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The booming commodity prices of the last decade have sparked considerable interest in the Labrador Trough – Canada’s main iron-ore district which extends through northern Quebec and Labrador – and while dozens of the junior developers that have flocked to the region are now struggling to finance their projects, international steel giants continue to flex their muscle in the region.
Steelmakers are increasingly investing in iron-ore mining assets and the resource of Canada’s main iron-ore production centre is a favourite among steel producers, which are seeking to reduce their reliance on the traditional centres, such as Brazil and Australia.
“Whereas many of the mining companies are struggling, we are seeing steelmakers from around the world, particularly Asia, investing in the Labrador Trough,” says Toronto-based analyst Adam Low, of Raymond James. The Canadian iron-ore district has attracted investment from all the major Asian steel-producing countries.
“You have one of India’s largest steelmakers, China’s first- and third-largest steelmakers, the world’s largest steelmaker, one of Japan’s biggest trading companies, Korea’s largest steelmaker and Taiwan’s largest steelmaker all investing in the Labrador Trough. That’s pretty impressive,” he says in an interview with Mining Weekly.
Steel producers that have invested in Canada include India’s Tata Steel, Chinese firms Wuhan Iron and Steel and Heibei Iron and Steel Group (HBIS), Taiwan’s China Steel, Japan’s Mitsubishi and South Korea’s Posco.
Low states that Canada offers Asian steelmakers, which are seeking to diversify their sources of supply, political stability, good rail and port infrastructure, which can cater for the current production volumes and for some expanded volumes, as well as a higher quality product.
Whereas head grades for Canada’s iron in the ground are typically lower than those of the key producing regions, such as Brazil and Australia, where direct shipping ore (DSO) has a grade of 55% to 58%, the country’s iron-ore producers are concentrating their ores to pellets and concentrates with an iron content of 65% to 66%.
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