When it comes to iron ore producers, Canada is a minnow in a sea of sharks, according to Alderon Iron Ore president and CEO Tayfun Eldem.
Sea of sharks
Speaking to an Atlantic Provinces Economic Council (APEC) gathering in St. John’s Wednesday morning, he said the country is producing about 45 million tonnes of iron ore a year, almost all from the Labrador Trough region on the Quebec-Labrador border. That production is about one and a half per cent of the total seaborne trade.
He compared this to the region of Western Australia, where mining companies are producing more than 450 million tonnes per year.
About 24 hours before his speech at the Delta Hotel, Alderon’s top man was signing a benefits agreement with the Government of Newfoundland and Labrador, based on the assumption the company’s Kami iron ore mine will be fully financed by the end of the summer — in a world where the sharks are always circling.
The Kami mine would mean $4 billion in tax revenues for the province, $2.6 billion by more conservative government estimates, and 400 long-term jobs post-construction, and would help keep Canada in the game globally as an iron ore producer.
However, in terms of fundraising, the Kami mine project is fighting the same elements already restricting Canada’s growth in the global marketplace.
Working here involves hard-rock mining, making projects inherently more expensive; lower grades make the work more labour intensive, adding to cost; labour costs are higher than in competitor countries such as Brazil; and transportation costs to reach key markets such as China are higher.
“Yet Canada’s Labrador Trough remains an attractive investment target for foreign investors,” an optimistic Eldem told his audience, after openly listing the challenges.
He said Chinese steelmakers — including Alderon’s main partner in Kami, Hebei Iron and Steel — are looking to diversify their sources of iron ore supply, moving away, where possible, from the “big three” of BHP, Rio Tinto and Vale.
“Getting their own sources of supply and thereby diversifying away from the big three is their way of controlling pricing,” he said.
He said Canada is politically stable, has an existing natural resources-fuelled economy, has invested in infrastructure like the new multi-user dock at the Port of Sept-Iles and produces a high-grade concentrate product, low in problematic impurities.
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