Huge mining projects in works

Two jumbo projects could turn Quebec-Labrador into the world's third biggest iron-ore mining region in a decade - and one of them has just deepened its footprint in Quebec.

The jumbos are New Millennium Iron Corp., with international partner Tata Steel of India, and Adriana Resources Inc., with partner Wuhan Iron & Steel Corp., China's third biggest steelmaker.

Their multi-billion-dollar projects, along with Iron Ore Co. of Canada's ongoing expansion, a fast-track project by Alderon Iron Ore Corp. with Hebei Iron & Steel Group, China's biggest steelmaker, and many smaller developments could triple the region's annual capacity to 150 million tonnes.

Cliffs Natural Resources Inc., which bought Consolidated Thompson for $4.9 billion last year to merge it with Wabush Mines, is also expanding. Century Iron Mines Corp. and Champion Minerals Inc. are working on key properties. though Oceanic Iron Ore Corp.'s Ungava project is remote. Another contender is Labrador Iron Mines Holdings.

Also, ArcelorMittal Canada is planning to raise annual capacity at its Mt. Wright mine in Quebec from 14 million tonnes to 24 million tonnes and its Port Cartier pelletizing plant will double to 18.5 million tonnes.

Quebec-Labrador would still be far behind Australia where BHP Billiton and Rio Tinto Group are expanding massively and behind Brazil where Vale SA means to hold its global industry leadership. But a boom has already been created across a vast region of Eastern Canada that suffered from rock-bottom iron ore prices from 1980 to 2005 - when Asia's economic miracle began to blossom.

The pace at MillenniumTata's project is picking up rapidly, says CEO Dean Journeaux, and the partners are planning a $1 billion pelletizing plant at Sept Îles (Pointe Noire). Iron ore is shipped as a fine or coarse powder or is converted into tiny pellets to meet steelmakers' specific needs.

Millennium's $4.4 billion Taconite project straddles the Quebec-Labrador border 25 to 50 kilometres north of Schefferville, the railhead. The LabMag property in Labrador and KeMag on the Que-bec side make up Taconite's current resource, but several others nearby are adding more. Millennium has 35 professionals in Montreal on planning and engineering, while at the minesites drilling teams are completing the winter program.

The Taconite concentrates may be delivered by slurry pipeline to Sept Îles at an annual rate of 22 million tonnes. That would yield 15 million tonnes of pellets at Pointe Noire and the rest will move to export markets as concentrates. Tata Steel will take half or more of the Taconite production.

The slurry pipeline is a low-cost alternative to a new 815-kilometre rail line proposed by the province and to be operated by Canadian National Railway Co. and financed via public pension fund manager, the Caisse de dépôt et placement du Quebec. It would serve new mines, especially Adriana Resources, located well north of Schefferville. The existing rail line, owned by IOC, will soon near maximum capacity.

Journeaux said the pipeline is feasible and preferable for its low capital ($1.5 billion) and operating cost, but the railway, with a tab of $5 billion, might better fit the Plan Nord's broad economic goals.

"We don't have strong feelings either way, though we recognize the mining companies' need to control the new railway and invest," he said.

The Taconite project has indicated reserves would last more than 100 years at the initial annual production rate of 22 million tonnes of concentrates. A total investment of about $6 billion is needed for mines, pipeline and pellet plant and Sept Îles port facilities.

The feasibility study is due this year and the partners are shooting for a 2015-16 startup. Longer term they plan to raise total capacity to 44 million tonnes - if markets hold up.

The industry says Quebec-Labrador can compete well when prices are around the present $125-$150 U.S. a tonne.

Adriana-Wisco's Lac Otelnuk project, 170 kilometres north of Schefferville, has an indicated resource of 5 billion tonnes at this stage and would need $13 billion of investment to build mine, concentrator and pelletizing plant and reach planned annual capacity of 50 million tonnes.

Alderon-Hebei's Kami project in Labrador but near the Quebec mining town of Fermont hopes to fast-track the permitting process and hit first production in 20152016. The short-term goal is annual capacity of 8 million tonnes with shipment to Sept Îles via the existing railway. Capacity could be doubled later.