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MONTREAL — ArcelorMittal, the world’s largest steelmaker, said Monday it is fully committed to developing a $4 billion open-pit mine with an annual capacity of 18-20 million tonnes of high-grade iron ore on northern Baffin Island in Nunavut.
Steve Wood, ArcelorMittal’s vice-president, Iron Ore Americas, reaffirmed ArcelorMittal’s future plans for long-term development of the Mary River deposits, after addressing the 23rd World Mining Congress at the Palais des Congrès in Montreal. His comments follow skepticism from some industry sources who questioned whether ArcelorMittal was still committed to such a large capacity, following the collapse in global iron ore prices last year, along with a severe slowdown in steel demand.
ArcelorMittal’s commitment to the Baffin Island development comes at a time when executives like Rio Tinto Alcan CEO Jacynthe Côté are talking about the increased risks facing the mining industry, which is struggling with the vagaries of the economic cycle, rising operating, compliance and social costs, and locations that are more remote and challenging.
The blow to iron ore prices last year led ArcelorMittal to reduce its interest in Baffinland Iron Mines Inc. — owner of the almost inexhaustible Mary River deposits — from 75 per cent to 50 per cent. ArcelorMittal also reduced the scope of the project — work started in early 2013 — to an annual output of 3.5 million tonnes, which shaved off capital costs as financial markets tightened.
“We’re working on the smaller project to truck the Mary River ore to Milne Port on Baffin’s North Shore, stockpile it and then load heavy ore carriers for summer delivery in Europe,” said Wood, who is based in Montreal. “We’re studying now whether to reach the full 18-20 million tonnes in one sweep or by separate phases,” he added. “That will depend on global economic growth, demand for steel and many other factors, but that ore is high purity and doesn’t need concentration.”
Analysts noted steel prices have firmed, spurring a 25 per cent recovery in iron ore. ArcelorMittal, also owner of Hamilton steelmaker Dofasco, has said it wants to source 70 per cent of its global iron ore needs at its own mines to cushion extreme open market price volatility.
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