“We will be insulated from the iron ore price”
OTTAWA—If Baffinland Iron Mines Corp. is permitted to build its proposed Milne Inlet railway and expand production to 12 million tonnes of iron ore each year, the company will never again have to worry about plummeting ore prices, Baffinland boss Brian Penney said last week.
“We will be insulated from the iron ore price,” Penney, the company’s CEO, told delegates at a mining industry panel held during the Northern Lights trade show in Ottawa.
That’s because the Mary River ore body, where a range of hills hold massive quantities of ore that are around 65 per cent pure iron, the greatest degree of purity that the laws of chemistry will allow, might be the richest iron ore deposit on the face of the earth, Penney said.
It also means the company doesn’t have to do any smelting on site to extract iron, which means they produce no tailings. They simply crush the raw ore into pellets and powder, and then ship the raw material to European steel makers.
But to make the project work economically in the high-cost North Baffin region, they need to increase the volume of ore they ship to those customers from the current limit of 4.2 million tonnes per year.
“When we expand to 12 million tonnes a year, our unit cost would decrease by half,” he said. That’s why Baffinland, in October 2014, proposed the first version of its Phase 2 expansion scheme.
At that time, the global price per tonne of iron ore had been dropping like a stone, due to falling demand in China and cheap new sources of supply in Brazil and Australia.
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