The new owners of the Bloom Lake iron ore mining project in northeastern Quebec got a bargain, but a mining analyst says don’t expect production any time soon.
“We think it’s a great deal,” said Garrett Nelson Tuesday in an interview with CBC Radio’s Labrador Morning.
“We think this asset will have significant value, longer term.” Quebec Iron Ore Inc., a subsidiary of Champion Iron Ltd., said Friday it had agreed to pay $10.5 million for the mine, railway and mineral claims just across the border from Labrador.
It will also assume responsibility for nearly $42 million in environmental liabilities.
The previous owner, Cliffs Natural Resources, acquired the Bloom Lake mine in 2011 as part of a $4.3-billion US takeover of Consolidated Thompson.
Iron Ore prices then were $190 a metric ton, compared with $40 and below today.
“Iron Ore prices won’t be at these depressed levels forever,” said Nelson, a metals and mining analyst with BB&T Capital Markets in Richmond, Virginia.
“Given the quality of the ore at that mine, we think that asset will have value.” But it won’t be any time soon.
Nelson said analysts expect ore prices to remain depressed for years, and the new owners will keep the Bloom Lake mine “on care and maintenance for some time.”
In hindsight, Nelson said it was a mistake for Cliffs to come to the region.
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