Alderon unshelving Kami mine plan in Labrador West
Kami project would take 29 months to build, and have a lifespan of 24 years
The improved price of iron ore is giving another injection of positive news to Labrador West, with Alderon Iron Ore Corp. revealing plans to reboot the idled Kami project.
If sanctioned, the plan would bring a new mine to a region that has been hard hit by an ongoing downturn in the commodities market.
"We [now] need to raise the money necessary to put it into production," CEO Mark Morabito told CBC News.
We've taken a very conservative approach and any further upside in the price is just sauce for the goose.- Mark Morabito
"It was just impossible to do that in a climate where iron ore prices were in the tank."
The announcement comes just days after the Iron Ore Co. of Canada decided to push ahead with the long-awaited Wabush 3 project.
Alderon shelved the project in 2014 due to a collapse in the price of iron ore. It's decision to bring the project back to life is mainly based on a recent feasibility study, which was done with a forecasted average price for iron ore at about $70 dollars per tonne.
That's well below the current high in the iron ore market, where prices over the last month have been above $90 per tonne.
"It's going to be a very profitable operation at today's prices or even less than today's prices," Morabito said.
"So we've taken a very conservative approach and any further upside in the price is just sauce for the goose."
Project could last for 24 years
Alderon's new mine would sit on the Rose deposit in Labrador West. The company says it would take more than two years to build and have a life span of about 24 years.
The company projects that it will cost just under $900 million in capital costs to get the project up and running. Morabito said Chinese investors have provided some of that capital, and Alderon has to find the rest.
"When you're doing that, not only do you have to sell the merits of the project, but you have to sell the merits of the jurisdiction," Morabito said "people have to believe that Newfoundland and Labrador is a good place to put hundreds of millions of their dollars."
Abandoned mine pit still sought
Part of Alderon's plan also includes using the mine pit at the Scully mine in Wabush to bury its tailings. Alderon has made attempts to secure the pit which has been tied up in regulatory proceedings since Cliffs Natural Resources shut down Wabush Mines in 2014.
"They said we are not going to entertain any offers for components of Scully — you have to buy the whole thing," Morabito said,
"It needs to come out of bankruptcy protection and it needs to … be dealt with as a normal mine closure."
He says the government of Newfoundland and Labrador could help make that happen but the idea of resurrecting the Scully mine needs to be done away with and the government needs to get behind Alderon's plan in front of a judge.
"They know [Wabush Mines] is out of economic ore [and] now they have the information from the independent report on our project," Morabito said.
"We have a proposal to make use of some of the facilities to get our facility off the ground and we need the government of Newfoundland and Labrador to step up with us and say, 'This is the way to go.'"