Iron ore miners in Canada are having a tough time, but one would-be operator — Alderon Iron Ore — remains confident its business case will carry it through the crucible.
This week, Labrador Iron Mines (LIM) suspended its mining in the Labrador Trough, citing poor prices and operating costs. In February, Cliffs Natural Resources idled its Scully Mine in Wabush, affecting about 500 jobs.
Reached Friday, Alderon president and CEO Tayfun Eldem said the cases should not be considered omens of troubling times about to hit his company’s proposed Kami iron ore mine.
“There is no change to what I stated back when we had the press conference with the government,” he said, referring to the announcement of a signed benefits agreement for the project, in May.
“We’re working on financing. We expect to have some clarity on financing by the fall.”
That financing will need to be settled for the project to move ahead.
While continuing to work towards the fall “go or no” decision, Alderon has suspended its engineering, procurement and construction management (EPCM) contractor for the project: WorleyParsons Canada Services Ltd.
“The reason we’ve done this decision is that we have advanced engineering well past where we had to be start construction,” Eldem said. “And continuing to do more engineering, without having a clear conclusion to the financing — it just doesn’t make sense. Because if you do end up either taking longer to complete financing or not get it at all, then that’s additional engineering hours that you really did not have to incur.”
The EPCM team will be brought back as needed.
Natural Resources Minister Derrick Dalley said the province is looking forward to the start of construction.
It would bring with it a fresh capital injection into Labrador West and the promise of 400 long-term jobs.
“We have been in regular contact with senior Alderon officials who remain confident in their ability to raise capital for this project in Newfoundland and Labrador, which is known throughout the global mining community as a good place to do business,” Dalley said, in a statement.
“We are disappointed that the company has temporarily suspended the work of its engineering, procurement and construction management (EPCM) contractor. We hope that the impact of this decision is minimal on the contractor and its employees.”
In taking in the situation as a whole, Eldem said it is important for people not to always generalize when talking about Canada’s iron ore miners.
“The circumstances surrounding each company is very, very different. ... People keep forgetting that. They paint everybody with the same brush and they can’t,” he said.
“(LIM’s suspension of operations) doesn’t hurt us, per se. It does raise question marks in the minds of the investors. However, what we’re trying to do is very different than what LIM has been doing and what LIM is facing further underscores the need to be cost competitive. If you’re not cost-competitive — whether you’re a junior miner or whether you are Rio Tinto — you’re going to face tough times. That’s the issue here.”