If you were a steel producer, now would be a good time to control a high-quality iron ore deposit. With continued strong demand for steel and iron ore, steelmakers are turning back to mine ownership to secure supply in a competitive climate. One of the top 10 producers, Indian conglomerate Tata Steel, has joined a general migration to Canada’s Labrador Trough, with its eyes trained on the extensive iron deposits held by New Millennium Iron Corp. (NML; formerly New Millennium Capital Corp.).
For Tata, partnering with NML will create the first captive iron source for its European operations, which use 20 to 25 million tonnes of iron ore each year. For NML, it means capital to begin developing a 210-kilometre-long chain of deposits, dubbed the Millennium Iron Range, which straddles the border between northeast Quebec and Labrador.
As a joint venture called Tata Steel Minerals Canada Ltd. (TSMC), the partners are starting small with a high-grade open pit mine known simply as the DSO project, due to go into production next year. Situated some 30 kilometres from Schefferville, Quebec, the project consists of 25 small open pit deposits containing hematite with a 58 to 60 per cent iron content. Like many of the area’s deposits, they sit on land that was mined by the Iron Ore Company of Canada (IOC) from the 1950s to 1980s.
An 80 per cent partner in the joint venture, Tata Steel will arrange financing for the first $300 million plus 80 per cent of the remaining cost, which the feasibility study estimates at $35 million. In return, it will offtake 100 per cent of the yearly 4.2-million-tonne output at market price for the life of the mine. That could be at least 15 years, according to Bish Chanda, NML’s senior vice-president of marketing and strategy. Including historical and current NI 43-101-compliant resources of about 80 million tonnes, he estimates the total resource at 120 million tonnes.
DSO: Easy come, easy go
DSO stands for “direct shipping ore,” which usually means that the ore is high grade enough to be shipped without processing. But at this project, some upgrading will be required first. “The term DSO, in our case, is a historical term,” explains Chanda. “IOC shipped 58 to 60 per cent grade to the steelmakers. In today’s market, European steelmakers prefer a higher grade.”
On the other hand, it comes packaged with very little of the contaminants phosphorus and alumina. “Many other ores, for example, from Australia or India, have much higher alumina,” says Dean Journeaux, president and CEO of NML. “And so our ore being lower in alumina is a big advantage.”
NML anticipates a conventional open pit operation, drilling and blasting to remove the minor overburden, using 180-tonne trucks to haul the ore to a small processing plant. At full capacity, the plant will take in five million natural tonnes per year and produce 4.2 million dry tonnes with a minimum of 64.5 per cent iron. Jigs, spirals and hydroclassifiers will use gravity to upgrade coarse fractions of six millimetres or less, while materials below 0.1 mm will be separated by wet high-intensity magnetic separators (WHIMS). The output is expected to be between 70 and 80 per cent regular sinter fines and 20 to 30 per cent super fines.
The tailings produced by this process are fairly benign, says Journeaux. They consist of silica, alumina and hematite remnants, which can be deposited directly into mined-out pits left by IOC. “These pits are currently partly filled with water,” he explains, “so we don’t have to build any new tailings dykes or dams. It’s an ideal tailings disposal strategy.”
Overall, the project’s environmental impact appears comparatively mild. “There are no fisheries involved in this case,” observes Chanda. “There’s no flotation. The water is the only ingredient that we use.” So far, TSMC has received approval from Newfoundland and Labrador and begun the approval process in Quebec. The project does not require a federal environmental review.