Lower prices? - Increase production!
November 20, 2014
Normally, falling commodity prices lead companies to close operations. However, in the case of Baffinland’s Mary River iron ore mine the company has applied to boost production. Go big or go home.
Baffinland filed an application Oct. 29 with the Nunavut Impact Review Board that asks for big changes to the terms and conditions listed in their project certificate. Those changes include:
- an increase in Milne Inlet shipments from a maximum of 4.2 million metric tons of iron ore per year to a maximum of 12 million metric tons of iron ore per year;
- an extension of their shipping season from ice-free months only — roughly June to October — to a 10-month period stretching between June and March each year, including the November to March period when ice begins to form;
- an increase to about 150 voyages a year to and from Milne Inlet or Eclipse Sound, which separates Bylot Island from Baffin Island, including fuel and freight vessels;
- the use of two “self-discharging” ore carriers for the trans-shipment of ore to a huge Cape-class vessel in Eclipse Sound and waters off Greenland;
- at least one huge Cape-class ore carrier, and other large vessels which would receive trans-shipments of ore from the self-discharging vessels out at sea, in Eclipse Sound and off Greenland;
- the use of two tugs and the use of floating fuel storage in Eclipse Sound for refueling of the tugs;
- the use of two new ice management vessels at Milne Inlet and a second dock at Milne Inlet;
- refueling of vessels at Nuuk, Greenland;
- a three-fold increase in the number of haul trucks on the Milne Inlet tote road, from the currently allowed 22 to 75. Originally Baffinland had planned to build a railway to haul ore to tidewater, Baffinland could not raise the $5 billion it needed to pay for a Steensby Inlet railway and port.
Baffinland stockpiled its first load of iron ore at Milne Inlet this past September and expects to export its first batch to market in mid-2015.
Baffinland is owned on a 50-50 basis by Luxembourg-based steel giant ArcelorMittal and by WW Mines Inc., a private investment firm formerly known as Nunavut Iron Ore Acquisition Inc.
Plunging iron ore prices have put most greenfield iron ore projects, like the promising Roche Bay project in Nunavut, on hold. Baffinland has chosen to try to get bigger to maintain profitability.
Interestingly, London Mining Plc, the company behind the huge Isua iron mine project in Greenland, filed for bankruptcy protection around the middle of last month, after the company’s Marampa mine in Sierra Leone closed because of low prices and the Ebola crisis.