March/April 2012

$55M in federal cash for Port of Sept-Îles

But local miners worry more infrastructure needed

By Krystyna Lagowski

multi-user dock.  Port Sept-Iles 

Although mining organizations are pleased with the federal government’s February 13 announcement to contribute up to $55 million to expand the Port of Sept-Îles, they are left speculating about railways and roads.

Currently, the port plans to build a multi-user deep water dock with two ship loaders and two conveyer lines. Construction of the new facility at Pointe-Noire should be complete by the end of March 2014.

In 2011, the port handled 26.3 million tonnes of iron ore for miners, namely Cliffs Natural Resources, Consolidated Thompson Iron Mines Ltd., Labrador Iron Mines Holdings Limited, Tata Steel Limited, New Millenium Iron Corp., as well as the Iron Ore Company of Canada (IOC). Organizations with projects in development include Alderon Iron Ore Corporation, Century Iron Mines Corporation, Champion Iron Works, Inc. and Adriana Iron Resources Inc.

According to Pierre Gagnon, president and CEO of the Port of Sept-Îles, the port will be handling almost 200 million tonnes of iron ore by 2018. “By the end of the decade, with the annual projected volume of activity, the Port of Sept-Îles will be the largest port by volume in North America,” he said.

But Bob Leshchyshen, vice-president of corporate development and investor relations at Century, said the port expansion is only one part of the puzzle. “The other part is the train. There is an existing train line to the port which has an estimated capacity for 80 million tonnes, but as other companies begin to expand their facilities, the capacity of the railway could get used up fairly quickly over the next two or three years.”

In addition, one of Century’s mines is located in Schefferville, Quebec, where the roads are not good enough to handle certain equipment, so helicopters are used instead.

“One of the issues is to create a potential multi-use railway, but all that stuff is up in the air,” he said. “There is discussion about trying to figure out the infrastructure and everybody’s in the game, including CN and CP – but nobody knows what’s going to happen next.”

When a railway crosses a provincial boundary, it becomes a national railway or a common carrier. This means that the rail company is obligated to haul products at a commercial rate and must accept other commodities.

For Alderon, this is good news, since the railroad it plans to use is currently owned by Rio Tinto. Its project in Labrador’s Kamistiatusset (Kami) is eight kilometres away from the rail, so it will build some rail to hook up with it. “The rail has capacity, and we’re confident we’ll have a rail agreement in the fall of this year,” said Simon Marcotte, the company’s vice-president of corporate development.

Julie Cusson, director of communications and external relations at the Iron Ore Company of Canada, which is 59 per cent owned by Rio Tinto, said Cliffs, Consolidated Thompson, Labrador Iron Mines and Tata Steel/ New Millenium have signed agreements to ship ore on the Rio Tinto railroad. IOC will need to invest in sidings and new engines to accommodate the increased load, she added.

According to Erik Richer La Flèche, partner in law firm Stikeman Elliott, the rail projects could benefit from the Quebec government’s Plan Nord – the 25-year, $80-billion development project for the north of Quebec. “The Quebec government can provide some assistance with respect to infrastructure,” he remarked. “Mining is a fundamental part of the Plan Nord, and in order to provide ability to access minerals, the Quebec government is saying, ‘We will provide you with some assistance. But there may be some capital involved.’ ”

However, Richer La Flèche noted that although the Quebec government would like to qualify the expansion of the Port of Sept-Îles as part of Plan Nord, the expansion pre-dates the Plan Nord – which is still in gestation. “The expansion consolidates the importance of Sept-Îles within the Plan Nord, since it will facilitate the Plan,” he said. “They complement each other.”

Leshchyshen said the Plan Nord can positively affect the expansion of the Port, if in fact the Quebec government is actually able to implement it. “The government’s plan is to spend $80 billion over 25 years – it doesn’t mean they are going to spend it all themselves,” he said. “They’re going to facilitate companies like ours to make things easier – they’ll spend money on roads, infrastructure and electricity, which are very important to us.

“The government takes its time in getting things done. You need permits. Without the government, you can’t build the railway,” Leshchyshen added.

In the meantime, it is full steam ahead for the Port of Sept-Îles. “We are already working on the next expansion,” said Gagnon. “We are ready to expand at the pace of the mining projects that will occur.”

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