Alderon focuses on financing after Glencore comes aboard

Published on July 30, 2014
Tayun Eldem — Telegram file photo

Alderon’s president and CEO says financing for the iron ore company’s Kami project should be completed soon, now that the project’s entire output is spoken for.

Alderon announced Tuesday that a subsidiary of natural resource company Glencore has agreed to buy all of Kami’s production that isn’t already going to Hebei Iron and Steel Group. The agreement will see about 40 per cent of the mine’s production going to Glencore. President Tayfun Eldem, speaking to The Telegram via phone following the company’s annual general meeting in Montreal.

“That sends an incredibly strong message to the markets, and in particular to the lenders, who need the confidence that whatever they lend can be paid back,” he said. “One of the only ways that we can pay it back is through sales of our product. And with 100 per cent of it committed, going to a buyer, essentially says once this project is up and running, it will be a strong revenue stream that can then in turn pay the debt back.”

Glencore is the largest global trader of bulk commodities, in particular iron ore, said Eldem.

Earlier this month, Labrador Iron Mines suspended its mining in the Labrador Trough, blaming high operating costs and poor prices for iron ore. Eldem said Tuesday the two companies are in different situations.

“It’s not a fair comparison, but at the end of the day, the game is all about keeping your operating costs down, and our projected operating costs allow us to remain profitable over a wide range of pricing scenarios,” he said.