than the second quarter of 2021, due to issues related to lack of feed from the concentrator.
Total iron ore sales tonnage by IOC (CFS plus pellets) of 4.2 million tons in the third quarter of 2021 was 10 percent lower than the total sales tonnage for the same period in 2020 mainly as a result of lower product availability. Total iron ore sales tonnage in the third quarter of 2021 was 2 percent higher than the second quarter of 2021, as sales tonnage in the second quarter of 2021 was negatively impacted by the lack of availability of reclaimers during the quarter.
Pellet sales in the third quarter of 2021 of 2.4 million tons was 1 percent higher than the total sales tonnage for the same quarter last year and 5 percent higher than the second quarter of 2021. CFS sales tonnage was 22 percent lower than the same quarter last year and 2 percent lower than the second quarter of 2021.